This article first appeared in Federation News (May 2003), the journal of the General Federation of Trade Unions in the UK (gftuhq@gftu.org.uk).
Labour Standards in the Informal Economy
by Dan Gallin, Global Labour Institute
Workers in the informal economy are all workers in unregulated and unprotected work – a majority by far of all workers in the world. This includes all work in informal enterprises as well as informal jobs (jobs that pay no benefits or provide no social protection), thus including own-account workers (for example home-based workers or street vendors) and wage workers (for example casual workers without fixed employers, most domestic workers, but also factory workers in unregulated and unprotected work, typically in the free trade zones). Because they lack protection, rights and representation, they remain trapped in poverty.
Informal work has always been a feature of colonial and underdeveloping economies, but it has massively increased in the last ten years, not only in these but also in advanced industrial economies.
The debt crisis of the underdeveloping countries, the dismantling of the public sector, the deregulation of the labour market under the structural adjustment programs of the IMF and the World Bank, and the succession of economic and financial crises since 1997, has pushed millions of people out of formal employment and into the informal economy. They are not in the informal economy by choice, but as a means of survival.
Meanwhile, the nature of the modern transnational corporation has been changing. From a producer it is becoming the coordinator of production carried out on its behalf by others. By eliminating the jobs of permanent full-time workers, by outsourcing and subcontracting all but its core activities, and by relying wherever possible on unstable forms of labour (casual, part-time, temporary, seasonal, on call), management deregulates the labour market, not only to reduce labour costs but to shift responsibility for income, benefits, and conditions onto the individual worker.
The outer circle of this system is the submerged world of micro-enterprises and industrial outworkers, with deteriorating conditions as one moves from the centre to the periphery of the production process. Most of the so-called own-account workers under contract to a transnational corporation (growing bananas, sewing garments or soldering electronic components at home, or driving delivery lorries) are in fact disguised employees who have lost their rights as employees.
Globalisation has tended to informalise work everywhere: the protection of workers in the formal economy is threatened under the impact of global deregulation, even while the workers in the informal economy remain integrated into global production and marketing chains. What is particular to the informal economy is the absence of rights and social protection of the workers involved in it. In every other respect, the formal and informal economies form an integral whole.
For the most part, informal workers are women. A majority of workers expelled by the global economic crisis from regulated, steady work are women. As the ICFTU has reported (1), women are the principal victims of the casualisation of labour and the pauperisation created by the crisis, and have therefore massively entered the informal economy, where they had already been disproportionately represented, even before the effects of globalisation had made themselves felt.
These developments represent a huge challenge both to governments and to trade unions. Democratic governments, who are accountable to their citizens, have an obligation to combat poverty through their social and economic policies. Today it is clear that the growth of the informal economy cannot be reversed in the short or medium term anywhere in the world. And, far from being an engine of economic growth, the informal economy represents the sum total of survival strategies by millions of workers unable to secure gainful employment in stable and regulated work. The only option for governments looking for means to combat poverty is therefore to empower these workers to defend their interests through organisation.
The challenge to the trade union movement is no less critical. The vast majority of the world’s workers, probably about 90 percent, is today unorganised. A large proportion of these unorganised workers are in the informal economy and, as the informal economy is growing, union density is declining.
The problem is not so much in the South, where unions, for example in Africa and Latin America, have been often successful in organising informal workers. In many instances informal workers have also created their own organisations. In India, where 97 percent of the labour force is in the informal economy, the Self Employed Women’s Association, which represents informal women workers, now has a membership of over 700,000. In countries like Brazil, Korea or South Africa where trade unionism is a militant social movement, there are also significant advances in organising in the informal economy.
It is in Europe, North America and Japan that unions have so far largely failed to develop successful organising strategies in the informal economy. In an advanced industrial country like Britain, 64 percent of the workplaces are unorganised (2) and, although many of these in theory represent formal employment, they employ in practice a casualised, contracted out and insecure workforce whose wages and working conditions are typical of those existing in informality. In addition, a vast number of workers, such as home workers, do not relate to any particular workplace or, like domestic workers or workers in sweatshops, are scattered among thousands of micro-employers. With a few notable exceptions, such as Northern Europe, the picture is the same throughout the industrialised world and, much worse, in the countries of the former Soviet bloc.
If one assumes, as we do, that the trade union movement is the main force in the world capable of reversing the neo-conservative tide and initiating a movement towards a humane, just, free and egalitarian world order and if we know, as we do, that this requires in the first place arresting the decline of the trade unions and going on the offensive, we also know that the problem of organising workers in the informal economy is one of the priorities to be addressed and resolved by the trade union movement today.
What are the obstacles to organising in the informal economy? One is backward trade union thinking, wedded to the myths and customs of rust-belt trade unionism based on traditional male manual work. That in itself, however, would not prevent organisation, since informal workers will organise themselves anyway when given a chance, as workers do, even without formal trade union backing. The real obstacle is fear: fear of losing one’s job, however bad, fear of losing security, however fragile.
The overriding issue is therefore workers’ rights, and the lack of legal protection of workers’ rights in the informal economy.
At last year’s International Labour Conference, the ILO for the first time addressed this issue. The “informal sector” was an agenda item and, after intense discussions between representatives of workers, employers and governments, conclusions were adopted of which unions should take notice (3). A coalition of women’s NGOs, informal workers’ organisations, international unions and workers’ education organisations intervened on the workers’ side. These are the most significant points made in the conclusions:
· The ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up and the core labour standards are as applicable in the informal as in the formal economy.
· Workers are not defined by their employment relationship but by the work they do and their dependent position in the production process. Therefore own-account workers are workers (not micro-entrepreneurs) and are entitled to the same rights as other workers.
· National legislation must guarantee and defend the freedom of all workers, irrespective of where and how they work, to form and join organisations of their own choosing without fear of reprisal or intimidation.
· The ILO should “identify the obstacles to application of the most relevant labour standards for workers in the informal economy and assist the tripartite constituents in developing laws, policies and institutions that would implement these standards”.
· The ILO should also identify the legal and practical obstacles to formation of organisations of workers in the informal economy and assist them to organise.
Ultimately, of course, the guarantee for implementation and enforcement of core labour standards in the informal economy rests mainly on the organisation of informal workers into trade unions. Experience shows that such an organising agenda can only be successfully advanced in co-operation with other social movements, in particular with women’s and human rights organisations. In Britain, the experience of the TGWU in organising domestic workers, in close co-operation with Kalayaan, a movement of immigrant domestic workers, shows what can be achieved.
However, here too, obstacles must be overcome, in particular a deep-seated mistrust in sections of the trade union movement of working with NGOs, justified in some cases, and entirely misplaced in others. Unfortunately, this mistrust is irresponsibly fostered and manipulated by some officials in the international trade union movement, more concerned with defending territory than with resolving the issues.
A welcome departure, indicative of new and constructive thinking, was made by the ITF at its 40th Congress in August last year, which adopted a resolution on organising in the informal economy. The resolution recognises that workers in the informal economy (in this instance transport) require a specific approach and opens doors for co-operation with NGOs. Other international federations, such as the IUF and the ITGLWF, have supported co-operation with pro-labour NGOs for some time. It is to be hoped that this new wisdom will eventually become the official policy of the international trade union movement, which needs all the allies it can get.
(1) From Asia to Russia to Brazil – The Cost of the Crisis, International Confederation of Free Trade Unions (ICFTU), Brussels, May 1999
(2) Polly Toynbee: The workers who need trade unions most can’t join them, in: The Guardian, December 27, 2002.
(3) Conclusions concerning decent work and the informal economy, in: Effect to be given to resolutions adopted by the International Labour Conference at its 90th Session (2002); (b) Resolution concerning decent work and the informal economy, document GB.285/7/2 (available on the ILO web site: www.ilo.org).