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Pathways towards integrated approaches towards formalization

DAY 221 March
15:30-16:45 NST (GMT+5:45)

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While South Asia is one of the fastest growing regions onthe planet, the labour market is still characterized by high levels of informality in all countries, with an average of 86.9 percent of employment being informal. Workers in informal employment often lack access to basic rights and protection, earn less, face job insecurity, endure worse working conditions, lack of safety and health measures, have limited access to social protection, among others. Similarly, informal businesses are often trapped in a race to the bottom, on low input and low productivity activities that prevent growth and sustainability, and often fail to protect the human rights of their employees and their families.


The causes and drivers of informality are multifaceted and complex and require the consideration of multiple factors. Among these are macro-economic factors, such as economic diversification, infrastructure and labour market; institutional elements such as regulatory frameworks and administrative systems; and the characteristics of the enterprises and workers themselves – including the access to essential services, skills, information, markets, and growth support services.  


To address the diversity of root causes and informality involved in various forms of work, ILO’s Transition from the Informal to the Formal Economy Recommendation, 2015 (No. 204) outlines three objectives for a gradual transition to formality, achievement of inclusive development, and the realization of decent work and human rights for all. These are to:


  • Facilitate the transition of workers and economic units from the informal to the formal economy, while respecting workers’ fundamental rights and ensuring opportunities for income security, livelihoods, and entrepreneurship.

  • Promote the creation, preservation and sustainability of enterprises and decent jobs in the formal economy and the coherence of macroeconomic, employment, social protection, and other social policies; and

  • Prevent the informalization of formal economy jobs.


The experience from the approaches used around the world to address informality in different contexts and with different degrees of effectiveness, indicate that integrated approaches to formalization are the most effective. An integrated approach is based on coherent and harmonized policies that address multiple aspects of informality, a notion of which is enshrined within the ILO’s Transition from the Informal to the Formal Economy Recommendation, 2015 (No. 204) and also reflected in the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration) which contains guidance on the issue of formalization, highlighting the crucial role of government and the contribution that enterprises (multinational and national) can make. The ILO MNE Declaration calls on Governments to develop and implement an integrated policy framework to facilitate the transition to the formal economy, recognizing that decent work deficits are most pronounced in the informal economy.


Integrated approaches to formalization also support progress towards Goal 2.1 “Improve policy coherence to reinforce more effective government action” of the UNGPs 10+ Roadmap, by bringing together different policy areas that affect workers and business in a coherent manner, and support conditions for the promotion, protection, and respect for human rights in business.


Session Description 


Formalization is a complex and multifaceted process, that requires multiple and complementing interventions to address its root causes and drivers. While economic growth is a condition for the formalization of the economy, it is not sufficient – as can be observed in the persistently high levels of informality in South Asian countries.


By facilitating the transition and maintenance of business to the formal economy, workers will have improved access to labour rights, working conditions and essential services, businesses will have improved access to support services, finance and markets, and governments will be able to implement better monitoring and compliance mechanisms to prevent and remedy abuses of human rights.


This session will discuss examples of initiatives pursuing coordinated and integrated pathways towards the formalization of jobs and businesses. It will also reflect on the challenges to upholding human rights in business operations in the informal economy and what could be meaningful ways to address them.


Session Objectives 

  • Discuss examples of initiatives pursuing coordinated and integrated pathways towards the formalization of jobs and businesses, and their contributions in upholding human rights.

  • Provide an opportunity to exchange on lessons learned and challenges in their efforts to address informality from various countries in the region. 

  • Better understand the role of international instruments such as the UNGPs, the ILO MNE Declaration and ILO Recommendation 204 in addressing issues related to formalization, at the national and regional levels.


Panelists will reflect on the following questions: 

  • What are the key intersections between formalizing businesses and jobs and promoting human rights in all economic activities?

  • What are the main challenges in the region in formalizing the economy, and what are some of the emerging integrated practices that are helping countries overcome the barriers to formalization?

  • How can integrated approaches facilitate the formalization of micro, small and medium-sized enterprises (MSMEs), particularly those in very low productivity and limited resources?

  • What role do different stakeholders play in defining and implementing an integrated pathway towards formalization, and how to coordinate different interventions?

  • How can countries and MNEs in South Asia work together in promoting formalization within their value chains, and further promote human rights in the economy?

  • Andre Bongestabs, Specialist on Local Strategies for Decent Work, ILO Country Office for Nepal

  • Sandeep Sachdeva, Founder and Director, Safe in India

  • Pradeep Bhargava, former President Employers’ Federation of India

  • Razzekuzzaman Ratan, President, Samajtantrik Sramik Front (SLF)

  • Dandu Raj Guimire, Joint Secretary, Ministry of Labour, Employment and Social Security

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