All Sectors

The Roadmap to Formalization presents a case study providing evidence that feasible policy can be obtained through a multi-stakeholder process. This process was led by the Global Fairness Initiative under the Promoting Informal Labor Rights program (PILAR), a two-year project funded by the US Department of State to improve government capacity to collect data on the informal sector while developing strategies that encourage formalization. PILAR’s broad-based coalition of non-governmental organizations, unions, private sector and government representatives, advocacy groups, and religious organizations has worked together to bring forward their most pressing needs, as well as solutions to break the formality ceiling.

In Latin America, informality continues to represent on average over 50% of the economically active population, becoming the main vehicle for employment for the working poor, the majority of whom are women and girls. In Nicaragua alone, 7 out of 10 jobs are created in the informal economy, providing limited opportunity to millions of workers. To address the economic exclusion of informal workers and successfully incorporate them into national and international markets, the Roadmap presents a holistic approach to address informality within the Decent Work Agenda of the International Labor Organization (ILO). Most important, the Roadmap emphasizes the need to extend social safety nets to workers while expanding government’s taxation base for improved services.

Informality encompasses legal economic activities parallel to a nation's regulated economy. The absence of adequate documentation inherent to the informal sector contributes to the legal and economic disempowerment of workers, robbing them of the protections and benefits formalized institutions provide.

The parallel economy informality creates tends to be larger in developing nations. In these countries, informal employment functions as a short-term survival strategy. With rapid population growth and urbanization, developing nations have yet to develop adequate social safety nets and regulatory structures to legally represent the majority of their populations. Thus, informal employment absorbs labor force expansion resulting from rapid growth in the absence of sufficient income-generating employment opportunities.

Under these conditions, informal employment contributes substantially to job creation and income generation. Chronically high informality levels, however, are indicative of legal and political vulnerability, allowing institutional and regulatory inefficiencies to persist in the long run. Ultimately, informal employment undermines economic stability, providing a short-term solution for long-running, systemic problems. The broad scope of societal, economic, legal, and political issues associated with high informality renders favorable macroeconomic conditions alone insufficient to reduce informal employment in developing nations.

This report examines the implications of informality in 15 developing nations, focusing on civil society, government, labor, and the private sector. Primary findings include:

• The causes of informality are variable and not mutually exclusive; they tend to exist on a continuum.
• The informal economy may contribute to short-term economic growth by bolstering income and production levels in developing nations. However, the long-term effects of informality are associated with underdevelopment and stagnation.

Informal workers, many of them youth and women, account for 48% of North Africa’s economically active population. In Tunisia, half of all employed workers lack access to social security, and 39.2% of production goes undeclared to tax and regulatory authorities. This Roadmap addresses the economic exclusion of informal workers in Tunisia and presents strategies for incorporating them into the formal economy, with an emphasis on extending social safety nets to workers and expanding the government’s core revenue to increase and improve services.

These recommendations, produced through a robust multi-stakeholder process, offer both initial steps and long-term opportunities to reduce informality and extend social services and protections to more Tunisians. Developed by Tunisians for Tunisia, the strategies in this Roadmap provide a tool for the Tunisian Government and CSOs, as well as donors and multilateral organizations, to generate targeted solutions to the problem of informality.

Over four decades of research, data, and analysis has established the primacy of the informal economy in international development, but we have not yet seen informality mainstreamed into development initiatives. In this report, we call for a movement to do just that. After years of implementing programs aimed at moving informality beyond the domain of white papers and development forums and into the mainstream of development initiatives, we at the Global Fairness Initiative seek to provide the core knowledge and tools that international development practitioners require to address the unique conditions of informal workers. This report is a first step in that process, providing foundational knowledge, relevant case studies, and actionable next steps for donors and implementers to begin to mainstream informality in their work.

The world of work has been steadily transitioning to a data-driven economy where development priorities, policy advocacy, and socio-economic strategies are being generated and extracted at a high level with minimal input or ownership from worker organizations on the ground. Multiple barriers have prevented informal workers and grassroots organizations from playing a central role, foremost of which has been the limited capacity of the informal sector to collect, assess and disseminate essential information to development advocates and policy-makers.

Global Fairness Initiative believes that local, grassroots-based entities have the right to set the standards for data collection. By working with partners in anchor locations, GFI is instituting a model of data collection that is worker-centric and locally produced and owned. We work within the local context to empower organizations to define key issues and create sustainable solutions rooted in equity and women’s empowerment. With knowledge building being core to the model, we use a bottoms-up, comprehensive Trainer of Trainer (TOT) strategy to augment the internal capacity of community partners, research enumerators, and worker unions.

In collaboration with regional data specialists, grassroots entities have hands-on experience learning and using proper methodologies and research techniques, planning implementation strategies, conducting questionnaires and facilitating focus group discussion, using data collection software, compiling information, and analyzing results to enhance awareness about workers and their rights. This responsive, real-time data is retained by those closest to the issue to provide them with targeted information necessary for effective bargaining power with government and external stakeholders, thus leading to more effective and sustainable changes for workers. Engagement at the grassroots level serves to bridge the ‘data divide’, and engenders local communities to make informed decisions and fosters social and economic development driven by workers themselves.

En Afrique, près de 85 % de la population active dépend de l’économie informelle pour son emploi et ses moyens de subsistance. Si les conditions sont généralement difficiles pour les travailleurs du secteur informel, les femmes, elles, sont confrontées à des inégalités entre les sexes et à des barrières sociétales qui créent des obstacles supplémentaires. Les travailleuses de l’économie informelle sont souvent obligées de travailler de longues heures pour gagner un minimum d’argent et vivent dans des environnements où les services essentiels ne sont pas garantis. Dans l’ensemble, la participation des femmes à la main-d’oeuvre reste inférieure à celle des hommes. Ces conditions créent des obstacles à l’autonomisation économique des femmes, qui présentent de multiples facettes et ne sont pas faciles à démêler.

Over the past decade, climate disasters in India have upended thousands of small and marginal producers and workers lives and livelihoods. Across sectors, informal and vulnerable workers, primarily women, are disproportionately impacted by climate change and are pushed further into poverty as they struggle on the front lines of the climate crises.

Since 2000, the Self-Employed Women’s Association (SEWA) and the American India Foundation (AIF) have worked to enhance financial stability and prosperity for its members through the transition to green technology and into the green economy in what is termed as building ‘climate resilience’. SEWA and AIF help build the skills, capacity, and confidence of workers to have livelihood security and resources to withstand the changing physical landscape and the significant increase of climate and economic shocks.

In 2024, Global Fairness Initiative (GFI), an international NGO with experience in evaluating economic empowerment of women, assessed the impact of SEWA’s and AIF’S on-going initiatives designed to engender inclusive financial growth and development through climate resilience. The following report focuses specifically on SEWA’s and AIF’s efforts, and the economic and social impact of those efforts, while also articulating the investment framework and financial partners and model used within each case study. The purpose of the report is to present different case examples of climate-linked financial models and their scope, structure and impact.

Through primary and secondary data collection, GFI’s assessment found that small and marginal producers, mainly women, gain stability and security as a result of targeted financial solutions that address specific climate challenges. When initial investments are activated, women producers reported sustained increases in their income, and a reinvestment of their income into their businesses and to climate friendly solutions linked to livelihood security. Furthermore, opportunities for expanded investments by SEWA and AIF to sustain and scale up successful models can provide further wrap-around support to deepen resilience against climate shocks for workers and communities.