Informalization of Labour Market

The number of people engaged in informal employment has risen in the past decades in developing countries, despite the achieved economic growth. The trend is called “informalization”. It can be ascribed to the decline in average per capita GDP growth. The conditions in developing countries have undergone a major transformation.

Informal forms of employment include, agricultural day labourers, urban street vendors, paid domestic work, or at-home producers of clothing or other manufactured goods. A high proportion of informal workers are self-employed. In most countries, women are employed in such informal jobs. The income of the workers received from informal employment is very low. These workers and their families have to live at the edge of poverty or even under the poverty-level.

Informal jobs are outside of the sphere of government’s supervision over the labour markets. This means the informal workers do not have formal contract that might protect them to a certain level from losing their job. They are not protected regarding the working hours, health and safety at the working place. Their wages and the fact whether they will get them on time and in full sum are not embedded in any formal document that would ensure its validity and the right to be executed. Such workers are not given any type of mandated benefits that would normally be a feature of “formal” employment opportunities, either in private sector firms or in the public sector.


One thought on “Informalization of Labour Market

  1. There are a lot of people working illegally all over the world. Not only people working without papers or in illegitimate job, but also immigrants – people without permission. The informal job which implies absence of formal labour contracts and fringe benefit, can be on the one hand profitable of course for both: employer and employee. It saves the money for taxes.
    One the other hand is not advantageous for employee, because of no possibility to take a loan or other fringe benefits and working years that are no counted in pension. For state is one of the main leak of money.
    I found out these sectors in which are most illegal immigrants employed: agriculture, building and civil engineering, small-scale industry, tourism and hostels. One reason why those sectors tend to employ mainly immigrant labour is greater flexibility to production work as the seasonal activities.
    Taking all into a account, one of the worst thing about it are illegal works that involve drugs and child prostitution. Most of all, it underlines the fact that resolving the problem of the undeclared worker requires more than just policies to control migration flows.


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