16 October 2015: Experts discussed challenges and proposed policy solutions for transitioning from the informal to the formal economy in order to achieve sustainable development and implement the 2030 Agenda for Sustainable Development, during a side event organized by the International Labour Organization (ILO) with the UN General Assembly’s (UNGA) Second Committee (Economic and Financial).
‘Expanding Economic Growth: Transitioning from the Informal to the Formal Economy’ took place on 16 October 2015, in New York, US.
Azita Berar-Awad, ILO, said the global economic slowdown will reduce the pace of job creation, especially for youth, and generate the need for greater focus on the informal economy, and especially on youth and informality. She described social protection as an important countercyclical measure, calling to: extend social security to those working in informal areas; recognize the skills obtained in the informal economy; and develop policies and programs that focus on subsistence agriculture and unpaid household labor, especially in the poor rural areas.
Gulelat Kebede, UN-Habitat, said that implementing two of the Sustainable Development Goals (SDGs) – Goal 8 on economic growth and employment, and Goal 11 on sustainable urbanization – as well as the Addis Ababa Action Agenda (AAAA) requires transitioning from the informal to formal economy. Urban development can help the shift to formal economy, he said, through: job creation in construction, housing, and infrastructure; urban and industrial policies that encourage connectivity – industrial zones, clusters, and value and supply chains; youth economic empowerment – through one-stop centers and youth funds; regulations that support home-based enterprises; and regulations that improve the cost of doing business.
Carolin Vollmann, International Trade Union Confederation (ITUC), underscored that informality represents not opportunity but lack of opportunity. She said economic growth is not enough; labor market regulations can contribute to both the creation of formal jobs and to the regulation of the informal market, such as in the case of Pakistan that extended the minimum wage to the informal market. Vollmann stressed the need for: support from governments; economic protection; social protection; health care; and improving workers’ conditions.
Ariel Meyerstein, US Council for International Business, called for improving government services and products to make the formal sector more attractive and create incentives for moving to the formal economy and pay for social benefits, taxes, and other bills. He said governments should invest in infrastructure such as mobile infrastructure and health, to help participants in the informal sector scale up their businesses and have more traction to join formal economy.
The Second Committee is convening until late November 2015, and its programme of work includes several side events and joint meetings. [IISD RS Sources] [Second Committee Side Events] [Webcast] [Event Details] [Background Note]