ILO

Back to index

Way out of informality: Facilitating formalization of informal economy in South Asia - Final Evaluation

eval_number:

1895

eval_title:

Way out of informality: Facilitating formalization of informal economy in South Asia - Final Evaluation

location:

region:

Asia and the Pacific

country:

Asia and the Pacific - regional

---

eval_url:

https://analyticstest.ilo.org/ievaldiscovery/eval/1895

lessons_learned:

description:

Formalizing informal economy is a huge task and requires commitment at the highest level so that required regulatory framework, policies and business environment can be created. Informal economy accounts for more than 90 per cent of jobs in South Asia and under the current business environment and businesses see any regulatory requirement as an added cost to business and hence tend to avoid even the basic step of registration of enterprises. This also implies substantial leakage of government tax revenue. There is a need for creating incentives for bringing businesses under the formal net which requires governments' commitment from the top supported by the business-friendly regulatory framework, simplified single-window business services delivery facilities so that entrepreneurs can register and access required institutional services, and clear standardized business operation guidelines, including any workers' employment arrangements. At the moment there is a lack of clarity in what is required and once entrepreneurs start the process, they get quickly put-off by bureaucratic hassles. Entrepreneurs tend to respond if activities are planned effectively. For example, in Nepal, advocacy and awareness campaign increased the registration of businesses by 24% within one year.

context:

The informal economy is highly unorganized and workers tend to be mobile. The enterprises including micro, small and medium enterprises view formalization as an added cost of doing business. Administrative hassles and bureaucratic procedure tend to deter formalization process.

success:

The ILO Decent Work Agenda and willingness of governments to address the challenges faced by informal workers demonstrated by their commitment to the ILO Recommendation 204; willingness on the part of trade unions to bring concerns of informal workers to the tripartite mechanism.

challenges:

Inadequate representation of informal workers on the tripartite mechanism, no clear incentives seen due to formalization; civil disturbances in Bangladesh and Nepal during implementation; project activities start-up delays in India.

administrative_issues:

Inadequate resources available, and available resources spread over too many activities.

comments:

ILO DWT, ILO CO (Dhaka, Kathmandu and New Delhi) and other ILO offices in sub-region, region, and headquarters; Ministry of Labour and Employment; local governments; trade unions; and the workers in the informal economy.

url:

https://analyticstest.ilo.org/ievaldiscovery/lessons/194776

themes:

theme:

Informal economy

category:

Employment

---

---