Every day for 30 years, Gloria Solorzano has left her small house before dawn to set up a fruit and vegetable stall at a street market in Lima, Peru. She pays a man with a station wagon to drive her and the produce she sells to the market, where she pays another man to load her crates of produce onto a trolley and take them to her stall. Around sunrise, she starts selling, under the protection of a security guard she pays to ensure she and her clients are safe, on streets she pays to be cleaned, under lights she pays to be turned on.
Gloria is just like most workers in the world – that is to say, informally employed. She is embedded in dozens of economic relationships, paying for the services she needs in order for her business to run and paying a daily fee in exchange for the right to work in the street. At any moment, despite the investments she has made both in her business and in the market itself, the local government could take away that right.
Slightly more than 60% of all working people in the world are informally employed. This means that they lack the labour and social protections that help smooth income, protect against risk, and keep households out of poverty. Without access to economic and social rights, it is difficult for informal workers to actively contribute to building open, vibrant, democratic societies.
How can their situation be improved? What can be done to ‘formalise the informal economy’?
Building collective power
First and foremost, workers need support to build democratic, accountable organisations to represent them in policy processes and negotiate with governments and corporations. To be sure, there are challenges to organising informal workers: they have diverse workplaces, their employment relationships are disguised, and their low and unstable incomes make participation difficult. Yet they have several decades of experience now in forming global and regional networks, developing innovative organising approaches, and bringing collective bargaining to informal workplaces. The bigger challenge is finding ways to use their power to ensure that governments uphold their duty to protect rights and that corporations uphold their responsibility to contribute their fair share to society.
Policies can no longer rely on models that assume most workers are wage employed, with steady income and workplace benefits.
Key to that challenge is finding the right organisational form for different occupational groups within the informal economy. At the global level, organisational forms vary according to political traditions and the ways in which base organisations are structured. Models include StreetNet International’s trade union model, based on the structure of a global union federation; the trade union-supported model where informal worker organising is incubated within formal trade unions, such as the IUF and the International Domestic Workers’ Federation; the networking model of the Global Alliance of Waste Pickers; the anti-hierarchical, anti-bureaucratic, cooperative-based social movement model of RedLacre; and the NGO-support model such as HomeNet South Asia. These different forms of organising enable different worker groups to build collective power across geographies and bring visibility to their role in the global economy.
Adjusting policy to reality
Governments, in turn, need a clearer picture of what jobs look like today. Policies can no longer rely on models that assume most workers are wage employed, with steady income and workplace benefits. Urban policies, social policies, and employment policies need to recognise that a typical worker in today’s economy lacks the type of institutional buffers against risk that formal wage workers used to enjoy.
Without long-term contracts and institutionalised access to health insurance, pension, childcare, and other workplace benefits, risks like illness and injury are individualised. And when combined with the costs that workers like Gloria bear to earn a livelihood, they prevent workers from working their way out of poverty, and in turn from being able to fully participate in democratic life. Workers’ organisations can play a role in helping governments design more appropriate, innovative policies that are better suited to today’s globalised economy.
Urban policies, social policies, and employment policies must also recognise that informal enterprises engage on unequal terms with formal enterprises. Small informal enterprises face structural disadvantages in their interactions with large formal enterprises, and regulations that aim to encourage formalisation can exacerbate those unequal terms of trade.
This problem is linked to the problem of job quality: as limits on corporate power get weaker globally, formal firms become more adept at outsourcing risk and blurring relationships of accountability. This leads to lower quality jobs and fewer paths for workers to work their way out of poverty. The increasing inequality that results has consequences for everyone.
Holding partners accountable
Fortunately, informal workers’ organisations are finding innovative ways to ensure that governments and corporate entities play their part in building more economically just societies. A useful example is the role informal workers’ organisations have played in developing new approaches to social protection.
Generally speaking, informal workers are the ‘missing middle’ when it comes to access to social protection: they are excluded from work-based protection because they lack a regulated employer-employee relationship, and they are excluded from poverty-related social assistance because they are in the workforce. Yet some have found solutions that combine their own contributions to social protection with contributions from the state and/or from those who pay for their services. For example, Mathadi Boards in India provide social protection for headload porters, which they finance through an additional charge levied onto the cost of hiring. Similarly, waste pickers are exploring the possible role of extended producer responsibility in facilitating a corporate role in creating safer working conditions, particularly at dumpsites.
In sum, despite the substantial challenges of organising informal workers, there are also promising developments that require more attention and support given current conditions in the global economy. Workers like Gloria create jobs for themselves and others, while also making an effort to inform policies by representing workers who are otherwise marginalised from mainstream political processes. Their role in advancing economic and political rights should not be overlooked.
These papers have been produced as part of the Open Society Foundations’ Just Future for Workers initiative, which advances strategies to build strong and inclusive labor movements.