United Nations
Information Centre | Nepal
Way out of Informality Facilitating formalization of informal economy in South Asia
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The informal economy (IE) in Bangladesh, India and Nepal is estimated to absorb 50 to 60 percent of the non-agricultural working population (comprising wage labourers, the self-employed, unpaid family labourers, piece-rate workers and other hired labourers). This share rises to 80 to 90 percent if agricultural workers are included. The IE not only prevents many people from enjoying the fruits of growth but also contributes to the polarization of society. The dwindling of job opportunities in the formal sector is a major reason for rising unemployment among youth in these countries,which often leads to distress migration or the mindset that “any work for whatever pay will do”. The IE may be formalized by: a) reducing the regulatory cost of formalization; b) linking incentive schemes to the registration and basic compliance with labour and environmental regulations; c)facilitating formalization through institutional channels; d) helping them grow and graduate into formal economy enterprises; e)revisiting the national definition of the informal sector. At the workers’ level formalization may take place through f) formalizing employment relationships; g) extending social security benefits to informal workers; and h) finding new jobs in the formal economy.
Type / Script:
Bulletin or Poster in English
Thematic Group:
 ILO : International Labor & Labor
02.02.00  -  Economic Conditions
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