ILO-UNDP: International labour standards can stem informal employment in the Arab States

Apr 18, 2013

imageRegional workshop highlights challenge of a growing informal Arab economy

– Regional development experts concluded a three-day workshop on Thursday, 18 April 2013, with recommendations to check the expansion of the Arab world’s informal economy.

Hosted by the International Labour Organization (ILO) and the UN Development Programme (UNDP), Rethinking the Informal Economy in the Arab Region: A Human-Rights Based Approach brought together worker, employer, government, civil society and UN representatives to examine country examples from Jordan, the occupied Palestinian territory, Yemen, Egypt, Tunisia, Lebanon, Morocco and Algeria.

The workshop concluded with calls for the implementation of international labour standards to the stem the tide of growing informality. Recommendations included extending social protection coverage to all workers, promoting social dialogue, strengthening legal frameworks and improving data collection and analysis.
Growing informality
According to a recent joint report by ILO and UNDP, development models characterized by the prevalence of rent-seeking activities have failed to address employment challenges in recent decades – in particular those related to youth and women.

In many Arab states, economic growth was promoted without addressing its impacts on employment, gender equality and worker’s rights. These policies led to the concentration of job creation in low productivity sectors and to the expansion of the informal economy.

“This development failure highlights that Arab countries must move away from the prevailing rent-based political economy to a developmental state model premised on a new social contract of mutual accountability, and capable of promoting investments in productive sectors and creating decent jobs,” said Marwan Abi Samra, UNDP Governance Practice Leader.

Despite the lack of comparable data across countries, a majority of Arab workers are engaged in informal employment – which limits their access to social security and health insurance, occupational safety and health measures, and working conditions regulations.

Women – who are often contributing family workers in both urban and rural settings – are disproportionately affected by these trends, but the extent of their participation in informal work remains under-reported.

Factors that push workers into the informal economy include widespread corruption, dysfunctional formal institutions, restrictions on labour unions that weaken social dialogue, macroeconomic policies that lead to low wages and poor working conditions, and limited access to justice for small and medium enterprises.
Statistics: Being counted
While an increasing majority of Arab workers operate in the informal economy, few Arab countries have incorporated informal employment modules into their labour force and establishment surveys. That means policymakers lack critical information about labour flows and structural changes to the labour market.

“Far too often data collection on employment focuses on the number of jobs, not their quality’, said Saleh al-Kafri, Director-General of Economic Statistics at the Palestinian Central Bureau of Statistics, noting the importance of conducting working conditions surveys.

The few countries that have gathered data on the informal economy – including Jordan, the occupied Palestinian territory and Yemen – have done so inconsistently.

Giving informal workers a voice
The lack of the right to unionize in many Arab states has also exacerbated the problem. Empowering informal economy workers to organize collectively – including in trade unions, business groups, associations, and cooperatives – enables them to better represent their interests and eventually transition to the formal economy. 

In Algeria, trade unions have actively pursued the unionization of workers from the informal sector, according to Karima Bou Derwaz from the General Union of Algerian Workers (UGTA).

“Through the formation of national committees and advocacy campaigns, we’ve organized Algerian women from across the country – some of whom have since successfully transitioned to formal employment.”
Social Protection
According to economist Sami Zouari, an expert on gender and the labour market from the University of Sfax in Tunisia, “improving access to social protection would go a long way towards improving the working conditions of those employed in the informal sector.”

In Tunisia, a government scheme enables employers to pay quarterly contributions to the Tunisian National Social Security Fund (Caisse Nationale de Sécurité Sociale CNSS) on behalf of employees that are not covered by national labour laws to guarantee their access to social security.
Legal frameworks
One way of strengthening legal frameworks to better protect informal workers is through strategic litigation, which according to lawyer and activist Khaled Ali, can lead to a “qualitative shift in implementing a country’s commitments to international labour standards and bringing national laws in line with constitutions that usually support workers’ rights.”

Ali believes that going to court to secure the rights of an individual worker can set a precedent that changes the working conditions on a national scale.

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