30 March


Informal Economy: Pathways to Promote
Responsible Business

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Ever since the UN Guiding Principles on Business and Human Rights (UNGPs) were adopted, business and human rights discourse has picked up speed significantly at the global level, including in South Asia. However, the challenges to upholding human rights in business operations in the informal economy have generally received little attention. As a result, meaningful progress in promoting business respect for human rights has not yet materialized in relation to the informal economy.


The precise scale of the challenge, however, is difficult to comprehend. The ILO estimates that 87.8% of employment and a staggering 99.3% of agricultural employment in South Asia is informal as of 2018. According to some estimations, more than 90% of businesses in South Asia operate in informality. Considering the scale of the informal economy in South Asia and the corresponding, disproportionate impacts associated with informality, there is an urgent need to effectuate meaningful change where it matters most, in the daily lives of workers and their families trapped in informality.


The COVID-19 pandemic serves as an urgent reminder that a wide range of systemic challenges continue to cause disproportionate impacts on the most vulnerable and marginalised sections of society, including those in the informal economy. During the pandemic, workers were/are more likely to lose jobs or incomes without social protections to fall back on, and informal enterprises did not have access to the same emergency support measures as formal enterprises. Workers in the informal economy in Asia are likely to be women, migrants, young, less educated and/or living in rural areas. Informality is also correlated with poverty, as well as linked to different types of discrimination. These intersectional characteristics of informal workers contribute to their economic, socio-political and occupational vulnerability.


Session Description


This state of affairs raises a legitimate question as to how responsible business practices should be promoted in the informal economy in South Asia. Promoting the transition from the formal to the informal economy is one such pathway. Yet, other short- and medium-term strategies should also be explored to develop a more comprehensive regulatory response.


The session aims to shed a light on the relatively under-explored issue of informality and highlight the complex nature of business and human rights issues associated with informality in South Asia. The purpose of the discussion is to explore different strategies to address human rights issues in the informal economy across all three pillars of the UNGPs. To inform relevant policy and legal development across the subregion, panellists will discuss the importance as well as challenges related to formalisation processes of enterprises as well as workers, the expansion of social protections to informal workers, as well as other potential short- and medium-term solutions. The panellists will discuss how emerging challenges or developments such as climate change and the need for a just transition, automation, digitisation, the rise of the gig economy, the emergence of mandatory human rights due diligence laws in Europe, and the potential changes in supply chains by brands might impact the rights of workers in the informal economy.


Session Objectives


The key objectives of this session are to:

  • Provide an overview of the most main challenges faced by states and businesses in implementing the UNGPs in relation to  the informal economy in South Asia;

  • Appreciate the role of the UNGPs, the ILO MNE Declaration and ILO Recommendation 204 on the Transition from the Informal to the Formal Economy Recommendation (2015) in addressing business-related human rights abuses in the informal economy;

  • Stimulate thinking on how to improve the lives of informal workers and their families in short-, medium- and long-term;

  • Identify how new challenges and the emerging regulatory landscape will impact the lives of workers and other rights holders trapped in the informal economy, and what implications these developments would have for policy responses by governments, businesses, trade unions, civil society organizations, multilateral organizations, and others.




Panelists will reflect on the following questions:

  • What are the most salient business-related human rights challenges faced by workers and other rights holders in the informal economy in South Asia?

  • What steps can governments take to develop and implement an integrated policy framework to facilitate the transition to the formal economy? What else can governments do to address business-related human rights abuses in the informal economy?

  • How can multinational and other enterprises address human rights issues in the informal economy?

  • Which vulnerable groups are disproportionately impacted by informality and thus need specific attention and protection? 

  • How can the UNGPs and the ILO MNE Declaration advance business respect for human rights in the informal economy in South Asia, and what are their limitations, if any?

  • Which future challenges and developments are expected to compound challenges relating to the informal economy? How will they impact the ability of states to protect human rights, the ability of enterprises to respect human rights, and rights holders’ access to remedy? 


Additional background documents (pdf format) or relevant links: