Transcript Social_Protection-Ma..

SOCIAL PROTECTION AND
THE INFORMAL WORKFORCE
Marty Chen
Harvard University
WIEGO Network
REMARKS
• Context
– increasing informality
– widening institutional mismatch
• Scale and Nature of Problem
• Reducing the Coverage Gap
– guiding principles
– promising examples
– key preconditions
CONTEXT # 1:
LARGE AND GROWING INFORMAL ECONOMY
• share of informal/unprotected employment in total
employment:
– developing countries: 60-90 %
– developed countries: 25-40 %
• informality is expanding: both – old forms + new forms
– self-employment + wage employment
• informality is expanding: under conditions of both – labour market regulation + labour market de-regulation
– economic growth + economic stagnation + economic crisis
CASE OF INDIA
• Composition of Workforce: 2001
< 10% formally employed
50% self-employed
40% or so engaged in informal/unprotected
jobs (notably in agriculture but also in
construction, manufacturing, and services)
• Trends in Workforce: under conditions of high GDP
growth
• decline in wage employment
• increase in self-employment
Source: ILO 2002 and Chandrasekhar and Ghosh 2006
CONTEXT # 2:
INSTITUTIONAL MISMATCH
• social security systems: premised on model of modern
industrial job + male breadwinner (rather than multisectoral labor markets + multiple earners)
• social safety nets: premised on notion of short-term residual
social problem (rather than long-term central economic
problem)
SOCIAL PROTECTION AND
THE INFORMAL WORKFORCE:
STATUTORY SYSTEMS
• formal system: in most developing countries, covers only
5-20% of total labour force
• extension of some components of formal system to some
informal workers: a few countries with limited and
targeted coverage
• universal system for all workers: growing number of
country-specific models
• alternative schemes for informal workers: many
countries with a patchwork of small schemes
• safety nets for informal workers: growing number of
countries since financial/economic crises of late 1990s
Coverage of Formal Pension Systems in South Asia,
Latest Year Available, Preliminary Data (in %)
SOCIAL PROTECTION AND
THE INFORMAL WORKFORCE:
VOLUNTARY SYSTEMS
• market-based systems: often too expensive for the working
poor in the informal economy
• NGO systems: mostly pilot schemes with low coverage
• mutual systems: very region-specific with low coverage
• traditional “informal” systems: low and declining coverage
+ limited provisions
CASE OF INDIA
• formal social security system: only 6-7% of the
workforce
• patchwork of other schemes: only 4-5% of the
workforce
• little or no formal system coverage: 90% or so of
the workforce
Source: NCEUS 2006
UNDERSTANDING THE COVERAGE GAP:
GLOBAL VALUE CHAIN # 1
Horticulture Sector in Chile
1. Continuum of Employment Arrangements
Permanent workforce (small core)
Temporary or seasonal workers
Casual workers for short periods or on a daily basis
Contract labourers – employed by a third party labour contractor
Smallholder producers
2. Social Security Coverage
percent contributing to a pension plan:
permanent workers – 52%
temporary workers – 33%
other workers –
0%
2001 - official commissions set up to offer the following to temporary
workers:
occupational health and safety
child care
training
UNDERSTANDING THE COVERAGE GAP:
GLOBAL VALUE CHAIN # 2
Garment Sector in Thailand
1. Continuum of Employment Arrangements
Formal workforce in factories (small core)
Agency workers in factories – supplied by a third part contracting company
Industrial outworkers in small workshops or at home – sub-contracted to a
third party contractor
2. Social Protection Coverage
Formal workers – employer contributions to social insurance +
full package of worker benefits
Agency workers – employer contributions to social insurance +
sick leave with hospital certification
Industrial outworkers – no employer contributions to social
insurance + no worker benefits
REDUCING THE COVERAGE GAP
FOR INFORMAL WORKERS:
GUIDING PRINCIPLES
Reducing the social protection coverage gap for informal
workers will require:
• context-specific mixes of statutory and private
systems
• schemes that are redistributive in nature and that do
not download risks or risk management onto the
working poor
• collective action and contributions by all
stakeholders
REDUCING THE COVERAGE GAP
FOR INFORMAL WORKERS:
PROMISING EXAMPLES
• extended statutory social protection: for embroidery
homeworkers on island of Madeira
• industry-funded social welfare funds: for bidi-rollers and
other sector-specific groups of workers in India
• voluntary retirement fund: for informal worker members of
Ghana Trade Union Congress
• voluntary health and pension insurance: for informal
workers in Costa Rica
• voluntary life, health, and asset insurance scheme: for
>100,000 of SEWA members in India
REDUCING THE COVERAGE GAP
FOR INFORMAL WORKERS:
KEY PRECONDITIONS
To ensure that social protection systems are accessible to and
appropriate for informal workers will require:
– official visibility of informal workers in national data on
social protection coverage - through improved national
statistics on all forms of informal employment
– representative voice in the design of social protection
systems – through participatory processes and inclusive
institutions
THANK YOU