Essay On Informal Sector

729 Words3 Pages
1.1. Informal Economy The concept of informal sector stems from early 1970s, when economic anthropologist Keith Hart conducted his research in Ghana having found out it not only existed but expanded. Later it was accepted by ILO, (International Labour Organization) perceiving the range in which marginal workforce turned into the profitable enterprises. It was followed up with the International Labour conference in 2002 broadening its concept to an economy wide phenomenon involving the jobs and workers inside (ILO, 2013). There are also various definitions incorporated by the various economist and sociologists, but ILO Resolution of 2002 delivered the one commonly applied in many states: «The informal economy comprises half to three-quarters of all non-agricultural employment in developing countries. Although it is hard to generalize concerning the quality of informal employment, it most often means poor employment conditions and is associated with increasing poverty. Some of the characteristic features of informal employment are lack of protection in the event of non-payment of wages, compulsory overtime or extra shifts, lay-offs without notice or compensation, unsafe working conditions and the absence of social benefits such as pensions, sick pay and health insurance. Women, migrants and other vulnerable groups of workers who are excluded from other opportunities have little choice but to take informal low-quality jobs (ILO, 2002)”. Various socio-anthropologists and economists define informal sector in their own particular way. Meagher (2004) introduces following categories: survival informal group, dependent workers and entrepreneurs. House (1984) investigates the motivation triggering entrepreneurs start a business which accor... ... middle of paper ... ...rivate sector. The overall negative outcome could be observed on the post USSR countries, named as “transition countries”. Only Poland and Hungary had success along with Georgia, but the latter showed the worst case of output due to the civil wars in 1990s. The paper will analyse the relation between informal sector, formalization outcomes and macroeconomic structural changes. The analysis is based on the three country examples: Brazil, Vietnam and Georgia. Those countries were selected due to their experience to cope with the informal sector, i.e. Brazil was chosen for its successful public and financial policy ending in the rise of formal sector; Vietnam for its partly successful formalization, but more for its successful informal institutions and lastly Georgia, conducting all necessary structural adjustments, but ending in decrease of formalization incentives.
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