The Essential Asset of The Underdevelopment Country

An essential asset of an underdevelopment country includes of small and tiny production organization run based on informal, self-employment. Informal employment is a widespread feature of today’s global economy. On average, informal employers have lower earnings and face higher risks than formal workers. Policies should seek to raise the wages and decrease the risks of the working poor in the informal economy. In its 2002 report Decent Work and the Informal Economy, the International Labour Organization (ILO) said the goal is to reduce the “decent work deficits” of informal workers, who tend to experience greater deficits than formal workers in four dimensions: opportunities, rights, protection, and social dialogue.

Following is the brief summary of Urban Informal sector’s Policy:

Both economic and social policies have a great effect on the informal economy. While no single method can address the concerns of all categories of informal enterprises, activities, or employers, there is a growing concurrence that an all-inclusive policy framework should necessitate four broad goals:

First of four is create more job opportunities, preferably formal jobs, through labour-exhaustive growth:

Some argue this can be done through employment policies alone; others believe that employment goals must be integrated into development strategies. Some also contend that the overall structure of employment opportunities must be transformed to allow the working poor to take advantage of available opportunities.

Register informal enterprises & regulate informal jobs: – Registering and taxing informal enterprises should be done by simplifying bureaucratic procedures and offering benefits and incentives in return for paying taxes. Concurrently, appropriate regulations should discourage employers from hiring workers informally—or informalizing existing jobs. Employers should be encouraged to contribute to health coverage and pensions for their workers and extend other benefits.

Extend state social protection and legal protection to the informal workforce: – There is a growing consensus that universal health care and pensions coverage are needed, though little agreement on the appropriate role for of government regulation and public expenditure, and the mix of public versus private provision.

There is also a need to extend legal protection to informal workers. The United Nations Commission on Legal Empowerment for the Poor has prioritized three areas: property rights, labour rights, and business rights. In most countries, this will require reforming existing legal regimes as informal workers are not covered under existing labour regulations or commercial/business laws. But many informal activities are governed by industry-specific regulations (e.g. those governing trade in fresh food) and undermined by local regulations that discourage or ban informal activities.

Increase productivity of informal enterprises & incomes for informal workers: – There are two ways to achieve this. The first is to increase the positives: through supportive measures to improve assets and market access, to provide legal identity and rights, to raise productivity, and to improve terms of trade or employment the second is to reduce the negatives: through measures that reduce risks and address market power imbalances, and that reduce policy or institutional biases which work against informal enterprises. This requires recognizing how market power imbalances and policy biases favour large formal enterprises over smaller informal enterprises, formal workers over informal workers, and men over women within these categories. The challenge is to monitor the impacts of different policies on different categories of the informal workforce and to address negative impacts.