Trade unions and the informal sector:

Towards a comprehensive strategy

Preface

In most developing countries the informal sector is vast, heterogenous in terms of activities and occupations, and expanding rapidly. At times the sector is characterized as innovative, dynamic and a provider of opportunity for those with entrepreneurial spirit. Yet working conditions in the sector are normally oppressive and often unsafe; incomes of unregulated wage earners and the self-employed are usually at or below the poverty line; access to state-provided social protection, training, and social services is severely restricted; exploitation and infringement of workers’ rights are common. For the vast majority of dependent and own-account workers the informal sector is not a stepping stone to improvement but a strategy for survival.

The ILO has been researching and proposing policies on the informal sector for almost 30 years. The general policy approach traditionally advocated by the ILO has been a compromise that attempts to preserve the income-generating potential of the sector while removing exploitation and gradually raising employment standards. Over the years the international trade union movement has kept abreast of this research and actively participated in tripartite discussions regarding this sector. The search for consensus between the interests of employers, trade unions and governments in debates about the sector have resulted in endorsement of the compromise mentioned above, which aims at the gradual integration of the informal sector into the modern economy.

In the last decade trends in the magnitude and nature of informal sector activities have diverged significantly between the different regions. Yet nowhere is the pace towards integration into the modern sector adequate, and in the vast majority of developing countries the informal sector continues to multiply and act as a magnet drawing incomes and labour standards of workers in the modern economy down towards the lowest common denominator. Faced with these trends, trade unions increasingly realize that it is time to re-examine and expand upon the policies that should be implemented by the State if the rhetoric about gradual integration of the informal sector is to be realized.

The ILO also appears ready to re-examine and re-evaluate policy proposals regarding the informal sector. In his Report, entitled Decent work, to the 87th Session (1999) of the International Labour Conference, the Director-General has stated:

The ILO is concerned with all workers. Because of its origins, the ILO has paid attention to the needs of wage workers — the majority of them men — in formal enterprises. But this is only part of its mandate, and only part of the world of work ... The ILO must be concerned with workers beyond the formal labour market — with unregulated wage workers, the self-employed, and homeworkers. ... All those who work have rights at work. The ILO Constitution calls for the improvement of the "conditions of labour", whether organized or not, and wherever work might occur, whether in the formal or the informal economy, whether at home, in the community or in the voluntary sector.

The Director-General’s statement is an invitation for the trade union movement to develop and articulate more detailed policies for the informal sector within the ILO framework. However, to participate successfully in the debate about the reorientation of activities being foreshadowed by the Director General, the trade union movement will require a coherent and comprehensive package of policy proposals that cover the full spectrum of ILO technical fields. In particular, trade unions need to be prepared to make proposals about how ILO activities and policy in the following fields should evolve to reflect adequately the needs of workers in the informal sector: labour standards and labour legislation; macroeconomic and employment policy; training and human capital development; social protection; and small enterprise development. This Symposium provides an opportunity to start preparing for this challenge.

However, regardless of how debates within the ILO on the informal sector evolve and how governments respond to trade union policy proposals, it would be unrealistic to assume that this sector will be rapidly integrated into the modern economy. Unfortunately trade unions must assume that this sector will be a prominent feature of most developing and many industrialized economies for the foreseeable future. Given this prospect, and the challenges to trade union strength that result from the growth of the service sector and atypical forms of work in the modern economy, most unions realize that they need to alter their internal priorities, review their allocation of resources and develop new strategies in order to organize the unorganized; represent the interests of all workers; and establish coalitions with groups that share common social interests. Indeed, many unions are already experimenting with new strategies in these fields.

This Symposium, which will take place in Geneva from 18 to 22 October 1999, will bring together trade union representatives from both developing and industrialized countries. It will provide participants with an opportunity to discuss the challenges that confront trade unions in the informal sector and to begin developing a comprehensive strategy in response: a strategy that is directed towards the State and relevant international organizations, including the ILO, as well as covering the internal trade union issues mentioned above. This background paper begins by reviewing and attempting to make accessible the conceptual and definitional issues that often contribute to the complexity of discussions on the informal sector. Chapter 2 concerns the role of the State in the informal sector, followed in Chapter 3 by a review of recent developments in trade union policy on the informal sector. Chapter 4 should be the focus of attention and debate at the meeting. It attempts to provide some thoughts and proposals for a comprehensive trade union strategy on the informal sector that participants may wish to discuss, modify and elaborate upon in light of their trade union experience and country-specific knowledge.

This background paper has been prepared by the Bureau for Workers’ Activities. It draws upon the written work of and discussions with a wide range of ILO colleagues, both past and present, who have been generous with their contributions. Many friends within the trade union movement also responded rapidly to requests for information and examples of successful innovations. However, given the broad scope of the topic, this report is neither exhaustive nor conclusive and should be considered a work in progress that will be refined and expanded in light of the discussion at the meeting.

Contents

Preface iii

1. Features of the informal sector

1.1. Defining the informal sector

1.2. Magnitude and trends

1.3. Activities and occupations in the informal sector

1.3.1. Common features

1.3.2. Mobility of the workforce and complementarity of the sectors

1.3.3. Socio-economic gender polarization in the informal sector

2. The role of the State in the informal sector

2.1. The impact of deregulation and structural adjustment policies on the informal sector in the 1980s and 1990s

2.2. The role of labour standards and labour legislation in the informal sector

2.2.1. The impact of labour standards on productivity

2.2.2. International labour standards and the informal sector

2.2.3. Labour legislation and the informal sector

3. The trade union response to the informal sector challenge

3.1. Changing attitudes and policies at national and local levels

3.2. Policies and strategies adopted by international trade union organizations and international trade secretariats

3.2.1. International Confederation of Free Trade Unions

3.2.2. World Confederation of Labour 

3.2.3. International Federation of Chemical, Energy, Mine and General Workers’ Unions

3.2.4. International Federation of Building and Wood Workers

3.2.5. International Textile, Garment and Leather Workers’ Federation

3.2.6. International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations

4. Future trade union strategies regarding the informal sector

4.1. External policies

4.1.1. Labour standards and labour legislation

4.1.2. Promoting good governance and sound labour administration

4.1.3. Tax policy and local government regulations

4.1.4. Social protection

4.1.5. Macroeconomic policy and structural adjustment policies

4.1.6. Employment-intensive infrastructure projects

4.1.7. Promotion of small and medium-sized enterprises

4.1.8. Human capital development

4.1.9. Access to credit

4.2. Internal trade union policies

4.2.1. Establishing priorities and strategies for organizing

4.2.2. Formalization of access and membership

4.2.3. Building alliances and community unionism

4.2.4. The gender dimension

4.2.5. Mobilizing young people

4.2.6. Awareness-raising and the media 

4.2.7. Supporting the development of special services

4.2.8. International trade union networking, codes of conduct and framework agreements

Bibliography

 

1. Features of the informal sector

The term "informal sector" originates from the International Labour Office (ILO). It was used for the first time in the reports on Ghana and Kenya prepared under the World Employment Programme at the beginning of the 1970s. One of the conclusions highlighted in these reports was that the principal social problem in countries such as Ghana and Kenya was not unemployment but the existence of a large population of "working poor", struggling to produce goods and services without their activities being recognized, registered or protected by public authorities.

In the ILO literature, the term "informal sector" has since been used to cover a multitude of characteristics that are specific to the urban "non-modern sector" of developing economies. In the Report of the Director-General to the International Labour Conference in 1991 (ILO, 1991) the term referred to:

very small-scale units producing and distributing goods and services, and consisting largely of independent, self-employed producers in urban areas of developing countries, some of whom also employ family labour and/or a few hired workers or apprentices; which operate with very little capital, or none at all; which utilize a low level of technology and skills; which therefore operate at a low level of productivity; and which generally provide very low and irregular incomes and highly unstable employment to those who work in it. They are informal in the sense that they are for the most part unregistered and unrecorded in official statistics; they tend to have little or no access to organized markets, to credit institutions, to formal education and training institutions, or to many public services and amenities; they are not recognized, supported or regulated by the government; they are often compelled by circumstances to operate outside the framework of the law, and even when they are registered and respect certain aspects of the law they are almost invariably beyond the pale of social protection, labour legislation and protective measures at the workplace.

Thus defined, the notion of "informal sector" covers that part of small-scale income-generating activities which take place outside the official regulatory framework and typically utilize a low level of capital, technology and skills, while providing low incomes and unstable employment.

The concept provided later by the ILO for statistical purposes refers to the informal sector as follows:

... consisting of units engaged in the production of goods or services with the primary objective of generating employment and incomes to the persons concerned. These units typically operate at a low level of organization, with little or no division between labour and capital as factors of production and on a small scale. Labour relations — where they exist — are based mostly on casual employment, kinship or personal and social relations rather than contractual arrangements with formal guarantees.
Production units of the informal sector have the characteristic features of household enterprises. The fixed and other assets used do not belong to the production units as such but to their owners ... Expenditure for production is often indistinguishable from household expenditure ...

Activities performed by production units of the informal sector are not necessarily performed with the deliberate intention of evading the payment of taxes or social security contributions, or infringing labour or other legislations or administrative provisions. Accordingly, the concept of informal sector activities should be distinguished from the concept of activities of the hidden or underground economy. (ILO, 1993.)

This definition of the informal sector expands on issues which were first tackled in the Report of the Director-General of the ILO (1991), particularly with regard to the fact that the term "informal sector" does not include the "hidden" or "underground" economy. A distinction has to be made between those activities which, as a result of the low incomes they generate, cannot afford the cost of legality and those which, despite being profitable, deliberately do not comply with regulations, so as to evade taxes or the law of the land. For the ILO, the latter are not included in the informal sector, in so far as they are not generally associated with survival strategies of the poor. For the same reason, the term "informal sector" is not to be used to encompass criminal and socially undesirable activities such as drug trafficking or prostitution.

Despite the vast amount of research on the subject, the term "informal sector" still lends itself to different interpretations. For example, outside the ILO the term is increasingly used to describe a process of general informalization of the modern economy that is taking place in both developing and industrialized countries, and involves the growth of casual, part-time, contract and other forms of precarious work which is undertaken by workers for enterprises operating in the formal economy.

However, for the purpose of this paper, the term "informal sector" refers to the phenomenon as defined by the ILO in the 1991 Report of the Director-General, as cited above. Therefore, the focus of this paper is largely on developing countries, but it should be acknowledged at the outset that the expansion of the informal economy and the "informalization" of work in industrial countries are related developments. Informal activities are acquiring significance in many industrialized countries, and "grey areas" of informality appear even in the midst of the formal economy.

1.2. Magnitude and trends

Some knowledge of the size and scope of the informal sector is a prerequisite for trade unions that wish to develop comprehensive policies and strategies concerning that sector. The heterogeneity of informal activities, the mobility of the labour force, the seasonal variations and the deficiency of many data-collection systems in most countries are some of the factors which explain the "invisibility" of the informal sector in official statistics. Moreover, the different definitions of the informal sector and measurement methodologies make cross-country comparisons difficult.

Since 1993, the ILO has developed a number of standards to measure informal sector employment. Estimates of urban informal employment in some countries of Africa, Asia and Latin America indicate that it constituted a large part of urban employment in the 1990s (table 1). In most countries, except in Latin America, the proportion of women working in the informal sector is higher than the proportion of men. In Africa, more than a third of women engaged in non-agricultural activities work in that sector (Lim, 1996). Because of job segregation in the formal sector, women have been more affected than men by retrenchments resulting from structural adjustment programmes. The alternative for many of them has been to seek employment in the informal sector, where they are generally found in low-paid precarious employment.

Children are also involved in the informal sector on a substantial scale. Precise data on child labour do not exist. However, the ILO estimates that, in developing countries alone, at least 120 million children between the ages of 5 and 14 are working full time. The number rises to about 250 million if those for whom work is a secondary activity are included. (In these cases where work is defined as a secondary activity for children, trade unions have actually found that work may still be the primary activity but that the children are involved in at least some form of education, although they often drop out of the education system as economic pressures on the family unit increase.) Of these, 61 per cent are in Asia, 32 per cent in Africa and 7 per cent in Latin America. While Asia has the largest absolute number of child workers, Africa has the highest incidence at around 40 per cent of children between 5 and 14 years of age (ILO, 1996a). The reality is that the vast majority of these children are to be found outside the formal sector and participation rates of children in economic activities are higher in rural areas than in urban centres. A recent survey carried out by the ILO in 26 countries found that 70 per cent of the children surveyed were engaged in agricultural activities, with higher ratios for girls than boys. In Latin America and the Caribbean, out of 15 million children involved in the labour market, 56 per cent work in the agricultural sector from the age of 5 to 7 years onwards (ILO, 1999a).

Table 1. Informal labour force in urban areas (selected countries)

Country

Year

Percentage of total employment

   

Total

 

Men

Women

Bolivia

1996

57

 

53

62

Chile

1997

30

 

32

27

Colombia

1996

53

 

54

53

Côte d’Ivoire

1996

53

 

37

73

Ecuador

1997

40

 

39

42

Ethiopia

1996

33

 

19

53

Gambia

1993

72

 

66

83

Madagascar

1994

43

 

43

43

Mexico

1996

35

 

36

34

Peru

1996

51

 

50

52

Philippines

1995

17

 

16

19

South Africa

1995

17

 

11

26

United Rep. of Tanzania

1995

67

 

60

85

Uganda

1993

84

 

68

81

Source: Based on data from the ILO contribution to the 1999 World Survey on the Role of Women in Development (forthcoming).

 

It is evident from the table that the informal economy makes a very significant contribution to production and job opportunities. Consequently, the removal of the informal sector without a dramatic increase in the size of the formal economy would significantly exacerbate problems of unemployment and poverty in these countries.

Moreover, the economic significance of the informal sector seems to be increasing in most developing countries. For example, ILO estimates indicate that in Latin America more than 80 per cent of the new jobs created between 1990 and 1994 were in the informal sector. In the region, informal sector employment grew at an annual rate of around 4.7 per cent, compared with 1.1 per cent in the formal sector. In Africa, urban informal employment absorbs 61 per cent of the urban labour force, and this sector was expected to generate more than 93 per cent of all additional jobs in this region in the 1990s. In Asia, before the financial crisis began in 1997, it was estimated that the informal sector absorbed between 40 and 50 per cent of the urban labour force, with differences between the newly industrializing countries (less than 10 per cent) and countries such as Bangladesh, where the sector’s employment share was estimated at 65 per cent (ILO, 1997a).

Table 2. Contribution of the informal sector in terms of employment and GDP (non-agricultural sector and total)

Country (year)

Non-agricultural

 

Total

Informal sector as a share of non-agricultural employment (%)

 

Informal sector as a share of non-agricultural GDP (%)

 

Informal sector as a share of total employment (%)

 

Informal sector as a share of total GDP (%)

Benin (1993)

93

 

57

 

41

 

37

Burkina Faso (1992)

77

 

40

 

9

 

25

Chad (1993)

74

 

45

 

12

 

31

Colombia (1992) (10 metropolitan areas)

       

55

 

18

Fiji (1990)

       

43

 

2

India (1993-94)

   

47

     

63

Madagascar (1995) (Antananarivo)

   

26

     

17

Mali (1989)

79

 

42

 

13

 

23

Mauritania (1989)

75

 

14

     

10

Mauritius (1992)

       

24

 

19

Niger (1987)

           

30

Philippines (1988)

       

26

 

12

Senegal (1991)

76

 

41

       

United Rep. of Tanzania (1991)

       

22

 

32

United Rep. of Tanzania (1995) (Dar es Salaam)

       

30

 

65

Thailand (1995)

       

6

 

1

Tunisia (1995)

49

 

23

 

38

 

20

Source: Du Jeu (1998).

 

1.3. Activities and occupations in the informal sector

The informal sector is heterogeneous in terms of activities and actors. Sectors of the economy involving informal operators include commerce, agriculture, construction, manufacturing, transportation and services — in other words, virtually every sector. The informal financial sector, including money lenders and money changers, plays a major role in many countries. Almost all crafts and most other occupations can be found in the informal sector: hairdressers, beauticians, money changers, bidi workers, rickshaw pullers, plumbers and mechanics, head load workers, garbage pickers, vegetable sellers, kiosk operators, second-hand clothes dealers, tailors, textile workers, wood carvers, watch repairers, furniture carpenters, charcoal dealers and domestic servants.

For analytical purposes in this paper, the informal sector workforce will be grouped into three main segments: owners or employers of micro-enterprises, own-account workers and dependent workers. The first segment corresponds to the owners or employers of micro-enterprises who employ a few workers and/or apprentices. They do not generally constitute a target group for trade union organizing policies. They may, however, represent a potential negotiating partner since they are directly or indirectly involved in an employment relationship with many of the informal sector workers that trade unions might attempt to represent.

The second segment comprises own-account workers, working alone or with unpaid employees. It includes mainly the self-employed and is the largest segment in the informal sector.

The third segment encompasses dependent workers, engaged in full-time or casual employment. It includes wage labourers engaged in micro-enterprises, generally without a formal contract and working on a regular or casual basis, unpaid workers, including family members and apprentices, homeworkers and paid domestic workers.

In many respects, the problems of workers in the informal sector are closely related to their employment status. For example, the problems facing a street vendor differ substantially from those of a homeworker. Within the same group of workers, the position of men and women differs. Despite these differences, precariousness and vulnerability apply to both the self-employed and the dependent workers in the informal sector in so far as they operate beyond the scope of legal and social protection.

The self-employed create their own one-person business. They work alone or with unpaid workers, generally family members and apprentices. The efficiency of their activities is often hindered by a lack of credit for small investments; technical skills for conducting their activity; raw materials and access to water and electricity supplies. Despite their self-employment status, they may be dependent on other people for their premises and credit. They generally do not have access to the loans of credit institutions because they cannot offer sufficient economic security, and often need to borrow sums that are insufficient compared with the administrative costs of loans. As a result, they are susceptible to exploitation by money lenders. They generally cannot afford the fees charged by official training institutions, and the courses offered by the latter are not necessarily adapted to their basic needs. Their workplaces are often unhealthy and hazardous and sometimes located in areas that discourage potential buyers.

The situation of the self-employed in rural areas deserves special attention, because of the large share of the agricultural labour force in the total economically active population in developing countries (59 per cent) (ILO, 1999a). Reduced trade barriers and other reforms associated with the restructuring of the world economy during the last two decades have resulted in reduced waged employment in agriculture in many developing countries. As a result, the distinction between waged rural workers and the rest of the working population becomes less clear, with everyone working in agriculture facing similar hardships. Evidence suggests that self-employment and casualization of the rural workforce are on the increase in many developing countries. Among the categories of rural non-waged workers or "self-employed" as defined by the Rural Workers’ Organisations Convention, 1975 (No. 141), are smallholders, sharecroppers and tenants; they also include other landless people living in rural areas often with little or no security of tenure in relation to the land they work (ILO, 1990). These categories of workers constitute most of the rural informal sector. This sector is the largest category in the rural class structure in developing countries and is at present growing steadily. A study carried out by the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF) reveals that in countries for which data are available for 1988, the smallholders’ sector accounts for 52 per cent of the rural population and the landless sector for 24 per cent. Latin America has the most disturbing statistics on socio-economic polarization. It is estimated that 71 per cent of agricultural households in this region are now landless or nearly landless (as compared with 69 per cent in 1988), while in Brazil, for example, 1 per cent of landowners control 44 per cent of productive farmland (IUF, 1997).

Street vendors, the majority of whom are women, represent a significant percentage of the workforce in the informal sector. These vendors are certainly the most "visible" component of the informal sector and play an important role as suppliers of a wide range of goods to low- and middle-income families. But they are often seen as a nuisance and sometimes even as a threat to security by the police and municipal authorities. Shopkeepers regard them as unfair competitors. Therefore, they are regularly subjected to harassment and eviction from public areas. Because of the public location in which they operate, their goods can easily be destroyed by natural disasters (such as fire or water), stolen or confiscated. Access to space and basic facilities, such as water and electricity, are their major concerns.

Paid workers in micro-enterprises often face harsh and unsafe working conditions and generally do not have access to many of the benefits that workers in the formal sector receive, such as old-age pensions, health and invalidity insurance, limits on regular working hours and penalty payments for overtime, paid leave and maternity protection. They have limited or no industrial relations strength, they are usually unorganized, and their wages and employment conditions are determined unilaterally by the owner of the micro-enterprise. They can be engaged on a regular or casual basis. In the latter case, they have limited employment security.

Unpaid workers are mainly family members and apprentices. Women and children represent an important percentage of these workers. This type of employment is not necessarily recorded in statistics and is often unpaid because of cultural traditions. Unpaid work is extensive in rural areas.

Workers engaged as contract labour in the informal sector are often at the very end of an invisible chain of subcontractors. In addition to the problems faced by paid workers, they operate in circumstances which enable the employer to avoid legal responsibility for controlling working conditions. This has a direct impact on their occupational health and safety conditions, including hazards due to exposure to chemical agents, or inappropriate weights or technology.

Homeworkers are one of the most "invisible" groups in the informal sector. The total number of workers within this group is certainly underestimated. Nonetheless, anecdotal evidence suggests that homeworking is on the increase all over the world. In developing countries, women represent the majority of these workers. In many societies, for cultural and religious reasons, home work is the only possible way for women to satisfy family responsibilities and income needs. Home work, as defined by the ILO’s Home Work Convention, 1996 (No. 177), refers to work carried out by a person, for remuneration, in his or her home or in other premises of his or her choice, other than the employer’s workplace, which results in a product or service as specified by the employer, irrespective of who provides the equipment, materials or other inputs used. In general, homeworkers are not covered under national labour legislation. The majority of homeworkers work under verbal agreements and therefore their dependent employment status is not recorded and their employer is hidden behind several levels of subcontractors. This deprives them of access to social security. Their working conditions are usually unhealthy and they commonly suffer from overwork and stress. Homeworkers are generally underpaid and, because of competition, are forced to endure long hours of work.1 They are totally dependent on the "middleman" to get work.

Women represent the majority of paid domestic workers. Like homeworkers, they are not visible and their number is underestimated because they are rarely covered in national statistics. However, evidence suggests that these workers constitute a large part of the female labour force in the informal sector in developing countries. Their main problems are long working days, low wages and the daily threat of dismissal. They are exposed to exploitation and sexual harassment.

1.3.2. Mobility of the workforce and complementarity
of the sectors

The above classification of informal sector workers does not adequately reflect the complexity of the sector. In the real world, no clear-cut borders exist between the above segments and there is constant mobility of workers between different employment categories and even occupations, depending on the time of year, the economic situation and the demands of their survival strategies. It may happen that a hired worker leaves the micro-enterprise employing her to set up a business, thereby becoming self-employed or even a micro-entrepreneur. Alternatively, she may hold two jobs or more at the same time. Homeworkers can be engaged in paid labour for some periods and sell directly the same goods and services for the rest of the year. In rural areas, many smallholders supplement their subsistence farming with casual work on large commercial farms during harvesting periods or with non-farming activities at a convenient time of the year. Workers on commercial farms cultivate small vegetable plots, and engage in the production of handicrafts or in other activities in order to supplement their meagre wages.

There are also strong links between the formal and informal sectors. A considerable percentage of workers belong to both the formal and the informal sector. Moreover, households are often part of both sectors, with one member — usually a male — working in the formal sector, and another member — generally a female — working in an informal sector job or running an informal sector business (Venkata Ratnam, 1999). Formal enterprises rely on informal workers to a very large extent to supply services, and the lower- and middle-income groups of the formal sector buy goods and services in the informal sector. The producers and traders in the informal sector have to buy most of their materials and merchandise in the formal sector; often they work as suppliers or subcontractors for formal enterprises. This establishes a mutual dependence, though an asymmetrical one, since informal work can easily be substituted.

While it is true that both men and women work in the informal sector, their position differs in many respects, for example in terms of hours and type of work and also remuneration. The female workforce is concentrated in petty trade and services, where little capital and only low vocational skills are required to start an activity. In the trading sector women are mainly engaged in small own-account activities such as selling food, while male traders tend to have larger-scale operations and to deal with non-food activities. In manufacturing, women are mostly in contract work or unpaid family work. In industrial home work, men usually play the role of subcontractors or are responsible for activities such as collecting raw materials and delivering the finished work. They rarely work at home themselves. In the construction, transportation and services sectors women are mainly engaged as casual workers.

In gaining access to credit, women often have to face additional problems caused by cultural and religious factors that exclude them from property ownership as well as from loans without their husband’s approval. Ignorance, high levels of illiteracy and cultural taboos are other factors pushing women towards the lowest paid and most precarious forms of employment in the informal sector.

2. The role of the State in the informal sector

The attitude and policy of the government towards the informal sector will significantly affect the magnitude and the quality of employment in this sector as well as the influence that own-account workers, dependent workers and micro-enterprises in the informal sector exert on other components of the economy. Government policy towards the informal sector varies between countries and has evolved over time in accordance with changing political ideologies and perspectives on the theory of economic development. It does not exist in a vacuum, nor is it unrelated to broader political and economic thinking among government policy-makers.

The role of the State is therefore critical to any policy discussion among trade unions concerning the informal sector. It is essential that trade unions develop and promote a coherent view as regards what economic, legal and administrative policies governments should adopt in relation to the informal sector.

2.1. The impact of deregulation and structural adjustment policies on the informal sector in the 1980s and 1990s

During the late 1970s and 1980s in most developing countries and many industrialized countries economic growth was either non-existent or insufficient to absorb expanding populations; and job creation was too slow to prevent an explosion of unemployment and underemployment. For those lucky enough to have a regular job, real incomes declined, working conditions deteriorated and job security vanished. For the remainder, the only alternative was to try to scratch a living in the informal sector. The important contribution that the informal sector has made to the economic survival of billions of workers is undeniable, and it is acknowledged that there is often considerable entrepreneurial spirit and creative potential within certain components of the informal sector. Very often, mutual support systems emerge in the sector which enable workers to cope with problems and harness new opportunities. Self-help and self-finance networks develop within the informal sector, based on families or friends. In short, informal sector workers are usually innovative, dynamic and flexible — but poor.

It is also generally recognized that the quality of work, the standard of living and the degree of exploitation of workers in the informal sector are unacceptable. Consequently, working in the informal sector amounts to little more than a survival strategy or a second-best solution for the vast majority of people who find themselves confined to working in that sector. Nevertheless, many people would say that a low income is better than no income at all and that any job is better than no job. Despite major concern for the welfare of workers in the informal sector, trade unions would generally concur with these sentiments, provided that public policy is directed at trying to improve the position of workers in this sector and integrate them into the formal sector.

In an effort to reduce the exploitation of workers, it being recognized however that the informal sector can make a valuable contribution as a survival strategy for those outside the formal sector, attempts have been made to strike a balance. For example, the ILO’s Employment Policy (Supplementary Provisions) Recommendation, 1984 (No. 169), calls on member States to recognize the importance of the informal sector as a source of jobs while seeking "progressively to extend measures of regulation to the informal sector", even though account should be taken of the fact that integration of the informal sector may reduce its ability to absorb labour and generate income, at least in the short term.

Part V of the Recommendation, devoted to the informal sector, recommends that member States: (i) elaborate and implement employment promotion programmes to encourage family work and independent work in individual workshops; (ii) promote complementary relationships between the formal and the informal sectors; (iii) provide greater access for undertakings in the informal sector to resources, product markets, credit, infrastructure, training facilities, technical expertise and improved technology; and (iv) seek to facilitate the progressive integration of the informal sector into the national economy while taking measures to increase employment opportunities and to improve conditions of work in the informal sector.

With regard to small undertakings, the same ILO instrument recommends that necessary measures be taken to improve not only the access of these undertakings to product markets, credit, technical expertise and advanced technology but also the working conditions in these undertakings.

However, it is evident from the data presented in the previous chapter about the growth of the informal sector that this strategy of gradual formalization is simply not working. While policies and programmes developed to assist small enterprises are generally addressing entrepreneurs’ problems of access to product markets, credit, technical expertise, advanced technology and managerial skills, the improvement of working conditions in the enterprises is rarely targeted as a goal per se. The justification for this lies in the often unstated assumption that once these enterprises take off, workers’ terms and conditions of employment will automatically improve. This assumption is based on a "trickle down" theory of economic and social development that has proved to be unrealistic.

The dramatic expansion of the sector and its apparent relative "success" when compared with declining job opportunities in the formal economy have induced a romantic view of the informal sector in some circles. During the 1980s and most of the 1990s an excessively optimistic perspective on the informal sector was popularized by the proponents of neoclassical economic theory. Consequently, the development of public policy concerning the informal sector in the last few decades must be seen in the context of the pervasive influence that the standard structural adjustment policies, imposed by the international financial institutions, have exerted on economic development.

As part of the neoclassical paradigm, a new and controversial view of the informal sector emerged. According to this line of thought, rather than trying to restrict or regularize the informal sector, governments should concentrate on creating an enabling environment for it. It was argued that the high costs and the time involved in registering a business, the complexity of administrative procedures and the inadequacy of the regulations to meet the informal sector’s needs acted as deterrents and discouraged entrepreneurs from legalizing their activities. At the centre of the criticism was the assertion that the costs of compliance with labour legislation were particularly excessive, and that this resulted in firms remaining in the informal sector. In addition, for enterprises in the formal sector it was argued that high labour costs would encourage entrepreneurs to reduce their workforce and substitute more capital equipment for labour. In either case, the neoclassical economists claimed that the outcomes were economically inefficient and society as a whole would suffer.

The response advocated by the neo-liberal economists, and at times by the international financial institutions, was to remove the barriers between the formal and the informal sectors by eliminating or reforming a range of regulations in fields such as labour legislation, minimum wages, social security, workplace health and safety, and taxes, as well as regulations concerning the registration and administration of an enterprise. The proponents of these reforms argued that they would free private initiative and the economic potential of the self-employed and micro-enterprises operating in the informal sector (de Soto, 1989). The whole emphasis switched to deregulation and withdrawal of the government to ensure that the private sector was not "crowded out" by public investment or overburdened with government red tape. These policies were pursued first, and most vigorously, in a number of Latin American countries, but they spread to other regions and assumed centre stage globally.

This policy towards the informal sector was part of the broader laissez-faire approach to economic policy and the dominance of sheer self-interest in the 1980s and most of the 1990s. In this period the focus of economic policy narrowed from the pursuit of broad-based development, full employment and high levels of income for all to concentration on fighting inflation, encouraging private investment and promoting market forces at all costs. The policy package advocated by neoclassical economists for developing countries also included devaluation of the currency; removal of subsidies for basic commodities; reduction of government expenditure on education, health and social protection; employment reductions in the public sector; labour market reforms to increase flexibility and mobility in the formal sector; and reduced trade protection.

The rationale for this policy package was a belief that all government intervention was bad: that government cannot make a positive contribution to jobs and growth and that the economy should be left entirely to market forces. In developing countries it was argued that government intervention had distorted or removed the incentives for export industries, particularly primary industries in which developing countries were thought to have a comparative advantage. The policy measures mentioned above were designed to remove or reverse this situation, thereby creating incentives to increase the production of exportable goods, mainly in the agriculture and resource extraction sectors of the economy. Stabilization policies were also designed to reduce the disposable incomes of urban wage earners and their expenditure on consumption, thereby reducing the demand for imports. The stabilization and structural adjustment policies were expected to stop inflation, correct balance-of-payments problems and encourage private capital inflow. In talking about the policy package in the 1980s, neoclassical economists and representatives of the International Monetary Fund and the World Bank would often talk about "getting the prices right", by which they meant creating the incentives for entrepreneurs in developing countries to produce more basic exportable commodities.

The outcome of these policies was detrimental in most countries. The promised economic rebound through export-led growth failed to materialize in most countries, and unemployment and underemployment increased, while access to health, education and other social services diminished. At the same time, however, marked inequalities in income, access to work and the quality of jobs were reintroduced both within countries and between countries. In part, these inequalities derived from promoting a global economy and powerful multinational companies while simultaneously strangling social protection at national level, eroding worker solidarity and replacing collective responsibility with individualized working relationships.

In most countries the national trade union centres opposed the basic thrust of this policy because of its harsh social impact and failure to produce the promised benefits in terms of economic and employment growth. The international trade union movement consistently pointed to several fundamental problems with the timing, ordering and packaging of stabilization and structural adjustment policies. Trade unions argued that policies should be more country-specific, that the stabilization component was excessively stringent, and that the structural changes should be spread out over a longer period of time and be the subject of tripartite dialogue.

Trade unions also argued that the promotion of tradeable goods through devaluation of the currency and alterations to price incentives was an insufficient response to the economic problems facing most developing countries. In economies with low development, characterized by an absence of basic infrastructure, and by underdeveloped markets and entrepreneurs, and where producers have only a limited knowledge of production technology and market possibilities, it would be unrealistic to expect an automatic supply response to price adjustments resulting from devaluation. In many developing countries dependence on a limited range of primary commodities for export has been a major source of vulnerability to fluctuations in the terms of trade. Therefore, trade unions consistently argued that it was important to achieve an improvement in the trade balance through a diversification of the structure of exports rather than simply selling more primary products. They also argued that production of higher value, non-traditional exports required a redirection — rather than a reduction — of public investment into productive infrastructure and human capital development. It also called for the development of capital markets and new innovative credit schemes targeted at small producers.

It is evident that the response being advocated by trade unions to the structural adjustment programmes and economic problems of developing countries was, and remains, completely inconsistent with the simplistic notion that economic growth and prosperity can be rapidly generated by removing legislative, tax and administrative controls over industry and the informal sector. The trade union perspective recognized that unconstrained market forces are not a panacea for all manner of economic problems and that the State has a fundamental role to play in correcting market failure and fostering economic development through investments in infrastructure, human capital development and access to credit.

The trade union perspective is supported by empirical evidence from ILO research which has, over the last two decades, attempted to examine the real reasons for the growth of the informal sector rather than basing policy prescriptions on predetermined ideological preferences (Tokman, 1992; Maldonado, 1995; Lagos, 1995). For example, Maldonado concludes that the existence of the informal sector results from the "interaction of multiple economic, political, institutional and sociological factors. This conclusion is at odds with the analysis attributing the existence of the informal sector to a single cause (with the law as the main determining factor) and invalidates the neo-liberal thesis which is itself built on a very shaky empirical foundation".

Chapter 4 will examine some possible ways in which trade unions could elaborate on the arguments described above and how, in particular, to make these policy proposals more specific to the informal sector.

2.2. The role of labour standards and labour legislation in the informal sector

The importance of labour standards and labour legislation for the informal sector can be examined from an economic perspective and from a social and human rights angle. The latter is intrinsically important, but we will first consider the former since it is closely related to the discussion immediately above.

2.2.1. The impact of labour standards on productivity

As noted above, the neoclassical model of economic development can be challenged on several fronts. For example, other models of economic development that recognize the existence of market failure, and also appreciate the long-term economic advantages that are derived from preserving and promoting the social fabric of society, lead to vastly different conclusions about the importance of labour standards and labour market institutions such as trade unions. According to the institutional or structuralist model of economic development, we should be concerned about the impact that unfair competition in the informal labour market may have on productivity in that sector and also how it might affect the long-term economic viability of the formal economy (Sengenberger, 1994; Lee, 1997, 1999). Trade unions have traditionally been concerned that in the absence of minimum labour standards a "race to the bottom" with respect to labour conditions would develop, and that this would have adverse economic as well as social consequences. Particularly in countries where there is a large labour surplus, the failure to implement labour standards, such as freedom of association, minimum wages, maximum hours of work, and occupational health and safety regulations, will encourage entrepreneurs to compete through reduced labour costs. It will also reduce or remove any incentive they would otherwise have had to compete through improved products, technology and marketing strategies. The final result is more intense competition in the labour market, increased exploitation of workers, lower productivity, inefficient allocation of scarce resources, slower economic growth and less prosperity for all. Consequently, arguments put forward by neoclassical economists which suggest that deregulation will unleash the creative potential of the informal sector and lead to innovation, greater competition in product markets and the production of higher-valued goods are erroneous.

In responding to the above points the neoclassical economist would probably argue that if it were in the economic interest of entrepreneurs to implement labour standards they would do so without being compelled by the State. Moreover, they would possibly point to surveys of informal sector operators which show that many entrepreneurs believe the financial impact of having to comply with labour laws would force them out of business and this is why they choose to operate outside the formal sector. However, the fact that micro-entrepreneurs might wish to minimize labour costs in the short run, despite the negative impact on productivity, does not necessarily mean that this is an economically rational approach. It simply reflects the fact that most operators in the informal sector are forced, by economic circumstances, to adopt a very short-term perspective. The priority for them has to be their day-to-day survival and immediate cash flow problems, because access to credit is severely limited. In their world there is no "long run". They therefore do not have the luxury of believing that observance of labour standards such as health and safety conditions will result in fewer occupational accidents, which will be translated into higher output, reduced unit labour costs and higher profits.

There is also a "free rider" problem: entrepreneurs in the informal sector will be reluctant to pursue a strategy that might involve slightly higher labour costs in the short term in order to achieve higher productivity and lower unit costs in the longer term, because they fear that other entrepreneurs will refuse to follow the same strategy. The entrepreneur who does not implement labour standards can afford to underprice those who do, and drive them out of business before they have the opportunity to enjoy the productivity benefits that flow from implementing labour standards. This is yet another example of market failure and an economic rationale for government intervention in the form of labour legislation, labour inspection and enforcement of minimum labour standards throughout the economy.

In recent years the ILO has undertaken considerable analytical work and several countries use studies to examine the "cost of legality" in the informal sector in an attempt to assess the competing claims made by the neoclassical and structuralist models of economic theory. For example, Vargha (1992) presents an interesting summary of the labour conditions that a law-abiding micro-enterprise in the United Republic of Tanzania would have to apply to its employees (excluding casual workers). They would not be under 15 years old; they would work not more than nine hours a day and 45 hours a week; they would be paid no less than the minimum wage and would receive pay regularly, in legal tender; they would have one day off in seven; they would have 28 days’ paid holiday a year; they would be provided with appropriate protective clothing and a safe working environment; the employer and employee would contribute to the national pension fund (NPF) for an amount equal to 10 per cent of wages; and employees would be insured for injury, medical aid and occupational diseases.

The costs of all the legal requirements mentioned above were evaluated roughly, and it was concluded that the main reason for entrepreneurs not respecting the legal requirements appeared to focus on high-cost items such as annual paid leave, workmen’s compensation insurance and the contribution to the NPF.

The author concluded that the enterprise could not remain viable if it had to absorb all these costs. However, she noted that some costs could be absorbed simply through better organization of the work and production process. For instance, working hours could probably be reduced and weekly rest respected if the organization of production in the enterprise was readjusted, without additional expenses having to be incurred. This would also improve the performance of the workers. Moreover, according to the author, it is obvious that workers will be better protected against injuries and illness if they are provided with adequate protective clothing. This will result in a double benefit for the entrepreneurs. First, the amount of medical expenses they have to incur and the number of workdays lost will decrease; and second, there will be an improvement in workers’ productivity.

To illustrate this, Vargha presents the example of the workers in a small enterprise in the United Republic of Tanzania producing cooking oil. The seeds from which the oil is extracted produce a large amount of dust and there is no adequate ventilation on the premises. The workers inhale this dust since they are not provided with protective masks. This damages their lungs and makes them susceptible to illness. The owner of the enterprise was conscious of the poor working environment but was not prepared to take any corrective action. However, as the author pointed out, if the owner had access to credit and could provide a more healthy environment, the benefits reaped by such investment would outweigh the cost involved in the workers’ medical expenses and labour productivity would increase. Nevertheless, even in an example like this, considering the financial precarity of small enterprises, ways to decrease the costs of certain safety and health requirements could be examined. Cheaper equipment could be imposed upon small entrepreneurs and/or the cost of such equipment could be considered as an investment cost and could be deducted from tax.

2.2.2. International labour standards and the informal sector

While strong economic arguments can be made, the social arguments for labour standards are even more compelling. The primary objective of the ILO is social justice. This has been defined in the Preamble to the Constitution as the removal of "conditions of labour ... involving ... injustice, hardship and privation to large numbers of people", and has been elaborated on in the Declaration of Philadelphia, which states that "all human beings, irrespective of race, creed, or sex, have the right to pursue both their material well-being and their spiritual development in conditions of freedom and dignity, of economic security and equal opportunity". The Declaration also emphasizes the importance of pursuing policies "to ensure a just share of the fruits of progress to all, and a minimum living wage to all employed and in need of such protection".

At the core of this objective lies a solid consensus derived from the Constitution, to which all member States of the ILO are party; it was confirmed, after the World Summit for Social Development, in the Declaration on Fundamental Principles and Rights at Work adopted by the ILO in 1998. These principles and rights are defined in the core ILO Conventions relating to: (i) freedom of association, and the right to organize and bargain collectively;1 (ii) freedom from forced labour;2 (iii) freedom from child labour;3 and (iv) freedom from discrimination.4

Respect for these fundamental principles and rights is both an objective in itself and a basic means of achieving the other objectives of social policy. These rights are an objective because they are an important part of universally recognized basic human rights, and respect for them is thus a moral imperative. They are a means because "freedom of expression and of association are essential to sustained progress" (Declaration of Philadelphia) and the same is true of freedom from forced labour, child labour and discrimination. This follows from the fact that these are the enabling conditions without which workers cannot exercise countervailing power to achieve improvements in working conditions. Moreover, as a key pillar of political democracy, freedom of expression and of association are also essential for ensuring that economic and social policies advance social justice.

In addition to these core international labour standards, there is an extensive body of ILO instruments which seek to provide practical guidance to member States in pursuit of the following objectives:

(i) ensuring decent and safe working conditions;

(ii) eliminating poverty and income insecurity; and

(iii) ensuring full employment and rising standards of living.

A common criticism of the ILO approach to international labour standards is that it focuses on workers in the organized sectors of the economy. Several points can be made in response to this assertion. First, it is untrue that ILO standards are established only for workers in the organized sector. The problems of coverage arise almost exclusively at the national level, when governments have not yet been able to extend effective protection afforded by national law to all workers. Most ILO standards refer to "workers" rather than the narrower legal category of "employees". An example of the breadth of coverage can be found in Article 2 of the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), which applies to "workers ... without distinction whatsoever". The other fundamental rights are also intended to benefit all workers. The same applies to the standards on, for instance, public employment services and employment policy. At the same time there are standards specifically intended to cover workers outside the organized sector, such as those for rural and home-based workers. For example, the Social Policy (Basic Aims and Standards) Convention, 1962 (No. 117), calls for action to improve the standards of living of agricultural workers that includes the elimination of indebtedness, control over land use and alienation, and the regulation of tenancy. Moreover, where these standards initially apply only to workers in the organized sector, there is sometimes explicit provision for their progressive extension to other categories of workers. For example, as noted in section 2.1, the Employment Policy (Supplementary Provisions) Recommendation, 1984 (No. 169), includes among its general principles the statement that "Members should take measures to enable the progressive transfer of workers from the informal sector, where it exists, to the formal sector to take place". Similarly, the guiding principles set out in the Income Security Recommendation, 1944 (No. 67), after calling for the introduction of compulsory social insurance, state that "social assistance appropriate to the needs of the case should be provided for other persons in want".

Second, it should be noted that international labour standards explicitly take into account the inequality between the formal and informal sectors and contain provisions for minimizing the problem. A basic characteristic of ILO Conventions is that they stipulate minimum standards to be arrived at through tripartite negotiation and consensus and do not prescribe economically unrealistic levels of provision. There is often a provision in relevant Conventions to the effect that standards shall be implemented in a way appropriate to national circumstances. In addition, some Conventions explicitly prescribe that attention be paid to the problem of inequality between the formal and informal sectors. For example, the Minimum Wage Fixing Convention, 1970 (No. 131), states that the determination of the level of the minimum wage shall as far as possible and appropriate take into consideration "economic factors, including the requirements of economic development, levels of productivity and the desirability of attaining and maintaining a high level of employment".

Third, attempts have been made to establish international labour standards that focus on various categories of atypical workers who often operate in the informal sector. For example, in 1996 the ILO adopted Convention No. 177 and Recommendation No. 184 on homeworkers, which are particularly important for this discussion. In 1997 it adopted the Private Employment Agencies Convention (No. 181) and Recommendation (No. 188). The latter instruments call on member States to take action to ensure that workers recruited by private employment agencies are given basic forms of protection such as the right to freedom of association, the right to bargain collectively, and equality of opportunity and treatment, regardless of race, colour, sex, religion, political opinion, national extraction, social origin or any other factor giving rise to discrimination which is covered by national law and practice, such as age or disability. In 1997 and 1998 the ILO discussed the adoption of new standards to protect contract workers. Unfortunately, however, owing to resistance by Employer delegates and some governments, no standards were ultimately adopted on this important subject. However, the International Labour Conference adopted a resolution calling on the Office to undertake further research with a view to re-examining the possible adoption of standards on contract workers in the near future.

Finally, there is the safeguard of the tripartite consultation and cooperation called for in all Conventions, explicitly or implicitly. This consultation and cooperation, especially at the industrial and national levels, is a means of ensuring that narrower interests, such as those of organized labour in the modern sector, do not prevail over general economic and social interests. Thus the Consultation (Industrial and National Levels) Recommendation, 1960 (No. 113), stipulates that such consultation should be conducted "with a view to developing the economy as a whole".

2.2.3. Labour legislation and the informal sector

Labour legislation is an essential means of providing workers with necessary rights and protections and socially acceptable conditions of employment. It can be divided into two components. First, there are basic human rights such as freedom of association and equality. Second, there are usually basic rules for fair treatment on matters such as job security, procedural rules regarding collective relations between trade unions and employers, as well as basic minimum standards on substantive matters such as conditions of work, safety and health, vulnerable groups and income security. The ILO and the vast majority of countries consider that a well-governed society requires a substantial and well-conceived body of labour law on these issues just as it requires systems of legal rules in the commercial and criminal fields. Such rules are needed to provide a framework for stability, order, predictability, and fair and equal treatment, which are essential for productive relations between employers and workers (Yemin, 1995).

To most people it would probably seem equitable and logical that the rights and protections provided through labour legislation should apply to all workers regardless of whether they operate in the formal or informal sector. This conclusion is reinforced if we consider the rationale behind labour legislation. For example, the basic rationale for legislation on collective trade union rights is recognition of the unequal power relationship between an individual worker and the employer. This lack of balance provides ample scope for worker exploitation, which is generally considered socially unacceptable. One aspect of labour law is therefore designed to promote the collective representation of workers in order to even up the scales. Given that informal sector workers are usually the weakest of all in terms of industrial and political strength, it is logical that they should be the main beneficiaries of labour law.

Unfortunately, however, the real world is vastly different and governments sometimes seem reluctant to even attempt to provide a level playing field between the "boss" and the "worker" in the informal sector. There are several factors that explain this situation. First, some observers attribute the lack of state intervention to the paternalistic nature of working relationships in this sector. As noted in Chapter 1, dependent workers in the informal sector often have family, ethnic or geographical ties with the business owner which in theory might reduce the probability of worker exploitation. However, one should not exaggerate the extent or positive image of paternalistic relationships that are to be found in the informal sector. For example, to the extent that family ties do exist, they often involve distant relatives rather than the immediate family and do not automatically prevent worker exploitation. Nor does the existence of family ties at work absolve the government of its basic responsibility for protecting the weak against the strong within the workplace.

Another explanation, more formal and legalistic, of why workers in the informal sector are usually denied the rights and protections laid down in labour legislation is to be found in the nature of the employment relationships that exist in the informal sector. As discussed in Chapter 1, a large proportion of workers in the informal sector are own-account workers or what some observers might call contract workers. Unlike most international labour standards, which are intended to apply to all "workers", the labour legislation in most countries is designed to protect "employees". The legal definition of an "employee" is a complex matter, but in many countries own-account workers, or contract workers, are denied the rights and protections accompanying employee status, even where they are in a situation of subordination or control by a third party (the employer). In other countries own-account workers may enjoy some of the benefits of employee status, albeit with certain qualifications. For example, they may be excluded from certain labour law entitlements such as protection against dismissal, sick pay or maternity leave.

In illustrating these points ILO experts have noted that traditional labour law is premised on the existence of an employment relationship evidenced by a contract of employment in which the employee offers labour to the employer in return for remuneration. Normally, the employer exercises control over the manner in which functions are performed, the work location, working days and hours, etc. As indicated in Chapter 1, many of these characteristics are absent in informal sector work relationships. Consider the following example provided by Tajgman (1996): an informal sector worker is paid on the basis of the number of shoes she resoles in a day, but understands from the person on whom she is clearly dependent for getting the used shoes, sewing equipment and a place to work that she does not have to turn up at her place of work every day or work a fixed number of hours. In a case like this many observers might argue that, despite the obvious dependence of the "worker" on the "employer", the necessary threshold of employer control has not been reached and therefore no contract of employment exists. Most trade unions would probably dispute this finding and argue that because the worker depends on the employer for the inputs, equipment, work location and sale of the final products, she or he should be considered an "employee" and therefore receive the rights and protections provided under labour legislation. In an example such as this it is unclear whether a court or tribunal would necessarily support the trade union case. It is a question of drawing lines, which in most countries is done on a case-by-case basis by the courts and tribunals.

To persons who are not labour lawyers (such as the authors of this background document) the debate would seem to focus on whether the employer can really be considered as the "boss" of the worker. Given the vast number of own-account workers in the informal sector, this will remain a critical and controversial issue. For trade unions, one strategy would be to lobby governments to ensure that the "dependence" criteria mentioned above are adequately reflected in the legislation and that when courts and tribunals are making determinations about the existence of an "employee-employer" relationship they are encouraged to consider fully whether it is feasible for the worker to carry out his or her functions independently of the employer. This issue is closely linked to the debate on contract labour. As noted in the previous section, attempts to adopt a new ILO Convention on contract labour in 1998 were undermined by resistance from employers and some governments. It will be critical for trade union activities in the informal sector to reactivate the international debate on this issue and ensure that international standards are eventually adopted.

For categories of workers other than own-account workers in the informal sector the application of labour legislation should be less controversial. For example, wage earners in informal sector micro-enterprises should be unambiguously within the scope of labour law. In reality, however, most employers in the informal sector do not extend all labour law provisions to their regular employees. ILO studies reveal that benefits such as paid leave, sick leave and overtime compensation are frequently not granted.

Although such a stance by the employer might be predictable, it is perhaps more surprising to learn that ILO studies reveal that most informal sector employees are unlikely to dispute the employer decision about the payment of benefits. ILO surveys show that many informal sector workers consider that labour legislation is irrelevant to their situation and that they do not, and perhaps should not, enjoy the protection and benefits provided by the law. This finding would suggest that governments and trade unions should devote more attention to overcoming problems stemming from a lack of awareness of rights provided under labour laws. They could also organize more systematic campaigns to change the negative perception of labour laws and regulations. Given that they are often seen only as a burden by employers, emphasis should be placed on the benefits gained from their application, especially with regard to workers’ performance and enterprises’ productivity. These issues are taken up further in Chapter 4.

3. The trade union response to the informal
sector challenge

3.1. Changing attitudes and policies at national and local levels

In the last decade many national trade union centres have begun to re-examine and reform their perceptions and policies concerning the informal sector. Several centres have openly acknowledged that in the past they adopted an excessively negative view about this sector and now recognize that significant changes are required. For example, the All India Trade Union Congress has stated: "Preoccupation with the already organized workers has led to the neglect of the task of organizing the unorganized ... The Bangalore Session of the AITUC held in December 1983 gave the call to ‘organize the unorganized’ as a priority task ... Some conscious attention has begun to be paid in a number of places to this task. There are a few achievements on record. But these are altogether too little compared with the magnitude of the task" (AITUC, 1997).

However, this is not replicated in all regions, and in a number of countries it would appear that perceptions and policy within the trade union movement remain unchanged. According to a case study on Kenya (Egulu and Chune, 1999), the role of the Kenyan Central Organization of Trade Unions (COTU) has remained focused on traditional tasks and objectives. It has concentrated on negotiating improvements in salaries, workplace safety, fringe benefits and generally better terms and conditions of employment for the workers it represents in the formal sector. According to the authors of the study, COTU has not done enough to meet the needs of the new working class, let alone to adapt to the trends in the development of new economic systems which have been responsible for the emergence of the informal sector in Kenya.

There are several reasons why many national centres remain sceptical about the informal sector. First, it is assumed that this sector is a transitory phenomenon and that it will be absorbed by the formal sector in time and without the need for action by trade unions or the State. This assumption was — and still is — widely accepted. Unfortunately, however, it does not seem realistic. As was clearly demonstrated in Chapter 1, instead of diminishing, the informal sector is growing while the formal sector is shrinking because of the outsourcing and subcontracting of many of its activities. It has to be recognized that the informal sector is an enduring element of the labour market and will not be diminished or absorbed into the formal sector without concerted efforts by trade unions and major changes in government policies. Moreover, even if the political will existed within governments to implement the promises that have been made about integration, this would certainly not be achieved rapidly.

Second, trade unions face significant problems in trying to maintain and mobilize their members in the formal part of the economy and do not feel that they are in a position to use scarce resources for the informal sector. Many unions consider that this would not be an efficient use of the trade union movement’s human and financial resources. The case studies prepared for this report reveal that there are often very pragmatic reasons for this, including the heterogeneous nature of employment relations, the difficulties in locating and contacting informal sector workers and the barriers to organizing in the informal sector created by the State. In addition, self-employed workers have been viewed as "entrepreneurs", and thus not potential trade union members or appropriate partners for cooperation. Given these conditions, many trade unions at national level have decided to ignore the informal sector completely; or to the extent that they try to coordinate with or organize the informal sector, their involvement is limited to ad hoc events and this is not considered a priority.

Despite this generally pessimistic but perhaps pragmatic perspective about the returns that national unions are expecting from investments in the informal sector, there are other national trade union centres and lower-level unions that have opted for engagement and are committing substantial amounts of time and resources to organizing and/or building bridges between the formal trade union movement and workers in the informal sector.

The focus in many cases is also on improving the situation of own-account workers and micro-entrepreneurs and/or increasing their access to specific services, such as credit, training in managerial skills, marketing and new technologies, information and advice on current legislation, dispute settlement and educational support.

Chapter 4 will examine some of the more promising strategies and practical examples of trade union engagement in the informal sector. It will be evident that considerable creativity has been demonstrated by many trade unions in trying to attract and assist workers in the informal sector. However, it is also evident that, up until recently, trade union activities and policies regarding informal workers have tended to be ad hoc and fragmented. While trade union initiatives involving the informal sector obviously have to start on a small-scale and experimental basis, there is a danger that they will never mature beyond this stage. In the past what has been lacking is an interlinking strategy for joining forces at the local, national and international levels.

To develop the abovementioned national and lower-level initiatives into a comprehensive and coherent package of programmes, support and guidance are required. Fortunately therefore, the informal sector has in recent years become a major policy priority for the international trade union movement. While various organizations that make up the international trade union movement might emphasize different components in the overall strategy towards the informal sector, there is a common concern about the intolerable working and living conditions of workers in this sector. The need for trade unions to reach out to these workers and campaign on their behalf is accepted throughout the international trade union movement. Accordingly, different actions have been promoted to achieve this objective, including research, education and development projects.

Without being in any way exhaustive, the section below presents the views of different international trade union organizations and international trade secretariats (ITSs) that are working towards a model of development in which "all human beings, irrespective of race, creed or sex, have the right to pursue both their material well-being and their spiritual development in conditions of freedom and dignity, of economic security and equal opportunity" (Declaration of Philadelphia, 1944).

3.2. Policies and strategies adopted by international trade union organizations and international trade secretariats

3.2.1. International Confederation of Free Trade Unions

The International Confederation of Free Trade Unions (ICFTU) considers that the growing prevalence of non-structured or informal work does not result from workers choosing to leave formal employment but rather from their being forced to do so in order to survive, or because a growing number of workers have no access to formal employment. According to the ICFTU, the important factors contributing to this trend include the following: (i) the informalization of what have hitherto been formal employment relationships, sometimes as a deliberate act of government policy; (ii) the impact of the debt crisis, structural adjustment programmes and privatization on formal sector employment levels, particularly in the public sector; (iii) the inability or unwillingness of governments and the international community to tackle poverty and ensure sustainable and equitable development, so as to find adequate solutions for those who are locked into a cycle of subsistence or clandestine, exploitative and often illegal economic activity; (iv) corruption in government, enterprises and institutions, which often reinforces exploitative economic relationships; (v) constraints on rural and agricultural development, coupled with the inability of governments to cope with massive influxes of people from the countryside into urban areas; (vi) advances in information technology and transport which enable production to be widely dispersed, including on a global basis, in the absence of international regulation which would ensure responsible business practices; and (vii) insufficient social security coverage, poor population planning and inadequate provision of education and other government services.

The combination of the above factors has resulted in increased marginalization and poverty for a growing number of workers who operate outside the formal sector. As governments have retreated from regulation, and as the effects of globalization have continued in the absence of an effective international framework to regulate economic activity and promote sustainable and equitable development, workers in developing, transition and industrialized countries are increasingly being forced out of formal employment relationships. These workers receive little income, face particular occupational hazards and have little access (if any) to health, community, educational and other services.

The ICFTU firmly rejects the criticism sometimes levelled at trade unions regarding their "lack of interest" in the informal sector, since in fact the workers concerned are often forbidden to join unions and thus to formalize their employment relationship and undertake collective bargaining.

Recent history shows that what is today considered to be the formal sector is largely such because of the activities of unions in the past. The history of the trade union movement has to a great extent been dominated by the struggle to formalize employment relationships and, through organizing, collective bargaining and campaigning, to counterbalance the inequality inherent in the employer/employee relationship. This has usually been accompanied by pressure on governments to support the growth of formal employment, through labour and other legislation as well as industry development strategies. In turn, governments receive tax revenues through taxation of company profits and employees’ earnings, and economic stimulation derived from the increased purchasing power of the workforce.

In this context, the ICFTU considers that it is the primary responsibility of governments to redress the process of informalization of work, a process which slows economic and social development and deprives workers and their families of opportunities to build a better life. A key starting point for trade unions is, in the ICFTU’s view, to continue to press for the maximum application of international labour standards and for governmental and intergovernmental action to formalize economic activity and promote development.

The importance of the application of core labour standards as a basis for economic development was recognized by the World Summit for Social Development, held in Copenhagen in 1995, which through the adoption of the ten Commitments, provided a comprehensive approach, including specific targets and responsibilities for national governments and the international community to tackle poverty, exclusion and the range of major economic and social issues confronting society. The ICFTU regrets that so little has been done by most of the governments which adopted the ten Commitments to fulfil the promises they made at Copenhagen.

Pressing for governments to implement the Copenhagen Commitments will therefore be a high priority for the ICFTU in the coming years, in particular through the five-year review process ("Copenhagen + 5") scheduled for the year 2000. At the international level, the ICFTU supports ongoing attempts by the ILO to promote the implementation of the Summit’s conclusions. The ICFTU will also maintain its strong focus on promoting the reform of the international financial architecture and the inclusion of core labour standards in the policies and programmes of the World Trade Organization (WTO) and a range of other international and regional institutions. International union campaigning to tackle violations of core labour standards in particular sectors and countries also in many cases directly concerns employment which is considered to be in the informal sector, but which is producing goods and services for national and international trade. Securing respect for core labour standards represents the first step in formalizing the various forms of this employment.

At the national level, many ICFTU affiliates are pursuing organizing strategies which take into account the different forms of economic activity in the "informal sector". These experiences have shown considerable potential and will be adapted and expanded within and across countries and sectors in the coming years. The ICFTU considers that the following activities should be promoted and where possible immediately implemented by the trade union movement: (i) seeking to extend union recognition and bargaining relationships from formal sector enterprises to contractors, subcontractors, homeworkers and others where these are producing inputs for (or in some cases using outputs of) the enterprise(s) concerned; (ii) community-based organizing where access to workplaces is denied, including educational and survey work amongst "informal sector" workers to establish contact and help devise organizing strategies; (iii) special awareness-raising and organizing programmes for home-based workers; (iv) organizing programmes for women workers; (v) recognizing that in many countries one worker in the formal sector (for example, the public sector) who may be a union member may provide economic support for a substantial extended family whose members are in informal employment, thus providing a potential linkage between the union and the workers concerned; (vi) maintaining contact with members who have been forced out of the formal sector into non-structured employment; (vii) helping informal sector workers to organize into union or union-associated structures and assisting them in seeking and obtaining permits to operate, and access to government services (for example, education and training, health and social services), as well as in bargaining for better incomes; (viii) supporting the development of mutual funds and cooperatives.

In the opinion of the ICFTU, however, the success of the abovementioned activities will depend heavily on actions by the State to remove the constraints which often inhibit the freedom of democratic and representative trade unions to organize and to represent the interests of all workers.

3.2.2. World Confederation of Labour

At its 24th Congress, held in Bangkok (Thailand) in December 1997, the World Confederation of Labour (WCL) made the informal sector one of its action priorities for the years 1998-2002. The Policy Resolution adopted by the Congress commits the WCL and its affiliates to "set up and/or step up activities to adjust their structures to the needs of the workers ... in the informal economy, and organize a platform for exchange and discussion on their rights and needs so as to: raise their awareness and help them set up trade union structures; unite, should the occasion arise, in production and sales cooperatives in order to raise their working capacity and to enter the formal economic and social sector" (WCL, 1998). By virtue of the Action Programme adopted by the Congress "the WCL and its affiliates make the active commitment to organize the workers from the so-called informal sector, bearing in mind their specific needs and with a view to protecting collectively their interests and to claiming proper regulations" (WCL, 1998b).

The WCL perceives the informal sector as an opportunity, a risk and a challenge. It considers that this sector de facto provides jobs, incomes and livelihoods for masses of poor workers who would otherwise have no other alternatives. In many countries in Africa, 60, 70 or even 80 per cent of families depend on the informal sector for survival. Unlike other organizations, the WCL does not share the view that the informal sector is to be blamed because it does not fit into the traditional schemes of the "formal" economy. Rather, it values the social role of the sector and sees in this a reason for respecting and improving it.

The WCL does not underestimate the damage done by the failure to apply labour laws and social protection to the majority of the workers operating in the sector. These workers are compelled by circumstances to operate in poor and unsafe working conditions as well as with precarious employment relationships. Even when they are adopted or ratified, neither national labour laws nor international labour standards generally apply to the informal sector. For the WCL the informal sector therefore represents a risk, as it exposes workers to exploitation. This is why it advocates the application of minimum legal regulations to the informal sector. It considers that the application of these regulations should go hand in hand with positive incentives aimed at improving the economic viability of activities in the informal sector, for instance in the form of access to credits, and vocational and management training.

The WCL considers that the nature of employment relationships and the instability of activities are only a few of the many factors that make it difficult to set up workers’ organizations in the informal sector. Part of this sector consists of micro-enterprises in which the employment relationship is based on personal relationship, which discourages unionization. Another part is made up of self-employed workers, who tend to seek individualized solutions to their problems. The challenge for trade unions, therefore, lies in organizing these workers. The WCL is committed to achieving this objective through diversified approaches reflecting the specific characteristics of the workers in the informal sector. It believes that this can result only from a long process of contact, training and exchange of information with the workers involved. This implies also, for the WCL, that the workers themselves have to be fully involved in the development and implementation of the organizing strategies. The high proportion of women in the informal sector needs to be reflected accordingly in such strategies.

Many WCL national affiliates have been actively involved in organizing informal sector workers along the lines mentioned above. Many successful experiences are reported. In Côte d’Ivoire in 1990 the National Union of Informal Sector Women (SYNAFSI), which is affiliated to the national trade union centre DIGNITE, was created on the initiative of DIGNITE’s Executive Bureau. The goal of SYNAFSI is to group women in the informal sector according to their particular type of activity (fish sellers, vegetable sellers and fruit sellers, for example) and to give some structure to these groups. As a first step, SYNAFSI has tried to form them into officially registered buyers’ and sellers’ cooperatives. The members benefit from the provision of machinery for their economic activities and training in both enterprise and household management. In Bangladesh, a number of non-traditional groups have started activities, including women in the informal sector, within the WCL national affiliate, Bangladesh Sanjukta Sramik Federation (BSSF). Women’s organizations have set up cooperative structures for their members and have taken a series of initiatives, including in the areas of adult education, mother and child care and productive work. In Latin America, within the Latin American Central of Workers (CLAT) (the regional organization of the WCL for the Latin American region), the Federation of Latin American Commercial and Service workers (FETRALCOS) has devoted increasing attention to the informal economy since 1989. FETRALCOS promotes initiatives to provide the workers in this sector with improved access to credit and credit institutions, as well as skills training. It also supports the creation of cooperatives for those engaged in the informal sector.

3.2.3. International Federation of Chemical, Energy, Mine and General Workers’ Unions

The active involvement of the International Federation of Chemical, Energy, Mine and General Workers’ Unions (ICEM) in the informal sector dates back to the international campaign aimed at the adoption of an ILO instrument on home work. The ICEM was in fact one of the organizations that led the process culminating in the adoption of ILO Convention No. 177 and Recommendation No. 184 in 1996. Since then, attempts to incorporate informal sector concerns into general ICEM policies have intensified.

In recent decades, the chemical, energy and mine sectors have been seriously affected by the changes in the structure and operation of the world economy. Privatization of enterprises and public services in these sectors has been massive, opening up national markets to the domination of multinationals. Even the productive sectors that have managed to survive are often linked to or dependent on multinationals. As a result, they have been forced to organize their technological and structural basis by introducing flexibility in the production process and labour. The production process in these sectors has thus changed considerably, while contributing to making employment more precarious and informal. In Latin America, for instance, the production process tends no longer to be set up by the enterprise; rather, it has been replaced by production chains. The latter often start in modern transnational corporations to end up in technologically backward companies in which workers seldom have any formal contract or any social rights. Moreover, many informal sector workers are to be found on the peripheries of the major production chains.

In this context, precariousness of employment and redundancy have become a major threat for the workers. A survey reveals that of the metalworkers made redundant in São Paulo (Brazil) between 1990 and 1995, only 21.6 per cent found another job in the same metal sector, while 15.2 per cent became permanently unemployed. Of those retrenched, 40 per cent stayed outside the formal labour market (ICEM, 1999a).

It is against this background that the ICEM and its affiliates in the different regions have come to recognize the need to strengthen their organizing efforts, including in the informal sector. A clear message to that effect was sent out by the ICEM’s first African Regional Conference in December 1998. A similar message came from the ICEM’s Regional Conference for Latin America and the Caribbean, which was held in April 1999. A policy document adopted on that occasion (ICEM, 1999a) states that a main objective of the ICEM’s strategy in the region is "to make sure that all men and women workers have their collective agreement, their labour stability and social coverage guaranteed". This requires a new form of organization and a profound reorientation of the content of trade union action. The policy document therefore calls on organized workers "to put the power of their unions in the service of organizing all segments of the working class, particularly women, blacks, Indians, the subcontracted and the informal sector, to create new forms of organization or transform current organizations in order to integrate them". The ultimate goal, as identified by the Conference, is to arrive at a single organization that represents the various categories of workers in a production chain or a branch of production, and defends their different interests.

In analysing strategies for organizing workers in the informal sector, the ICEM is devoting particular attention to gender-related aspects. A policy statement prepared by the Women’s Group of the ICEM, for submission to the forthcoming ICEM World Congress at the end of 1999, acknowledges the overwhelming presence of women’s employment in the informal sector and export processing zones. It recommends, therefore, that the ICEM put a programme in place geared to organizing women in these areas. It is further recommended that the ICEM and its affiliates do as much as possible to develop the protection of homeworkers, most of whom are also women.

Many ICEM affiliates are involved in outreach to the informal sector. In India, the Indian National Cement Workers Federation is organizing small groups, and providing them with training for saving in banks and general health practices. In Africa, a number of unions in the ICEM industries are looking into amending their rule books to allow them to organize informal sector workers. South Africa’s ICEM-affiliated National Union of Mineworkers (NUM) is now unionizing small-scale family mines where many women are active. It also sponsors an agency to assist retrenched miners. The South African Self-Employed Women’s Union (SEWU) conducts a wide range of education activities, dealing with issues such as violence, child abuse and domestic violence, as well as women’s capacity building and training in typical men’s trades (ICEM, 1999b).

In Benin, the cement workers’ union SYNTRAUCIB, affiliated at the national level to the National Confederation of Workers’ Trade Unions of Benin (UNSTB), works closely with informal sector women in rural areas. Through a women’s association (GBENONKPO), the union has organized women in 33 villages into women’s cooperatives. It also helps to hold training seminars for rural women to develop income-generating skills such as conservation of food, soap-making and bee-keeping. The union held discussions with local authorities to organize a market every five days so that women can have an outlet to sell their products and crafts. This has given women an additional source of revenue.

Some projects conducted under the ICEM’s aegis provide scope for further replication in other countries. This is the case, for instance, of a project launched in Zimbabwe in 1995. The project started with a survey to ascertain women’s needs at the workplace in the mining, chemical and electricity industries. These concerns were then turned into collective bargaining demands included in negotiations with employers. Women were trained to carry out surveys, to ask questions and to listen. They also learned how to conduct a mass meeting and about collective bargaining issues and techniques. One of the achievements of the project was that it united women in Zimbabwe, women at work and at home in compounds, and women in formal and informal employment, and along the way helped the process of unionizing.

3.2.4. International Federation of Building and Wood Workers

At the 20th World Congress of the International Federation of Building and Wood Workers (IFBWW), held in Harare in September 1997, the organization of informal sector workers and the issue of contract labour were raised and discussed in depth in addressing the process of modernization of unions. The rationale for this was the recognition that changes in the global economy and employment structure were weakening the ability of unions to protect their members in the construction and wood industries, while contributing to the decline in the percentage of organized workers.

The number of workers in temporary, flexible and informal employment in these sectors is increasing, as are the levels of labour force migration. At the same time, already established patterns of rural migration at the national level have been extended to the international level as companies search for cheaper sources of labour.

The construction industry has historically been based on project-oriented work at changing worksites, and a proportion of the workforce has always been composed of temporary workers on fixed-term contracts. In recent years, however, the proportion of non-permanent workers in the construction and wood industries has increased dramatically. In Asia, for example, around 95 per cent of construction workers and 76 per cent of wood industry workers are not permanently employed. Similar figures can be found in all other regions.

These non-permanent workers may be on temporary, short-term or seasonal contracts, be self-employed or be subcontracted from one employer or agent to another. This increase in the proportion of non-permanent employees and contract labour is occurring at the expense of directly employed permanent workers. These workers are referred to collectively as contract labourers because they do not fall within previously established definitions of the employment relationship. Under accepted definitions these workers are typically not employed by the person or enterprise for whom they work or provide services; they may be self_employed or contracted by their employer to work for another. Many workers in the construction and wood industries fall into this category.

Using this evidence, a paper submitted for discussion to the IFBWW Congress stressed the importance of bringing these workers under the protection of existing international labour standards and welcomed the efforts that the ILO was making at that time to work towards the establishment of a standard on contract labour.

In the IFBWW’s view, recognition of the fundamental employment rights of contract labourers would have positive consequences for the union movement. Unions would thus be able to organize around issues relating to workers’ rights, and the benefits provided by collective agreements would be of interest to larger numbers of workers. In addition, employers would be forced to acknowledge the role of the unions as the sources of unorganized and unprotected workers dry up.

In the paper submitted to the Congress, necessary actions by unions in relation to the informal sector and contract labour were identified in the form of the following ten major points:

(i) evaluating current union organization in the informal sector;

(ii) formulating methods of attracting members who are currently in a weak position, for example without collective agreements;

(iii) identifying specific groups for recruitment campaigns;

(iv) discussing strategies for future initiatives;

(v) identifying areas where contract labour is used;

(vi) determining how to monitor and exchange information concerning contract labour;

(vii) highlighting the need for effective international labour standards;

(viii) identifying appropriate employment standards and deciding how these should be promoted and enforced;

(ix) emphasizing the need for national legal frameworks;

(x) discussing the role of international development agencies and banks such as the World Bank.

One of the IFBWW’s most important tasks is to broaden the membership base within affiliated unions. Under the IFBWW’s proposal, the first step for unions to work towards this objective is to become open to new potential members such as white-collar workers, women, young people, and part-time, flexible and even self-employed workers. The use of campaign issues such as equal rights and vocational training is seen as a means of attracting members.

3.2.5. International Textile, Garment and Leather Workers’ Federation

Workers employed in the textile, garment and leather sectors have always been exposed to exploitation in form of low wages, long working hours, child labour, unhealthy and unsafe working practices, and other abuses of workers’ rights. The problems faced by homeworkers were raised and discussed for the first time in 1894, at the First Congress of the International Federation of Textile Workers’ Associations.

Today the International Textile, Garment and Leather Workers’ Federation (ITGLWF) is the international trade union organization that, with 207 affiliates in 96 countries, represents workers engaged worldwide in the textile, garment and leather sectors. In those sectors, the informal sector consists mainly of homeworkers or self-employed workers, as well as workers employed in small family businesses or small workshops.

The priorities of the ITGLWF with regard to the informal sector have so far been mainly focused on home work. Several resolutions adopted by its World Congresses during the past decades commit the ITGLWF to ensuring that homeworkers enjoy the same labour standards and social protection as those working in factories, including wages, welfare benefits, employment protection and the right of freedom of association and collective bargaining. The Programme of Action adopted at the 7th World Congress in 1996 indicates that the ITGLWF will "encourage affiliates to run campaigns to organize homeworkers, to make them visible, to alert them to their rights and to bring them within the scope of collective bargaining" (ITGLWF, 1996).

It is not surprising, therefore, that the ITGLWF played an active role in the process leading to the adoption of ILO Convention No. 177 and Recommendation No. 184. Assisting affiliates in campaigning for the ratification and implementation of this Convention will be a priority of the ITGLWF in the years ahead. Similarly, it will devote particular efforts to assisting affiliates in running campaigns to organize homeworkers and in support of their rights.

In a world characterized by intense and growing economic competition, however, the ITGLWF considers that the key to alleviating the problems affecting workers in the textile, clothing and leather sectors is to be found at the international level rather than at the national or local level. For the last 30 years, the ITGLWF has been campaigning for new mechanisms to enforce labour rights, including making participation in world trade conditional on countries’ respecting international minimum labour standards.

The textile, clothing and leather sectors have been particularly affected by the erosion of labour standards as employers search for the cheapest sources of production in a globalized economy. Subcontracting in these sectors has been increasingly used as a means of further reducing labour costs; this practice has spread all over the world, particularly in developing countries. For the ITGLWF, the worst forms of abuses of workers’ rights occur in this area.

It is against this background that the action of the ITGLWF in relation to corporate codes of conduct has intensified in recent years. Most of the code of conduct activity has so far centred on the textile, clothing and footwear industries. The hundreds of codes adopted to date have not been followed by appropriate action on the part of most companies to implement or monitor them. Many of the ITGLWF’s efforts are currently geared towards the establishment of an international framework ensuring that the content of codes is adequate to protect workers and that systems are created for the monitoring and independent verification of code compliance.

A number of initiatives have been undertaken in this area. Of these, the one which the ITGLWF considers is having the greatest impact is SA8000. This is a global system of standards for companies to monitor social accountability and has by now been adopted by a number of major retailers or merchandisers. It is implemented through an independent accreditation agency in the United States (the Council of Economic Priorities Accreditation Agency), assisted by an international Advisory Board, which includes representatives of prominent corporations, human rights organizations, certification professionals, academics and trade unions. The Secretary General of the ITGLWF is a member of the Advisory Board. SA8000 certifies that participating companies comply — at all points along the chain of production — with a number of labour standards, including the right to organize and bargain collectively, a ban on child labour and forced labour, as well as other human rights.

For the ITGLWF, codes of conduct are not a permanent solution to worker exploitation, and their proliferation tends to reflect the failure of governments to protect workers through appropriate legislation, thereby leaving it to companies to adopt voluntary undertakings on responsibility for their own labour standards and that of their suppliers and business partners. However, the ITGLWF considers that codes of conduct, if used properly, may be the catalyst that will force governments to examine new mechanisms for the enforcement of workers’ rights, regardless of the location of employment. For this reason, in the coming years the ITGLWF will continue to work closely with affiliates to include in their codes of conduct with major retailers provisions to ensure better conditions for homeworkers.

3.2.6. International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations

At the 20th Congress of the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF), which was held in Geneva in 1985, the problems facing homeworkers were raised and discussed for the first time — through its Indian affiliate, the Self-Employed Women’s Association (SEWA). Since then, the IUF has relentlessly supported the struggle of SEWA and other affiliates with membership in the informal sector in Asia, Africa and Latin America to obtain adequate protection in terms of minimum pay, safety and health standards, sickness coverage and old age pensions.

Together with SEWA, other ITSs such as the ITGLWF and the ICEM, the ICFTU Equality Department, the Netherlands trade union centre FNV and the HomeNet association, the IUF formed the core group which worked towards the adoption of ILO Convention No. 177 and Recommendation No. 184.

Following the merger between the IUF and IFPAAW (International Federation of Plantation, Agricultural and Allied Workers) in 1994, the IUF’s potential membership in the informal sector increased substantially. Currently, the mass of the IUF’s agricultural membership is in waged agriculture or plantations, but a number of small farmers’, campesino and non-waged rural workers’ organizations are already members of the IUF.

The situation of workers in the agricultural sector has always been difficult, since in many countries freedom of association rights in that sector are heavily restricted or even non-existent, often because of the inordinate political influence of land-owning elites. Added to this, the economic restructuring and structural adjustment programmes in the last decades have worsened the economic and social lot of the rural poor since they have transformed the productive system by bringing changes in the labour market. Forms of contracting out of the formal sector and deregulation of wages and labour conditions are common in rural areas. In agriculture, privatization has caused job losses in plantations, an increased casualization of the rural labour force and the marginalization of the most unprotected workers, notably waged rural workers and small subsistence farmers and their families. Rural wage employment is on the decrease, and as a result of different work systems being used to avoid recognition of basic labour standards, trade unions representing wage earners are also facing new challenges.

In view of the complexity of the sector and the considerable resources needed to organize and service this growing workforce, the IUF continues to work closely with other ITSs, community-based organizations, HomeNet and other non-governmental organizations (NGOs). Linkages have been established with peasant organizations such as the Landless Movement in Brazil (MST) and the Zapatista movement in Mexico, the latter organization having formed in 1993 a network and coordinating body of organizations of small and medium-sized producers, agricultural workers and indigenous communities, known as Vía Campesina.

In addition, several codes of conduct have been established on the basis of the IUF’s agreement with certain enterprises in the agricultural sector to guarantee basic rights to workers in the industries within the food chain, from production to food processing.

Through IUF trade union development projects, some aspects of the informalization of work in rural areas have started to be addressed. For many IUF affiliates, SEWA’s experiences have been a source of inspiration at different levels of organization and tripartite negotiations. A new IUF affiliate, the South African Self-Employed Women’s Union (SEWU), used SEWA as a model for its constitution. In Latin America, the Colombian affiliate, FENALTHYS, has been active in organizing workers in the informal sector and promoting appropriate legal measures. More recently (at the end of 1998) another Colombian affiliate, the agricultural union SINTRAINAGRO, has helped small producers of bananas to set up their own organization. In Paraguay, the food and agriculture federation affiliated to the IUF includes informal sector workers.

Today the IUF affiliates in all parts of the world, including in the West, recognize the urgent need to protect the labour and social rights of workers in informal employment. The need to rebuild the organizational strength of the trade union movement at national level through the widest possible recruitment strategies and campaigns (for example targeting the informal sector, casual and temporary workers and women) was reiterated in several resolutions adopted at the IUF Congresses in the 1990s. One of the main problems, however, is the lack of overview and of reliable data on the informal employment situation with regard to the IUF sectors and, consequently, limited capacities for elaborating relevant trade union strategies.

In the coming years, special attention will be devoted to building and encouraging strategic alliances so that rural people can strengthen their voice to influence national and international policies. Some of the areas which will require attention are: (i) ensuring basic rights for rural workers (promoting ILO core Conventions — and their application in the areas of human rights, equality etc. — as well as the Rural Workers’ Organisations Convention, 1975 (No. 141) and the Indigenous and Tribal Peoples Convention, 1989 (No. 169); (ii) empowering women workers; (iii) building international solidarity; and (iv) lobbying intergovernmental institutions. Special attention will be devoted to promotion of the ratification and implementation of ILO Convention No. 177.

4. Future trade union strategies regarding the informal sector

This chapter reviews a range of issues that trade unions at international, national and lower levels need to consider in developing a coherent and comprehensive strategy for the informal sector. Ideally, any such strategy should cover the full range of economic, social and industrial relations issues that impinge on the sector, plus a comprehensive review of internal trade union priorities and strategies. Unfortunately, however, given the extent and diversity of issues that are relevant to the informal sector, the coverage in this chapter is far from exhaustive. Participants in the meeting may therefore wish to raise issues that go beyond the topics covered below.

As noted in Chapter 1, the informal sector is extremely heterogeneous and divergent patterns are emerging in different regions. It would therefore be inappropriate and counterproductive to try to develop a single trade union strategy that is universally applicable. Consequently, this chapter merely raises issues and, where possible, provides some policy proposals as a starting point for discussion. Participants will no doubt want to develop and modify these ideas in the light of their practical experience and knowledge of the cultural and political realities in their own countries. This meeting should be seen as the first step in a process of trade union dialogue and development of policy on the informal sector.

This chapter is divided into two sections. Section 4.1 concerns policies that trade unions may wish to consider advocating for adoption by government, the international financial institutions, the ILO and other institutions outside the trade union movement. Section 4.2 examines some general issues and strategies that the trade union movement itself should consider and possibly adopt in order to enhance the possibility of organizing workers in the informal sector and/or developing better cooperation with workers in this sector. In both sections the emphasis is largely on issues that are most relevant to unregulated wage workers and own-account workers in the informal sector, but at least some of the policy issues considered in section 4.1 are also relevant to micro-entrepreneurs in the sector.

Before turning to the discussion on external policies, participants may wish to consider the basic premise that should underpin trade union policy on the informal sector. As indicated in Chapter 2, the traditional ILO approach to the informal sector is a compromise solution that recognizes the economic and social contribution that this sector has made to the survival of millions of people, who through no fault of their own have been denied the opportunity to work and earn a living in the formal sector. At the same time this traditional approach calls upon the State to take various steps to gradually dismantle the informal sector and integrate the activities and occupations into the modern economy.

While attempts to gradually integrate the informal sector into the formal economy may seem like a reasonable compromise and perhaps the only policy recommendation that developing country governments and their policy advisers in the international financial institutions are likely to accept, the fact remains that this approach is clearly not working in practice.

An important issue for discussion at this Symposium is whether trade unions should accept this as the only pragmatic and politically acceptable perspective. Alternatively, should trade unions adopt a more radical perspective and argue for more immediate action by the State to eliminate the informal sector? While the adoption of such a radical policy line by trade unions is unlikely to command an immediate consensus, and is unlikely to be implemented in the short term, it may help force governments to confront the exploitation and suffering of workers in the informal sector and compel them to become more assertive and at least move a little faster towards formalization of this sector.

However, it is important that trade union strategies be based on a realistic perspective of future economic and social trends. Regardless of the policies that trade unions adopt vis-à-vis state intervention in the informal sector, the trends evident over the last two decades are unlikely to be dramatically altered in the near future. Consequently, in most developing countries the sector will not diminish and in fact may continue to expand. Given this expectation, the argument in favour of attempts to accelerate existing trade union engagement in the sector through organizing activities and to enhance cooperation demands careful consideration. Participants will no doubt wish to reflect on the pros and cons of this approach.

4.1. External policies

4.1.1. Labour standards and labour legislation

There is overwhelming evidence that many basic rights, which are reflected in the core international labour standards concerning freedom of association, collective bargaining, discrimination, forced labour and child labour, are often flagrantly abused in the informal sector.

As indicated in Chapter 2, the most important ILO Conventions and Recommendations have been adopted on the understanding that they will be applicable to all "workers", regardless of the sector, occupation or type of work they are engaged in. A notable example is the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), which states in Article 2 that "workers ... without distinction whatsoever, shall have the right to establish and ... to join organizations of their own choosing".

As was also noted in Chapter 2, the recently adopted ILO Declaration on Fundamental Principles and Rights at Work states that all governments have an obligation to respect, promote and realize the principles set out in the core international labour standards mentioned above. It is important to note in the context of this discussion that the Declaration makes no distinction whatsoever between the formal and informal economies. On the contrary, it states that the provision of these fundamental principles and rights will enable all persons to claim their fair share of the wealth they have generated and to fully achieve their human potential.

In practical terms, the implementation of this Declaration would mean that labour legislation and practice should be reformed to ensure the following:

1. All workers, including those in the agricultural sector, unpaid workers, casual, self-employed and all the other categories of workers who constitute the informal sector, have the same rights of association as are normally provided to industrial workers.

2. Adequate protection is given to all workers, including homeworkers and all the other groups of informal sector workers, against acts of anti-union discrimination in respect of their employment.

3. No work is exacted from any person under the menace of any penalty for which the said person has not offered herself/himself voluntarily.

4. Persons under the age of 15 do not work.1 In the context of the Declaration this would imply that informal sector entrepreneurs should support efforts to move working children from work to basic education.

5. The ILO’s Discrimination (Employment and Occupation) Convention, 1958 (No. 111) is applied. In practice, this would mean that assistance provided to the informal sector in the form of vocational training should be accessible without any distinction based on race, colour, sex, religion, political opinion, national extraction or social origin.

6. The principle of equal remuneration for work of equal value, in accordance with the ILO’s Equal Remuneration Convention, 1951 (No. 100) is also applied to the informal sector, and measures are taken by the State to promote compliance with this Convention. Given the large proportion of female workers in the informal sector, this Convention is particularly important.

A major priority for the ILO and the international trade union movement in the foreseeable future will be the promotion and implementation of this new Declaration. Participants in the meeting may wish to discuss how its contents and implications could be drawn to the attention of informal sector workers. Participants should also be aware that the ILO has adopted a follow-up mechanism to review the extent to which the contents of the Declaration are being implemented. For this process to work effectively, it is imperative that national trade union centres systematically inform the international trade union organizations to which they are affiliated about infringements of core labour standards.

In Chapter 2 it was pointed out that the ILO has adopted various Conventions and Recommendations that relate specifically to workers in the informal sector. The Home Work Convention, 1996 (No. 177) is an important example. Unfortunately, the number of governments which have ratified this Convention remains extremely low. Participants may therefore wish to discuss ways of encouraging governments to ratify these Conventions and ways in which the ILO could effectively promote such Conventions at the country level.

Close cooperation between trade unions at the international level was an important factor in achieving the adoption of Convention No. 177. Participants might wish to consider whether the absence of a similar degree of coordination and cooperation was a factor in the failure to adopt an ILO instrument on contract labour in 1998. Today the views of the ILO constituents on this complex issue still differ considerably. The experience with Convention No. 177 should be examined with a view to mobilizing international support to bring contract labour rapidly back onto the agenda of the International Labour Conference and working towards the successful adoption of a strong Convention on this issue.

As noted in Chapter 2, in some countries the protections provided under labour law are not extended to informal sector employees who are not paid wages but receive remuneration in kind. Labour legislation sometimes draws a distinction between "employees" and "workers", granting certain basic rights to all persons but with more specific benefits being available only to "employees". In those countries where such distinctions exist it would seem appropriate to revise labour laws to provide more specific protection for all workers and, as a minimum, to ensure that legislation on issues such as fundamental rights and health and safety applies to all. Legislation should also ensure that all workers receive appropriate benefits and protection in respect of hours of work, holidays and so forth.

It is interesting to note that ILO surveys show that compliance with some aspects of labour legislation, such as health and safety regulations, minimum wages and working hours, tends to improve as the size of the enterprise increases and as its longevity increases. On the other hand, benefits such as sick pay, workers’ compensation for accidents or death, annual leave and maternity leave are virtually never provided in the informal sector, regardless of the size or age of the enterprise.

These considerations have prompted many observers to suggest that labour standards and labour legislation should be extended to the informal sector on a gradual and selective basis. This would perhaps suggest concentrating attention on the core labour standards in the first instance and thereafter trying to secure compliance with minimum wage legislation, health and safety regulations, and so on. This approach is certainly consistent with the international consensus on labour standards that has emerged over the last few years.

4.1.2. Promoting good governance and sound labour administration

Previous sections of this paper have emphasized the economic and social importance of appropriate labour legislation. However, this does not mean that legislation is always perfect or that the implementation of regulations is without flaws. In fact, one reason often given by people in the informal sector for their non-observance of rules and regulations is a perception that these are costs from which they derive no benefits. Trade unions might therefore consider lobbying governments to rationalize expensive regulations and find less expensive means of meeting desired social objectives. For example, with regard to safety and health requirements, alternative and cheaper equipment could be proposed to small enterprises and this facility included in legislation (see below for further details). Another significant problem is the ambiguous way in which regulations are implemented and the corruption often associated with the collection of taxes and enforcement of regulations. This naturally contributes to the perception of government as a leech on the private sector and that all forms of regulations are an unjustified burden. In these circumstances it becomes morally legitimate, and generally acceptable, to avoid paying taxes and complying with labour legislation or other regulations.

These considerations would suggest that rather than reducing the role of government in the economy, policy-makers need to concentrate on improving the efficiency of government interventions. For the last decade much has been written and spoken about "good governance". In most people’s minds this concept is associated with important "big picture" policies such as promoting democracy, the rule of law, and making the relationship between government, the banking sector and industry more open. However, good governance is equally relevant to the informal sector. ILO studies on the informal sector clearly show that improving the transparency and consistent application of rules and regulations concerning building permits, health regulations, operating licences, registration with local and national tax authorities, and registration with institutions responsible for employment contracts and social security matters would improve the image of the government organizations responsible for these functions, and in turn this may make a contribution towards greater compliance with these types of regulations.

Informal sector workers also face problems which result from power structures and mafia-type organizations that control access to markets. Those power structures are often organized like criminal groups, against which informal workers are helpless because their unofficial status prevents them from seeking assistance from the police or other public authorities. Government action to eradicate criminal activity and at least minimize petty corruption and bribes would significantly help the majority of people operating in the informal sector. However, if governments are going to tackle this problem in a serious way, they must be prepared to pay the public servants implementing these regulations a fair wage, a wage that will allow a reasonable standard of living and does not force public sector workers into corruption in order to feed their families and survive. It is necessary to combine this with additional training for public officials to improve their efficiency and eliminate harassment and corruption. At the same time, the State needs to assume more responsibility for protecting property rights and contractual transactions.

In the past the international trade union movement has fully supported campaigns to improve good governance and eliminate corruption at the highest levels of government. Participants in the meeting may wish to consider how these same principles can be promoted and implemented at lower levels. In this way, the trade union movement will be demonstrating greater appreciation of the problems that confront informal sector workers on a day-to-day basis.

In many developing countries the system of labour administration is understaffed and ill-equipped. Increasing the resources and trained staff available for these functions is an obvious policy conclusion that governments should implement if they are serious about trying to integrate the informal sector into the formal economy. However, this would be an excessively simplistic solution to a complex problem faced by labour inspectors when they try to enforce the law in micro-enterprises. Labour inspectors are often conscious of the precariousness of the conditions in which these small units operate and of the fact that they cannot afford all the costs of the legally prescribed measures. Consequently, in some countries labour inspections enforce the law in a flexible manner. They decide, on a case-by-case basis, the level of compliance that will be required from each entrepreneur. When they think that a certain entrepreneur has the financial means to provide the workers with all the safety equipment or to improve the working conditions, they will fully enforce the law in that enterprise. If not, they will ask the entrepreneur to make incremental improvements.

Some labour inspectors also give advice on cheaper solutions, such as keeping sand instead of fire extinguishers. These kinds of solution might be given more attention. Trade unions may wish to consider promoting the idea that labour inspectors should draw up a list of alternative and cheaper safety equipment that could be utilized by micro-entrepreneurs until they reach a sufficient level of sustainability. However, on issues such as freedom of association, discrimination and worker exploitation there is no scope for flexibility, and trade unions should be urging governments to ensure that their labour inspectors are adequately trained and rigorous in implementing these essential components of labour legislation.

4.1.3. Tax policy and local government regulations

In considering how trade unions might attempt to influence the evolution of public policy on the informal sector it is also important to remember that this sector is extremely heterogeneous, not just in terms of the functions it performs, but also as regards the degree to which it is really "informal". ILO studies have shown that the informal sector is neither entirely legal nor completely illegal. Many enterprises comply with a few basic regulations at the local level and obtain some licences which provide a minimum threshold for operating. In so doing the entrepreneur is minimizing the risks associated with total illegality which could jeopardize the survival of the enterprise. On the other hand, the same enterprises do not comply with what they would consider to be more demanding rules that are enforced centrally by the State, such as tax and labour law obligations.

ILO studies also confirm that, as one might expect, the degree of compliance with the law depends on the geographical location of the enterprise, the size of the unit and the length of time it has existed (Maldonado, 1995). For example, enterprises in urban centres were more likely to abide by the law and regulations, while those in rural areas that are less conspicuous, and more distant from any form of inspection, were less likely to comply. Similarly, the more people that are engaged in an enterprise the greater the probability that laws will be honoured, whereas the single-person or family-operated micro-enterprise is less likely to meet its legal obligations.

This type of evidence has encouraged many economists who share the social values and basic concerns of trade unions about poverty to argue that we should aim for the gradual regulation of the informal sector and adopt a step-by-step approach to integration of this sector into the regular economy. Indeed, as noted at the beginning of this chapter, this has been the basic philosophy of the ILO for the last two decades. It leads to recommendations that reforms be launched at municipal level, where many micro-enterprises already accept and implement some rules and regulations. Tax and other regulations established at regional and central government level should be extended to the informal sector by a gradual iterative process. For example, some ILO economists have proposed that taxes on profits or turnover should be moderated for the self-employed and micro-enterprises or that other forms of tax relief should be introduced which take into account the ability of the informal sector to pay. It has also been suggested that governments consider converting taxes that should normally be imposed on incomes or profits into charges on services that are rendered by the State and utilized by the informal sector.

There have also been suggestions about how to cut non-wage labour costs by reducing or eliminating taxes that are levied on wages paid and would normally be paid by the enterprise if it was operating in the formal sector. The desire to reduce the "tax wedge", which is basically the difference between wages and total labour costs, in order to promote employment is a policy proposal that deserves careful consideration. In theory at least, it would be possible to introduce or increase value-added taxes, capital gains taxes, income tax or any other tax in order to compensate the State for revenue lost through eliminating payroll taxes.

Participants may wish to give careful consideration to the abovementioned policy options. Support for reforms of this nature could help to demonstrate that trade unions are familiar with and concerned about the problems that confront own-account workers and micro-entrepreneurs in the informal sector. Moreover, trade unions can probably accept and support reforms of this nature while simultaneously demanding more systematic intervention by the State in the labour market and with regard to the sound objectives discussed previously.

4.1.4. Social protection

A number of surveys have indicated that micro-entrepreneurs working in the informal sector consider the cost of employer contributions to national social protection schemes excessive and cite this as one important reason for operating outside the formal sector. Currently, over 80 per cent of the population of Africa is excluded from national social protection systems. The same is true of most of the population of all developing countries. Moreover, the international financial organizations and many governments are concerned about the budgetary consequences of state intervention in this field and are experimenting with reforms of social security systems that involve privatization of at least some components of social protection. The trade union movement rightly remains opposed to the most radical reform proposals in this field. However, unions are equally concerned about social exclusion and the fact that significant sections of the labour force in developing countries are denied any social protection. Consequently, there are sound reasons why trade unions are already involved in the debate on the future of social protection, and it would be desirable to find ways of exerting even more union influence over the evolution of government policy in this field.

The key issue in the social security debate should be how to provide protection to those who need it most, including of course workers in the informal sector, at a cost that can be borne by the workers themselves, their employers (if any) and the State. Attempts to provide equitable and universal social protection are seen by many observers, including the trade union movement, as a central factor in diminishing income inequalities in a society.

While employers and neo-liberal economists might argue that the role of the State with regard to social protection should be reduced, we observe that some form of government intervention is necessary in all societies. First and foremost, governments have a critical part to play regarding the redistribution of income to alleviate poverty. Second, it is generally accepted that governments have at least some role in trying to provide all citizens with adequate financial protection in the event of disease, disability, death or retirement. One of the most basic arguments for this form of government intervention is the short-sighted behaviour of many working people who could adequately provide for their own insurance needs. In the absence of a mandatory scheme they would not have the foresight or discipline to contribute to an insurance arrangement to cover disease, disability, death and retirement. By the time they realized their mistake, it would be too late. Nevertheless, even trade unions would acknowledge that government interventions promoting social protection have the potential either to improve or to worsen market outcomes. Consequently, the structure and scope of state intervention need to be carefully considered.

In the light of these very general considerations, participants in this meeting might wish to consider whether it is desirable and politically feasible for trade unions to promote a national debate on the future of social security, which should at least involve representatives of the State, employers and workers. The issues to be addressed could include:

(a) what forms and level of basic protection everyone, including informal sector workers, should enjoy;

(b) sources for financing social protection and how much society as a whole can afford to spend on social protection; and

(c) mechanisms to administer social protection schemes in an equitable manner.

In any such debate there are a number of general points that trade unions may wish to emphasize. First, concerning the definition of basic protection, many case studies have shown that the priority needs of informal sector workers are for benefits in the event of disability or death of the prime earner in the family unit (survivorship benefits for their families). On the other hand, formal sector workers, who enjoy stable and higher incomes, attach an equivalent or higher priority to income for retirement. In most countries disability and life insurance is relatively inexpensive and normally should not cost more than 3-4 per cent of insured earnings. Trade unions could argue that all countries should be able to afford universal coverage at least for these forms of insurance.

Second, in debates about the financing of social protection trade unions are often confronted by arguments such as "country x is spending y per cent of GDP on social protection and this is unsustainable". However, the establishment of a simplistic ceiling on social protection expenditure is unrealistic and undesirable. In the real world it is evident that the amount of money people are prepared to spend on social security — and therefore the level of expenditure that society can afford — is closely related to the type of social security system that has been established. Typically people, and therefore governments, are unwilling to pay very much for schemes that provide "flat-rate" benefits (i.e. benefits that are the same for all regardless of income levels), and particularly so if benefits are means tested. On the other hand, universal social insurance-based systems, in which contributions and benefits are related to the individual’s income level, are often accepted by the population as affordable and desirable, despite the fact that they usually cost two or three times more than "flat-rate" systems.

Third, concerning the mechanisms to administer social protection schemes, the trade union movement may well consider that government intervention and the provision of income transfers are necessary in order to provide the protection needed to workers in the informal sector, given that the take-home pay of workers in this sector is often below the poverty line. From an administrative perspective, in most countries the existing social security institutions probably cannot adequately provide insurance coverage to the informal sector without major alterations to their traditional structure, which is tailored to servicing formal sector workers. Consequently, participants in the meeting may wish to discuss whether other organizations and institutions might be used to administer schemes catering for the informal sector. For example, trade unions might be involved in the administration of schemes for this sector. In any case, unions should be involved in oversight of the national social security policy.

There is another important aspect in the debate about social protection and the informal sector that participants should consider. In the absence of universal social protection schemes, and in the light of increasing social exclusion in most developing countries, many governments, international financial institutions and NGOs have been experimenting with local-level mutual insurance schemes. The ILO is also involved in this field. STEP (Strategies and Tools against Social Exclusion and Poverty) is a global programme launched by the ILO in 1998 and constitutes the operational instrument of the Social Security Department as regards the struggle against social exclusion and the extension of social protection in the informal sector. The establishment and expansion of this programme are based on the assumption that the extension of social protection to the informal sector is not feasible through national systems of social security, which may contradict the arguments outlined above. Those responsible for STEP believe that there is an urgent need for innovation, experimentation and reforms of policies and strategies on social protection, and they are attempting to respond to this challenge. Box 1 contains further details on this programme.

Box 1

The STEP programme

STEP aims to promote and disseminate innovative methods which reconcile social justice, efficiency in management and economic reality. It defends principles of justice and social cohesion through a solidarity-type approach to social protection, founded on active participation by excluded workers in the definition and implementation of more appropriate forms of social protection.

STEP’s strategy is focussed on three main topics:

— Development of knowledge: identification and analysis of the most significant experiences in the world; systematization of teaching and know-how; conceptualization of applied research work; and the production of methodological and didactic tools.

Development of services: consultative services for constituents regarding strategies and policies for the extension of social protection; formulation, execution and evaluation of projects and programmes; dissemination of tools; training; and animation of dialogue networks.

Advocacy: strengthening the ILO’s capacity to play a decisive role in the international debate on the future and the extension of social protection systems in the context of globalization; organization and participation in international forums; high-level publications; development of strategic alliances with the main international organizations concerned; mobilization of resources.

 

The motives behind STEP and these innovative approaches to social protection are honourable and prima facie consistent with trade union objectives of improving the situation of the poor and the socially excluded. Nevertheless, the voluntary grass-roots schemes with which the programme has been working do not offer the same scope for solidarity as national, compulsory schemes covering both low-income and high-income earners. They may therefore be seen as a staging post on the road to compulsory social protection. It is of course vital to ensure that formal sector employers do not see them as a cheap substitute for social security and thus as an encouragement to informalize more of their activities.

For these reasons, the evolution of social protection systems could be central to the whole debate about the informal sector. The outcome of the debate on social protection could be a key factor in determining whether the informal sector is eventually integrated into the modern economy or whether it is allowed to erode labour and social standards in the formal economy.

4.1.5. Macroeconomic policy and structural adjustment policies

As noted in Chapter 2, the criticisms levelled by the trade unions at neoclassical economic policies and structural adjustment programmes have won wide support and are starting to have a profound effect on the international financial institutions. The task which trade unions now face is to elaborate on these economic policy proposals and explain why the policy recommendations being advanced by unions are directly relevant to people in the informal sector.

Informal sector workers face specific problems, such as insecure or costly access to land. As a result, they often squat on public and private property or simply operate on the pavement or street corners. This in turn means that they do not have normal access to basic services such as water and electricity, and inadequate infrastructure — for example, roads, drainage and access to communication facilities — undermines their productivity and ability to expand and succeed. These are some of the issues that trade unions have highlighted in criticizing the standard structural adjustment programmes and in making suggestions to the international financial institutions about how policies should be altered.

Despite this, however, there remains a tendency within the international financial institutions and among many academic economists to misrepresent policy proposals emanating from trade unions as merely representing the demands of a privileged group of workers in the formal sector. Unions are often accused of contributing to what economists call an "insider/outsider" divide between the formal and informal sector.

In recent years the international trade union movement has devoted considerable time and resources to dialogue and debate with officials from the World Bank and the International Monetary Fund. In so doing, it has been conscious of the criticisms about unions, i.e. that they represent only the vested interests of formal sector workers, and has presented policy proposals that are balanced and designed to promote faster economic growth and greater income equality for all workers.

Perhaps in the future trade unions could do more to explain how policies to mitigate the adverse implications of adjustment programmes, the stimulation of aggregate demand, international debt relief and the other policies set out in Chapter 2 will benefit the informal sector. In this context it should be noted that when describing the problems they face, workers in the informal sector often cite the surplus of labour that pushes down incomes, as well as unstable or insufficient demand for their products, rather than the existence of labour legislation and government regulations, as the main reasons why they are forced to operate outside the formal sector. These conclusions would support the arguments presented by trade unions with regard to macroeconomic policy and structural adjustment in the developing world. As noted in Chapter 2, trade unions have consistently been at the forefront of the fight against draconian stabilization measures that have reduced incomes, consumption and public expenditure, thereby further suppressing demand and increasing the uncertainty faced by micro-enterprises and individuals operating in the informal sector.

Moreover, these results would suggest that the neo-liberal policy of complete deregulation is counterproductive if we want to increase incomes, profits and productivity in the informal sector. Because deregulation of labour laws is likely to result in lower wages and reduced real disposable incomes, the demand problems cited by operators in the informal sector will be exacerbated. Without any floor to the wage structure a vicious circle will be established, with lower incomes feeding into lower demand and back into even lower wages. The empirical findings about the factors encouraging people to operate in the informal sector would therefore tend to support the importance of labour standards and institutions such as trade unions which act as a "road block" to the establishment of any such vicious circle and help generate a virtuous circle that produces higher incomes, productivity and prosperity.

4.1.6. Employment-intensive infrastructure projects

As noted above, the international trade union movement has placed considerable emphasis on the need for better infrastructure in developing countries and has urged the international financial institutions to provide greater financial support for this objective in their structural adjustment programmes. This will have obvious benefits for entrepreneurs and workers in the informal sector.

The ILO also has an important role to play in this field and has an impressive record in promoting labour-intensive technologies, as opposed to the use of expensive equipment and technology, in the construction of rural road networks, basic irrigation systems and other forms of infrastructure.

In discussions about priorities for ILO activities and the distribution of resources the Workers’ group of the ILO Governing Body has been very supportive of programmes designed to promote employment-intensive approaches to the construction of infrastructure. The ILO has been involved in both (i) convincing governments and international financial institutions of the merits of this approach and (ii) designing and helping to implement labour-intensive infrastructure projects. Box 2 provides an overview of the achievements of this programme of activities and some examples of national trade union involvement in it.

From a trade union perspective, one of the most important aspects of this programme is that it demonstrates that the ILO can combine support for the establishment of small and medium-sized enterprises (SMEs) in the private sector with enforcement of labour standards. This ILO programme has helped reform the system whereby SMEs tender for public works contracts, so as to ensure that it favours enterprises that utilize employment-intensive techniques. At the same time the ILO has managed to convince governments to adjust contract specifications to ensure that important labour standards are introduced, including those covering minimum wages, non-discrimination, elimination of forced labour, freedom of association and health and safety standards. The use of contract specifications to promote ILO standards in SMEs is a significant step forward and a policy that should be adopted in other ILO activities regarding SMEs.

Box 2

Employment-intensive infrastructure programmes: New opportunities for social dialogue and the involvement of ILO constituents

From the outset, the success of the ILO’s employment-intensive programmes has provided its constituents with a good opportunity for dialogue with economic ministries and with the international financial institutions. As labour-based approaches have become more institutionalized, the Office has sought to increase the involvement of its constituents. An integral component of the policy advice that is provided to countries adopting these approaches is the establishment, in the ministries responsible for investment decisions, of labour-based policy promotion units, of which the steering committees include workers’ and employers’ representatives. One such unit, the Labour-based Policy Promotion Committee (LAPPCOM), was set up in Uganda in 1997. The representation on its steering committee includes the Labour Ministry and the social partners. Similar units are planned in Guinea, Madagascar, Senegal and Togo.

Through these units, ministries of labour, in liaison with employers’ and workers’ organizations, are in a good position to achieve concrete results in the fields of employment and labour policy; to assess the applicability of labour rules and regulations; to protect the right of association; to assist in the development of contract documentation; and to provide contractors and workers with training in subjects related to labour legislation and working conditions. One illustration is Namibia, where the involvement of the Ministry of Labour from the initial pilot programmes onwards has meant that labour inspectors have been directly involved in the on-site training programme for small contractors. Another example is Sierra Leone, where representatives from the Ministry of Labour, the Employers’ Federation and the Sierra Leone Labour Congress have participated in contractor training courses to explain the relevant labour standards. They have helped greatly in the development of a practical code of conduct on labour issues understood by all the relevant agencies and practitioners.

For employers’ and workers’ organizations, in addition to involvement in policy dialogue at the national level, the ILO’s approach to employment-intensive works offers other opportunities. Chief among these is the possibility of extending the reach of representative organizations to unorganized sectors. This opportunity is reinforced through the inclusion of clauses recognizing the right to organize in contractual arrangements. Employers have seized this opportunity, with the establishment of associations representing small contractors in several countries. Such associations give small contractors better visibility and bargaining power vis-à-vis government. Workers’ organizations are also expressing keen interest in collaborating with employment-intensive infrastructure programmes as a vehicle to reach out to workers in the informal sector and to promote job creation and workers’ rights in an integrated manner.

Collaboration with employers’ and workers’ organizations in relation to employment-intensive programmes and projects has embraced a number of policy issues ... The Confederation of South African Trade Unions (COSATU) requested the ILO’s assistance on the issue of remuneration policy for informal-sector workers recruited under the country’s National Public Works Programme. Contacts with the International Confederation of Free Trade Unions (ICFTU) and with the International Federation of Building and Wood Workers (IFBWW) have resulted in a partnership in the development and dissemination of the above guidelines on labour policies and practices and for the introduction of labour clauses into public contracts, in accordance with the Labour Clauses (Public Contracts) Convention, 1949 (No. 94). Furthermore, the IFBWW has requested ILO technical inputs in this field for a number of recent meetings that it has organized on the informal sector, such as the Pan-African Workshop on the Informal Sector in Harare in August 1997 and the IFBWW Construction Committee meeting held at the ILO in May 1998.

Source: ILO (1988a).

For the purpose of this discussion it should also be noted that ILO projects on labour-intensive infrastructure have helped in the establishment of organizations representing the informal and rural sectors, which previously had not had a representative voice. The impact of the activities on expanding employment opportunities for women and the promotion of gender equality through emphasizing the importance of equal pay for equal work and the training of women as technicians and for other responsible positions is a highly desirable one. These projects have also played a constructive role in combating forced labour.

Unfortunately, however, the resources allocated by the ILO to work in this area have declined markedly over the last decade. For example, in 1990 the total number of ILO staff working on promoting employment-intensive infrastructure projects was over 20, whereas today there are fewer than ten ILO staff members working on these projects worldwide. This has significantly reduced the number of projects which can be implemented and the amount of outside resources that can be raised. As a result, the number of countries in which the ILO is active in promoting employment-intensive infrastructure development has declined from over 40 to some 20 today. The Workers’ group therefore recently requested the Director-General to restore the resource base for this programme to a reasonable level; and trade unions participating in this meeting may wish to discuss the links between, on the one hand, labour-intensive infrastructure programmes and, on the other hand, attempts to upgrade facilities available to operators in the informal sector and the integration of the informal sector into the modern economy. Given the record of achievements with labour-intensive infrastructure programmes, participants may wish to reiterate the recent request by the Workers’ group that the regular budget resources devoted to these activities be upgraded.

4.1.7. Promotion of small and medium-sized enterprises

The ILO also has a major programme of activities to promote the establishment of SMEs. This programme could be utilized to improve working conditions and the implementation of labour standards in the informal sector. ILO activities in this field have been consistently expanding in recent years and now include a relatively new programme entitled the International Small Enterprise Programme (ISEP) (see box 3 for details).

The summary in box 3 indicates that ILO programmes on SMEs are not simply geared to promoting entrepreneurship but also aim at improving working conditions and other ILO values. This is an important component of these activities because research published by ILO officials has raised concerns about whether the emphasis placed on improving the quality of jobs in ILO projects is adequate. For example, the paper by Vargha (1992), referred to in Chapter 2, describes an ILO project designed to establish several small enterprises producing salt in the Tanga municipality in the United Republic of Tanzania in the early 1990s. Vargha reports that despite considerable success in establishing viable enterprises and generating jobs, little attention was paid to health and safety issues in this ILO project. Indeed, according to Vargha, "the working conditions are very poor in these farms. Until very recently, none of the workers had boots and gloves to protect their hands and feet from salt damage. None of the workers wear hats and sunglasses to protect them from the sun. If the ‘improvement of working conditions’ was a criterion in the evaluation of the salt production project, its achievements would no longer be considered as successful as if only improvement of the production process and managerial aspects were considered".

Of course, the project described above was implemented several years ago and may be just one isolated example. It is to be hoped that other ILO projects devote more attention to improving working conditions and ensuring that international labour standards and the values of the ILO are fully reflected in project implementation.

To ensure that ILO projects for developing micro-enterprises or small enterprises promote international labour standards, their activities should be systematically aimed at improving working conditions. In many cases it appears that an improvement could be achieved just through the application of existing labour laws. For this reason, training on local labour laws should be automatically included in all courses and activities related to SME promotion.

Box 3
International Small Enterprise Programme

Level of intervention Major types of intervention to support enterprise-based job creation
Business environment
(Macro)
- Promotion of a conducive policy and regulatory environment for small and medium-sized enterprises
  - Stimulation of an enterprise culture
  - Promotion of national tripartite frameworks for productivity
and cooperation improvements
  - Design of national strategies for small enterprise development
  - Reform of cooperative policy and legislation (through the COOPREFORM programme)
  - Advice to central banks to improve the regulatory framework for improved access to credit and finance
Service delivery capacity
(Meso)
- Development of effective support service intermediaries, including tripartite productivity centres
  - Capacity building for employers’, workers’ and similar organizations
  - Promotion of business linkages
  - Human resource development and the promotion of cooperative efficiency (through the COOPNET programme)
  - Development of effective financial retail agents
  - Development of SME credit windows in commercial banks
  - Support for associations of savings and credit cooperatives
Business development services
(Micro)
- Training for business start-up and expansion
  - Entrepreneurship, productivity and management development
  - Identification of business opportunities
  - Facilitation of access by cooperatives to markets and export opportunities (through the INTERCOOP programme)
  - Development of credit guarantee systems
  - Design of micro-finance for self-employment schemes
Others - Promotion of access to social protection and services for self-employed and small enterprises
  - Improvement of working conditions in small enterprises
  - Development of cooperatives for indigenous people (through the INDISCO programme)
Source: ILO (1998b).  

An increasing proportion of ILO projects are executed by national staff who do not receive any briefing on international labour standards, not to mention the requirements of their local labour laws. Therefore, the ILO staff backstopping these projects have to ensure that national staff are given information on national labour laws and international labour standards and on the ILO’s policy of promoting international labour standards through technical cooperation activities.

As regards technical cooperation in general and possible action in the field of safety and health, it could be suggested that projects assisting micro-enterprises provide for some kinds of incentives to stimulate micro-entrepreneurs to improve the working conditions in their undertakings. A prerequisite for this is that due attention be paid to terms and conditions of employment when identifying and elaborating projects. The training component of these projects should include a session on safety requirements that could be elaborated with the collaboration of ILO’s Occupational Safety and Health Branch. The possibility of projects providing safety equipment should also be looked at.

In recent years the Workers’ group of the ILO’s Governing Body has made many other suggestions about how the focus of ILO programmes on the promotion of SMEs might be altered. For example, it has suggested that more resources could be devoted to improving industrial relations in SMEs because poor industrial relations are a major cause of bankruptcy among small enterprises. In particular, it has suggested that the focus be on improving the quality of collective bargaining in micro-enterprises since in many countries policy-makers had decided to decentralize the bargaining process, but often both management and trade unions lacked experience and the necessary skills for constructive collective bargaining at this level.

The adoption of Recommendation No. 189 concerning job creation in small and medium-sized enterprises, at the 1998 International Labour Conference, should be an important factor influencing the future development of ILO activities regarding SMEs. This new Recommendation includes significant references to the following issues: the protection and promotion of workers’ rights; consultation with employers’ and workers’ organizations; gender equality and anti-discriminatory measures, and social protection; measures and enforcement mechanisms to safeguard the interests of workers in SMEs; and the need to promote respect for ILO Conventions concerning freedom of association, discrimination and child labour.

From the trade union perspective the most important principle contained in the Recommendation is the need for absolutely equal treatment of workers in small enterprises and large ones alike. Paragraph 6(1)(b) calls on ILO Members to "ensure the non-discriminatory application of labour legislation in order to raise the quality of employment in SMEs". During the debates on the Recommendation in June 1988 the Workers’ group at the International Labour Conference made it clear that the most important area for action was the ensuring of full freedom of association for workers in small companies. Those sections of the Recommendation calling for action to eliminate discrimination against women in SMEs and specific activities to eliminate child labour in SMEs are also important.

In the context of this discussion on the informal sector, participants may wish to discuss what they consider should be the priority issues for the ILO in promoting and supporting SMEs. They may also wish to discuss whether an appropriate balance has been struck by the ILO in the promotion of SMEs and the labour-intensive infrastructure projects mentioned previously. Finally, participants may wish to reflect on ways of promoting the implementation of ILO Recommendation No. 189 and in particular those aspects of the Recommendation highlighted above.

4.1.8. Human capital development

Policies to promote human capital development through better education and training are of vital importance to workers in the informal sector. Consequently, trade union campaigns to promote universal access to free primary education and access to higher levels of education and training are particularly relevant to people in the informal sector. However, trade union policies in this field perhaps require further development to make them more relevant to the specific needs of informal sector workers. People in this sector usually have little schooling and their ability to upgrade their production and marketing processes is hindered by their lack of access to training. Formal training institutions are normally costly and their courses are not designed for illiterate or semi-literate people, which means that people in the informal sector rely almost exclusively on informal apprenticeship schemes to acquire new skills. Reform of the vocational training and apprenticeship schemes to better meet the needs of informal sector workers would therefore be highly desirable.

A range of possible policy proposals on training are contained in box 4. Participants may wish to consider if and how trade unions could promote these at the national level.

Box 4
Good practice in developing a training strategy for informal sector enterprises

Drawn from good practice in countries where pertinent reforms have been implemented, the following suggestions may be useful in reorientating training systems towards improving conditions in informal sector enterprises:

(i) training for employment should be conceived broadly, meaning well beyond what happens in the typical, government-sponsored, two- or three-year programmes aimed at preparing school leavers for their first jobs in the formal sector; related concepts, notably that of trainee and trainer, should be defined accordingly;

(ii) it is important, before developing a training strategy for informal sector enterprises (or whatever the preferred terminology may be), to reach a consensus about the merits of improving conditions for large numbers of people who work at very low levels of productivity and income, possibly at the expense of some other worthy cause;

(iii) for reasons of feasibility, and on equity grounds, training measures to improve, little by little, conditions in large numbers of informal sector enterprises may be favoured over measures aimed at "picking a few winners"; instead of offering fully fledged training courses, one could think of administering distinct "shots" of skill, aimed at the most obvious weaknesses in enterprise performance; ways and means of encouraging private training providers, including micro-entrepreneurs who might qualify as master craftsmen, to get involved in implementing a modular approach of the sort, should be explored;

(iv) it makes sense in conditions of uncertainty, for example about future skill requirements, to try and make training systems and their product more flexible than what is usually the case; it should be acknowledged, however, that such flexibility is easily compromised by an undue infatuation, common among bureaucrats, with regulation, such as concerning minimum entry qualifications, or in respect of training standards, testing and certification, or as regards conditions to be met by private sector training providers;

(v) while aiming at early results, the basic approach to systemic reform should be to pursue gradual changes in existing structures and procedures; policy-makers, after all, may make mistakes, or fall behind new developments, or underestimate resistance to top-down approaches; there should be ample opportunity for evaluation and for adjustments as appropriate;

(vi) it is crucial to convince training managers, trainers and others concerned of the need for change, to involve them in the design of alternative policies, and to provide them with training and incentives as necessary to ensure implementation;

(vii) the effectiveness of training increases as and when clients are somehow involved in making decisions which affect them; the merits of decentralizing public provision should therefore be explored, including the devolution of control over budgets to training managers; in any event, programme implementers should have room for manoeuvre and be allowed, within limits, to experiment, for example as regards training contents and methodology;

(viii) major changes, even if implemented gradually, are likely to require substantial resources; rather than claim additional government funds, existing ones should be re-budgeted and made better use of, while alternative means, including external resources, are being explored; likewise, it is recommended to rely as much as possible on existing institutions, be they public or private, adapted or regrouped as necessary for meeting new purposes;

(ix) training for work in micro-enterprises should, as necessary, be complemented by before- and after-training services, such as vocational guidance and trouble-shooting in respect of credit or markets or access to technology;

(x) in targeting trainees from groups designated as disadvantaged, one should not be led to believe that their training will do away with the root cause of their disadvantage.

 

4.1.9. Access to credit

A basic message emerging from several ILO surveys on the informal sector is that one of the most important obstacles faced by micro-entrepreneurs and own-account workers is the lack of finance, exacerbated by difficulties in gaining access to institutional credit. Many international institutions and NGOs have established programmes to extend small loans to people in this sector. The international trade union movement has fully supported these initiatives. The ILO has also become active in this field; boxes 5 and 6 describe ILO projects designed to promote access to credit for SMEs and self-employed workers. In the context of this discussion, participants may wish to consider whether and perhaps how ILO micro-credit programmes could be adjusted to incorporate fully and systematically the promotion of core ILO Conventions, while continuing to pursue their primary objective of assisting in the establishment of SMEs. Given that ILO activities in labour-intensive infrastructure programmes have been able to promote a diverse range of social and economic objectives, it would seem desirable for other ILO technical cooperation activities to evolve in a similar manner. Participants may also wish to consider how trade unions could be more fully integrated into the national management and international oversight of these ILO projects.

Box 5
Policy development for access to credit in West Africa

In partnership with the Central Bank of West African States (BCEAO) in Dakar, the ILO has developed a comprehensive programme in support of micro-finance institutions (MFIs). Nearly 2,500 village banks and savings cooperatives in the subregion, with over 715,000 members/clients, have collected US$ 5 million in deposits from some of the poorest members of society. These village banks are the only source of financial services for most households and enterprises. While the volume of credit is still small in comparison with bank loans, the sheer volume of transactions shows that they respond to a genuine need and deserve a supportive environment from the public authorities.

A major weakness of MFIs is their fragmentation and donor dependence. To address this weakness, the joint programme has helped set up a data bank on micro-finance in each of the seven member countries of the monetary union. This has allowed governments and donors to design appropriate staff training programmes and, in particular, an incentive-based regulatory framework. In addition, assistance has been provided to MFIs seeking, for example, to set up an internal auditing system. The package is now being replicated in several other African countries and shows that unusual alliances, in this case between the ILO and a central bank, can sometimes offer powerful ways of addressing key ILO concerns.

Source: ILO (1998b).

 

Box 6
Micro-finance and enterprise creation:
Self-employment programmes for the unemployed

In 1998, an Action Programme was launched to review the performance and cost-effectiveness of micro-finance schemes in self-employment programmes in industrialized countries. Self-employment programmes are a cross between active labour market instruments and measures to promote the private sector. Existing programmes reach between 30,000 (Ireland) and 120,000 (Germany) individuals.

Lack of capital is an important obstacle for anybody starting a business, especially the unemployed. The average capital requirement for starting self-employment was estimated at DM15,000 (US$8,940) to 20,000 (US$11,920) in Germany, I£6,500 (US$9,690) in Ireland, FF50,000 (US$8,888) in France and Hf124,000 (US$12,690) in the Netherlands (exchange rates as at 30 September 1998). This is below the entry threshold for most banking groups. Self-employment programmes respond to this constraint by offering micro-finance facilities, either direct or through intermediaries, such as banks and financial NGOs. Substantial levels of financing are involved: the Bridging Allowance scheme in Germany cost DM 944 million (US$ 563 million) in 1997 alone, while the ACCRE programme in France involved expenditure of FF1.2 billion (US$213 million) in 1996.

Seven countries are participating in the initiative (Canada, France, Germany, Ireland, the Netherlands, the United Kingdom and the United States). Steering groups have been set up at the national level, bringing together the government, banks, the social partners, micro-finance institutions and researchers.

The Action Programme is co-financed by several governments and private foundations and its objective is to inform decision-makers of the merits and weaknesses of different options for self-employment programmes containing micro-finance components. A high-level international technical conference will be held in 1999 to review the outcome and lay the groundwork for future exchanges of best practice.

Source: ILO (1998b).

 

4.2. Internal trade union policies

4.2.1. Establishing priorities and strategies for organizing

Economic restructuring in recent decades has dramatically altered the way in which work is organized, thus rendering traditional organizing strategies ineffective. A number of other factors have also contributed to a steady decline in union density rates in most countries (ILO, 1997; Olney, 1996). What is evident is that the workforce has become more diverse and that "traditional" union priorities and organizing techniques need to be re-examined in this light. Already many unions are attempting to broaden their membership and the mandate of their organizations. It is in this context that the organization of "atypical" workers in the formal sector, as well as employees and own-account workers in the informal sector, has increasingly become a policy issue for the trade union movement.

Today the reality of a restructured and fragmented economy and the individualization of employment relationships make trade union organizing more difficult. Organizing does not mean just recruiting new members in the workplace and providing them with services. It is equally about connecting with current members, potential members and other groups in society who share less and less a commonality of interests in order to build a strong social movement. Organizing therefore means that unions need to refocus on workers, regardless of their employment status or link to a particular workplace.

Organizing the unorganized can be a risky decision because, as noted in Chapter 3, the rate of return on the human and financial investment required is uncertain. Moreover, it requires a long-term commitment and may imply re-evaluating the perception which trade unions have of their "base" as well as the way they operate. The trade union movement faces the challenge of needing to reach out to new groups without undermining its traditional support base. However, the limited experiences reviewed in the process of compiling this paper would tend to suggest that where unions have given priority to organizing atypical and informal sector workers, they have generally had encouraging results. When considering whether to devote more time and resources to organizing workers in the informal sector, several elements need to be taken into consideration.

First of all, as voluntary and democratic organizations unions require the support of their membership, leadership and staff in order to make any changes in their policy. Members must feel that they belong to the organization and that they participate in the decision-making process. Staff must be motivated to accept changes. Experience shows that some attempts by trade union leadership to organize non-traditional workers failed because the membership had not been sufficiently involved in the relevant decision-making and was therefore not committed to the changes in resource allocation that these decisions entailed. Internal support is therefore a prerequisite for the development and implementation of viable strategies aimed at organizing workers in the informal sector.

One way of building internal support is to increase awareness and convince members that organizing will also benefit them as well as the others. Commitment to increasing resources — both financial and human — for organizing can result only from the recognition that growing union density improves the collective bargaining position of all workers and strengthens the position of unions in political and social arenas. Trade union congresses and conventions are usually the appropriate forums for discussing trade union involvement in organizing informal sector workers, and decisions taken at this level are a normal prerequisite for subsequent action and the reorientation of programmes within the union structure.

A recent ILO-ICFTU survey reveals that about a fifth of the unions surveyed and a quarter of the national centres do not currently target any atypical or informal sector workers in their mobilization efforts. But several other unions indicate plans to do so because they recognize that such workers are too numerous to neglect (ILO, 1999b). Among the unions that currently have organizing campaigns, the most common groups of atypical workers targeted are (in decreasing order of total number of unions and national centres indicating organizing efforts) temporary workers, trainees and apprentices, part-time workers, contract workers, casual workers, self-employed, home-based workers, teleworkers and informal sector workers. The same survey indicated that organizing strategies targeting atypical workers are still not a high priority. Unions appear to believe that, rather than organizing such workers, their approach should be to provide guidance, training and other support to enhance the capacity of these workers to organize themselves, and that once this is achieved existing unions will establish alliances with them.

Box 7
Trade union structures and the informal sector in Senegal

The informal sector has become a reality within the Democratic Union of Workers of Senegal (UDTS). Since 1998, the sector has been represented within the national centre by an autonomous federation, the Informal and Rural Workers’ Federation (FETRI). The creation of the FETRI represents the end of a long process in the evolution of the UDTS informal sector, which commenced in 1994. Today, the FETRI comprises around 3,500 members and sympathizers, mainly women.

The FETRI carries out several activities, such as the sale of fish and vegetables in markets, retail sales, laundry services, product transformation, horticulture, cattle raising, and the provision of domestic services and basic education for its members. Trade union support to the informal sector is based on services in the following areas: information, education and awareness-raising on family planning and trade union issues; training (literacy, economic management, learning crafts); socio-economic promotion (access to credits and land, production facilities, facilities for the conservation and transportation of its products); and the defence of material and moral interests of its members.

While organizing women workers in the informal sector, the UDTS has conducted an interesting experiment with a group of women in Mbour (about 100 km from Dakar). With the help of the UDTS, these women have organized themselves into groups of 30 to 40 women and pooled the small amount of savings they have in order to buy raw materials in larger quantities. They have also obtained from the village authorities some land on which they can build a small workshop where they can manufacture and sell their products.

Source: WCL (1998b, c, d).

Organizing may imply changes in the way unions operate. Some unions have created special structures with responsibility for mobilizing and organizing atypical workers. Unions in Benin have established secretariats for the informal sector. In Colombia, the Confederation of Workers of Colombia (CTC) has set up a secretariat for self-employed workers. In Ghana, the National Sawyers Association, which has been organized by the Timber and Woodworkers Union (TWU), employs a full-time official responsible for the informal sector.

Associated with this is the issue of what model of unionism, if any, best suits the organization of the informal sector. The "service model" of unionism is built upon a "transactional" relationship between the union bureaucracy and its members. The latter pay dues to the union in exchange for services. Continued membership and loyalty to the union depend on the satisfactory delivery of services. In most developing countries, unions generally tend to stress the need to provide special services to workers in the informal sector, especially women workers, as a recruitment strategy. One problem with this model, particularly if used for recruiting the diverse workforce in the informal sector, is that unions may never have enough staff to meet the needs and demands of all members.

The other model is the "organizing model". It is based on the assumption that the empowerment of workers will enable them to find solutions to their problems. The emphasis of this model is therefore on collective action. Recruitment of new members is usually carried out through one-to-one contact between members and their co-workers rather than by union officials. This does not mean that unions cease to provide services. On the contrary, they continue to ensure essential service functions such as compensation advice, delivery of social wage improvements, and advocacy of new benefits, including through research and bargaining. But this model devotes particular attention to mobilizing rank and file activists to do the work of organizing their co-workers and it emphasizes a distinct methodology for achieving trade union objectives. This involves encouraging the active participation of members in campaigns and other forms of trade union action. Under this approach, on every issue, the union is expected to ask the members how they can achieve the objective themselves rather than being passive and leaving all actions to union officials. Box 8 summarizes some of the key features of the two models. Some unions in the United States, Australia and New Zealand have committed themselves to an organizing rather than a servicing model to reach out to the unorganized workforce. Other unions may make use of this concept for specific activities or particular sectors of the economy. For instance, affiliates of ICFTU-APRO in Bangladesh have established a "1 + 1" campaign to recruit women workers, which was successful because each union member was responsible for recruiting a new member.

Box 8
Some differences between the service and
organizing models of trade unionism

Service model

Organizing model

Union is seen as external — a third party

Members own the campaign to unionize their workplace

Union officials tell members how the "union" will solve their problem

Members generate own issues and organize to solve them together

Relies on employer to provide lists of workers’ names to union official

Workplace and staff attitudes crucial — names and information are provided by workers

Relies wholly on employer for workplace access

Initial organizing can be done outside work — in workers’ homes, etc.

"Cold", hard selling of union membership by organizers

First recruiting steps are to establish contacts, find natural leaders, uncover issues

Union sold on basis of services and insurance protection

Workers empowered to find solutions themselves through education and support

Reliance on full-time officials to recruit, solve problems

Workplace organizing committee formed; workers encouraged to build the union through one-to-one organizing

Aim is to recruit only — "sign on the dotted line" — not organize

Recruitment and organizing integrated

Results achieved, but likely to be short-term

Results obtained through sustained efforts — more likely to be permanent

Workers blame "the union" when it cannot get results

Members share decisions and solve problems together with union leaders

Organizers resent members for not coming to meetings or participating. Members complain that they pay fees and the union does nothing

Members identify with the union and contribute to activities. An attack on the union is seen as an attack on themselves

Managements acts — union reacts — always on the defensive

Union has its own agenda — members involved, keeps management off-balance — image is positive, activist

Source: TUTA (1996, p. 9).

There is no single or simplistic formula for success and in fact in the real world there are not two distinct models of unionism. Rather there is a spectrum of approaches with the service and organizing models at each end of a continuum. None of the elements of the organizing model is new to trade unions. But together these elements provide scope for working towards a systematic approach to organizing a diverse and scattered workforce through a bottom-up process.

It goes without saying that decisions about the objectives, targets and implementation strategy for organizing campaigns can be made only at national and lower levels, where the relevant trade union leaders have the necessary country-specific information and experience to make informed choices. Participants in the meeting may wish to share with one another their experiences and opinions about the general strategies mentioned above.

4.2.2. Formalization of access and membership

In many countries legal barriers still prevent atypical workers from joining unions. The ILO-ICFTU survey shows that in recent years some 25 unions and 21 national centres changed their statutes or internal structures to accommodate atypical workers; these new initiatives should be considered as ways of bringing rural and informal workers under the umbrella of trade union organizations (ILO, 1999b). The constitutional amendments cover not only the right to membership, participation in negotiation teams and coverage in collective agreements, but also in many cases the provision of special services for such workers, including helping them to regularize their employment status. The unions also offer social services, such as medical insurance, health funds, unemployment benefits, cooperatives and assistance in dealing with government authorities, such as obtaining licences, subsidies and market places (for informal sector workers). However, as noted in Chapter 2, even when a union amends its statutes to admit atypical workers as members, these workers may not be eligible under the labour code for coverage in collective agreements. For this reason, decisions that may be contemplated regarding changes to internal union structures and resource allocation must be coordinated with union campaigns directed at government reform of labour legislation or, at least, at extending the scope of coverage.

If unions decide to amend their constitutions or statutes in order to include in their membership workers from the informal sector, the interpretation of the trade union "base" has to be widened to include a broad spectrum of workers, regardless of their employment status. Broadening the organizational base of trade unions through an expansion of membership can certainly be a mid-term objective. But in the short term unions might wish to help informal sector workers establish their own union-type associations and forge closer relations with them. This kind of initiative can be instrumental in developing mutual trust, thereby reducing the reluctance of those workers to join existing unions.

This leads to two major considerations. First, unions have to consider on what basis they will try to integrate informal sector workers into existing union structures. If those workers join existing unions or establish new unions that are formally affiliated to the existing national union structure, they should be able to play their part in the management structure of trade unions on the same basis as other members. On the other hand, if they establish new organizations that are not formally affiliated to the national union centres, the existing trade unions could still consider involving leaders of the informal groups in discussions about priorities and strategies in order to strengthen ties between trade unions and informal sector groups.

Second, regular membership fees can sometimes be a constraint preventing informal sector workers from joining a union. In this case too, alternative solutions may have to be found. Some unions, for instance, have agreed to set lower membership fees for workers in the informal sector. Others, for instance in the Philippines, offer "grace" periods of up to one year in order not to make fees a prohibitive threshold for membership. It is clear that in both cases endorsement by the existing members is critical for the implementation of such decisions.

 

Box 9
Integrating the self-employed in trade unions in Ghana

The Timber and Woodworkers Union (TWU) in Ghana began its organizing efforts in the informal sector in 1988, following the adoption of a resolution by its quadrennial conference for organizing self-employed wood workers in the sector. The TWU’s constitution was amended accordingly in 1991 during the National Congress.

Today four informal sector associations are affiliated to the union. These are:

(1) the National Sawyers Association (NSA), which draws its membership from chain saw operators, firewood cutters and charcoal burners. It has a membership of 12,000 spread over six regions, mainly in the south of the country;

(2) the Small Scale Carpenters’ Association, which since 1993 has organized 30,000 workers, with a concentration in Kumasi and Accra. The association is made up of carpentry, joinery and furniture workers;

(3) the Wood Working Machine Owners Association, which has been affiliated to the TWU since 1993 and today has a membership of 3,000 workers;

(4) the Cane and Rattan Workers’ Association, which is made up of suppliers and weavers in the sector. Organizational activities started in 1996 and so far around 1,000 workers have been signed on.

The informal sector associations are fully represented in the structures of the TWU and their needs are serviced by full-time officials employed from among the ranks of the informal sector wood workers.

The TWU has obtained agency status for the associations, which enables them to collect taxes from their members on a monthly basis on behalf of the Internal Revenue Service (IRS). Tax rates for members are negotiated by the TWU with District Assemblies and the IRS. Since the unionization of the informal sector workers, national institutions dealing with issues relevant to the timber industry have included the trade union in consultations on relevant issues. This is the case, for example, of the Timber Export Development Board (TEDB) and the Ministry of Lands and Forestry.

The TWU intervenes to settle members’ cases out of court. It has also been providing its members in the informal sector with education and training activities in the fields of health and safety, tree planting, felling, harvesting and extracting techniques, timber laws and regulations, marketing and business management.

4.2.3. Building alliances and community unionism

The nature of the workforce in the informal sector makes the work of trade unions difficult. Although it is seen as "unorganized" from the outside, the informal sector has its own rules, where ethnic, family and kinship ties are more important than working-class solidarity. Informal sector workers are very often concerned with day-to-day problems and are not necessarily inclined to join collective protests or participate in industrial action, because they do not see how such action or membership in a trade union is going to help solve the practical and very basic problems they face. However, these barriers can at times be exaggerated. For example, in the past trade unions often assumed that conflicting family responsibilities and cultural or religious barriers would prevent women from becoming fully involved in union activities. When put to the test, however, these preconceptions have not always stood up to scrutiny. Other potential barriers have proved to be more rigid. For example, informal workers’ associations, where they exist, do not necessarily want to work with traditional trade unions. Efforts to forge closer trade union cooperation and involvement are made more difficult by the fact that traditional shop-floor organizing methods are usually inappropriate for reaching out to the informal sector, where workers are scattered and the employers difficult to identify.

Consequently the first and perhaps most difficult step for trade unions is to establish contact with informal sector workers. In practice, this means going and looking for them, but this is not always easy. An increasingly important strategy which should be developed is to keep track of members, as they are more likely in today’s labour markets to change jobs, employment, status or workplace or become unemployed several times over their working life. In many cases, trade union members who are employed in the formal sector but have relatives in the informal sector can serve as the "bridge" between unions and the workers concerned. Sometimes, members who have been forced out of the formal sector into non-structured employment can also provide a potential linkage with workers in the informal sector. One way which has proved successful in reaching workers in that sector is also to link up with already established informal sector craft associations.

Where access to the workplace is denied or the workplace is unknown, as in the case of homeworkers or domestic workers, a "community-based" approach may be helpful. This means working intensively in particular communities, linking with community organizations and employing workers within the trade union who already have close contacts with the community (see box 10 for further details on how this approach has been used in export processing zones).

Box 10
Organizing the unorganized in export processing zones

There are over 2,000 export processing zones (EPZs) employing some 27 million people in the world today. Between 60 and 90 per cent of those workers are women, often young and first-time wage earners. Although there are very few countries which officially restrict trade union activity in EPZs, the fact remains that the majority of EPZs have no trade union presence. Such zones often have no structured labour relations system. This means that most zone enterprises do not have mechanisms for consultation, negotiation or the resolution of disputes. At the same time, the enterprises in zones are having to work harder and longer in the face of tougher international competition. The intensity of production, the length of the shifts and the terms and conditions of work are frequently the source of disagreement between labour and management, and given the absence of workers’ organizations and channels for negotiation such disagreements often develop into open conflict and confrontation. More and more zone enterprises and the zone authorities themselves are realizing the importance of stable labour relations and are seeking to establish systems of consultation, negotiation and dispute resolution. One of the prerequisites of such systems, however, is the presence of well-organized trade unions.

Trade unions face two types of problems in organizing zone workers. The first concerns the lack of access to EPZs. The zones are a special customs area and are often fenced and guarded for that purpose. This makes it even more difficult for trade union organizers to gain access to workers in their workplaces. The second type of problem concerns the response of the workers themselves to approaches by trade union organizers.

In order to overcome the problem of access, unions have adopted a community-based approach to organizing. The zone workers are generally concentrated in high-density areas and so trade unions, along with NGOs and religious groups, have established centres which provide advice, counselling and training services to workers. The activities vary from advice on workers’ rights under the labour laws, to counselling on sexual harassment or violence at work, to life-skills training. In the Dominican Republic, Fenatrazona — the zone labour union — created the Comites Femeninos Barriales de Zonas Francas. These district committees for women unite female union members as well as non-members with the intention of raising awareness about their working conditions. By 1997, four committees were functioning. These might serve as platforms for future union organization. In August 1996 in the Dominican Republic, the "Cipaf" and the regional office of Oxfam/UK started a campaign entitled Trabajo Si pero con Dignidad (We say yes to work, but with dignity), designed to raise awareness of the living and working conditions of the workers in the EPZs. It aimed also at sensitizing the public and employers to the need for codes of conduct for labour relations. The Trade Union Congress of the Philippines (TUCP) launched a drive to organize zone workers in 1997. Organizers go from door to door in the community. They also provide information on workers’ rights, health and safety and gender issues.

The second problem is one of attitude or awareness. Trade unions have sometimes found that zone workers are reluctant even to come to a union meeting, let alone to join. This may be due to fear of victimization by the employer or the authorities, a lack of confidence or assertiveness, or a function of the two shifts a day many women workers have to cope with — one at work and one in the home. Women workers often find it difficult to find the time to attend union meetings, especially if they are held at night or on the weekends when women have to attend to their domestic responsibilities. In order to help overcome these obstacles, some unions have started special women’s sections to organize women workers. These use female organizers to organize women, and plan meetings at times and venues that are most convenient. One successful approach adopted in the Philippines has been to help women workers meet their domestic needs in order to free them to participate in other activities such as trade union work. Such initiatives have included the formation of cooperatives to provide housing, transport, bulk buying of essential items and child care. Unions have also found that educational and training activities are highly valued by women workers (who may face considerable discrimination in access to education and training). These activities improve their confidence and job opportunities and enhance their ability to organize themselves.

Historically, the trade union movement has always sought the involvement of allies to pursue its causes. Building coalitions with like-minded organizations and movements has been a cornerstone of the trade union movement’s social and economic strategy. As trade unions become more and more involved in social issues such as environmental protection, racism, discrimination, child labour, slavery and migrant workers, and as more and more NGOs spring up, building alliances acquires even more importance.

Criteria for building alliances vary considerably from place to place. However, it has become increasingly obvious for many unions that there is a need for a strong partnership between the labour movement and the community around drives "to organize the unorganized" or mobilizing on social issues. Like any other trade union activity, alliances need clear goals and a well-planned strategy. All the partners involved must feel that they will benefit from taking part and that their interests are fully taken into account. Issue-based alliances are the most common. Women’s groups are often very active in the struggle for human rights and are not afraid to take part in demonstrations or engage in strike action, and they are therefore an important potential ally for trade unions. For example, the Trade Union of Workers of the National Electrification Institute (STINDE) in Guatemala successfully worked with women’s groups to submit a Bill on sexual harassment to Parliament. In Ghana, there has been a joint union-NGO initiative on the intestate succession law, so as to protect women’s rights and guarantee them a share in the husband’s estate. In Benin, unions submitted comments on the Bill on the Family and Persons’ Code and organized a seminar and information sessions to raise public awareness of the issue. In Argentina, the National Civil Servants’ Union (UPCN) has been working with universities, other unions, political parties, NGOs and the legislature to train women for entering politics. In Burkina Faso, unions have linked up with NGOs and local community groups to fight against crimes that go unpunished following the killing of a journalist and an employee close to the Government. Event-based alliances are also common, for instance on May Day.

Although alliances between unions and community groups are usually formed around specific issues, they may also result in more ongoing relationships when several objectives or interests overlap. In the United States and Canada, this has led to a new form of unionism called "community unionism", referred to earlier in this chapter. The rationale for "community unionism" stems from the recognition that unions cannot operate in isolation but must enlist community organizations in their struggles. The community organizations involved include advocacy groups such as civil rights and minority rights groups, religious organizations, environmental groups, and women’s rights and senior citizens’ organizations. One of the advantages of community unionism is that it facilitates a sense of solidarity among union and non-union workers as regards community goals. In this way, non-union workers may gain confidence in union organizing efforts.

In building alliances, particular attention should be paid to mobilizing other unions around causes of common interest. In many developing countries, the existence of a large number of unions is sometimes a real obstacle to the advancement of trade union causes. Evidence suggests, however, that cooperation and coordination between different unions, particularly in workers’ causes of justice and dignity, can mobilize more resources — both human and financial — and avoid unnecessary duplication of efforts. This also contributes to building greater solidarity among workers in society.

Participants may wish to discuss whether the concept of building alliances with NGOs, churches and other groups is a viable and an efficient component of the overall campaign to organize and improve the conditions for informal sector workers. What types of groups and issues offer the best prospects for alliances?

Box 11
Strategic alliances: The SEIU example

Since the spring of 1941 no union in the United States has been able to organize such a large number of workers as the Service Employees International Union (SEIU) did with the home-care workers of Los Angeles county. These workers provide assistance to elderly and disabled persons in the county. They are hired by the client individually, and paid by the county at the minimum wage. This means that the workers normally do not know each other and have little or no opportunity to organize themselves with a view to defending their rights. It has been a major challenge for the SEIU to plan the organization of 75,000 workers, scattered in 75,000 workplaces and employed by virtually 75,000 employers.

Over the last 12 years, SEIU succeeded in reaching out to these workers by making common cause with their clients. When starting the organizing campaign, the SEIU obtained support from the disabled movement and they reached agreements about measures to safeguard clients’ rights (hiring and firing), accepting a non-strike clause and jointly seeking better training programmes for the workers. All these measures ultimately benefited both the clients and the workers. By virtue of this alliance and through political advocacy action, the SEIU obtained from the State approval for counties to establish agencies that, acting as employers, could supervise training, maintain registries and bargain collectively with the workers. To achieve this result and in the absence of both a central registry and a common workplace, the SEIU needed to contact the home-care workers individually: 22 of its full-time staff and 75 other staff members were hired from neighbouring sections or other unions. Their task was to contact the workers through a door-to-door campaign. Between March and November 1998 more than 3,000 home-care workers were contacted, one-third of whom joined the union.

Today the objective of the SEIU is to agree with the state authorities on the establishment of a registry, the setting up of a training programme for the workers and the increase of the pay scale over the minimum wage, as it is at the moment. Of the 475,000 workers organized by United States unions in 1998, 13.5 per cent joined the SEIU, and the latter expects to organize 150,000 more in 1999.

Source: LA Weekly: "Powerlines", 26 Feb.-4 Mar. 1999.

 

4.2.4. The gender dimension

In the poorer parts of the world women are found working not in organized workplaces, but in locations and occupations that are exempt or hidden from labour inspection and labour legislation. This reality means that there must be a gender awareness in building strategies to improve the conditions facing workers in the informal sector. As other studies have noted, "An important lesson for organizing is that just as women’s work in the informal sector, and in casualized employment in general, differs from that of the formal sector, their situation calls for a more holistic type of organizing. These women view their lives in their homes, at the workplace and in their communities as an integral whole. In order for organizing to succeed and for trade unions to become more relevant for women in general, this fundamental requirement must be acknowledged" (Martens and Mitter, 1994).

One strategy that has proved effective in mobilizing poor women, especially in rural areas, is to link cooperative economic activities with trade unionism. "The big advantage of being a member of a trade union-cum-cooperative organization is that a casualized worker begins to perceive herself gradually as a proper "worker" entitled to rights similar to those that the State offers to the workers of the organized sector" (ibid.). In addition, cooperatives generally pursue economic and social objectives simultaneously. Training in health issues, family planning, special facilities for child care and literacy courses are often organized around cooperatives. They have proved to be successful in both empowering women and increasing awareness among them about the benefits of unionization.

What has proved to be successful in reaching out to women is the holding of regular events (such as meetings of small study groups, debates, seminars and training sessions) at times and places that are convenient for them (for example on Sundays). Soliciting the views of women and listening to their concerns in forums where they can express themselves seems to be a more effective strategy than merely informing them of their rights.

These factors should influence the choice of education techniques to be used in dealing with informal sector workers. One didactic method which has proved successful is study circles. In Benin, the use of this method in an ongoing project involving two national centres — the Confederation of Autonomous Trade Unions (CSA) and the National Confederation of Workers’ Trade Unions of Benin (UNSTB) — has enabled informal sector workers to acquire skills in organizing training sessions and meetings. This method has helped to build mutual respect, dialogue and unity among workers.

In some cases, special structures responsible for training and educating informal sector workers have been established. In India, the Self-Employed Women’s Association (SEWA) has set up an academy for this purpose. The academy aims to build women’s capacity for leadership and self-reliance. Programmes cover leadership training, group organizing, and capacity building for policy action and for management of producer groups and cooperatives. Nearly 600 women are trained every year. Literacy and basic education classes are held on request. Didactic methods include pictures, games, videos and other training tools. In general, it has been proved that non-traditional methods, such as drama, songs and dances, are important tools of communication within educational programmes addressing women (see box 12 for further examples of this approach).

Box 12
Drama, role playing and songs to mobilize women in union activities

From 1989 to 1997, the IUF ran an education project with the IFPAAW and the ILO to increase the participation of rural women workers within affiliated unions in four African countries (Ghana, Uganda, Zambia and Zimbabwe). The education programme was initiated after the IFPAAW focused attention on the total absence of women in leadership positions and their very low participation in union activities. This was seen as a particularly serious problem because women account for about 80 per cent of the labour force in agriculture in Africa.

An important and innovative approach was the use of songs, drama and role playing to teach rural (male and female) workers about trade unions and gender issues. Group work at seminars included performances around given topics, such as structural adjustment policies. Video recordings were made of the performances and used as a means of self-analysis and development. Drama groups were established to enable workers to explore subjects such as women’s rights, labour laws, health and safety, and environmental hazards.

The project evaluation was very positive in regard to the impact of the drama, songs and role playing component, which was seen as having increased the participatory effect and cost-effectiveness of the project. It helped to make women more active and outspoken in discussions concerning internal union affairs, grievance handling and recruitment.

By the end of the project, female membership had increased in all the unions involved, as had the number of women office bearers. Women’s issues had also been included in collective agreements, albeit to a modest degree.

Source: ILO (1999b).

The ILO-ICFTU survey analysed union membership levels and found that women constituted the bulk of new members (ILO, 1999b). Although the reasons for this vary from specific recruitment campaigns to the need women see for protection, some trade unions have been more responsive in dealing with women’s concerns and priorities than others. None the less, women are still underrepresented in the total membership of unions.

Among the reasons preventing women from joining unions, the abovementioned survey highlighted the following factors (in decreasing order of importance): lack of understanding of how unions can help them; fear of reprisals by employers; conflicting family responsibilities; male-dominated culture/activity of the union; lack of confidence to join unions; religious/cultural norms and constraints; unions’ lack of sensitivity to the special needs of women workers; predominance of women in atypical forms of work and hence difficulty in reaching out to them; objections by spouses or families; problems in regard to membership dues; negative image of unions portrayed by media; legal constraints.

In the light of the above constraints, it is clear that awareness-raising is critical in order to sensitize women to the benefits of unionization. For unions to be credible and attractive to women in the informal sector, genuine efforts must be made to promote equality in the workplace and in union structures. This point was stressed at the 7th World Women’s Conference which was organized by the ICFTU in Brazil in 1999. Within the international and national trade union organizations it is evident that the specialist units dedicated to gender issues have very often played a central role in improving the image of trade unions and developing new services that are relevant to female members, and in implementing the union organizing efforts that have generated the most success. They have also helped to ensure that the particular needs of women are reflected in collective bargaining strategies.

In the discussions at this meeting participants may wish to consider how the activities undertaken by specialist units devoted to gender issues can be mainstreamed within unions and given higher priority and resources in the future (see box 13 for a practical example). Participants may also wish to discuss the respective roles of national centres, the international trade union movement and the support that might be sought from the ILO in developing new trade union services that are relevant to female trade union members.

Box 13
Women’s departments working for change

After the mass lay-offs following the closure of many state institutions in Colombia during the mid-1990s, the Women’s Department within the trade union centre Single Confederation of Workers (CUT) devised strategies to retrain women for occupations in great demand. This is how the Centre for Women Workers who are Heads of Households (Casa de la Mujer Trabajadora Jefa de Hogar) was created in 1995. It launched programmes enabling women to develop skills in crafts dealing with electricity, printing and wood working. In cooperation with the local university it helped women complete secondary education and gain access to the national programmes of apprenticeship. Initiatives were also undertaken at the municipal level. For instance, a contract was signed with the Department of Social Welfare of the Capital District, which provided women with jobs caring for elderly people. These practices stimulated wider discussions with universities and other training institutions, with the result that they extended their programmes to the Casa.

4.2.5. Mobilizing young people

Young people in the informal sector constitute an important target group, since they represent the bulk of new entrants to the labour force. Unionization rates among young workers are extremely low in the vast majority of countries. Recently, with a renewed emphasis on organizing the unorganized, many unions around the world have been devoting increased attention to young workers. Rather than talking "about" young people, they have started talking "with" them. But to talk with young people means speaking their language. Many unions have therefore set up structures (such as departments, committees, teams) to establish dialogue and promote programmes specifically for young persons. Some unions are already reaching out to young people in schools, using the latter as allies to promote the benefits of unionization. In Australia, for instance, officers of the Australian Council of Trade Unions (ACTU) visit schools to explain the relevance of trade unions to young workers, and an annual publication is provided to every student in the final two years of secondary school in an endeavour to sensitize students about the world of work and the role of trade unions in the workplace. The Norwegian trade union movement has developed a more comprehensive summer programme whereby unions contact young people working in casual jobs during the school vacation. Union representatives go and talk to young people in the workplace and provide them with information on workers’ rights and the role of trade unions.

Other unions operate youth centres or reach young people in their leisure activities. One union in Sweden has a special group to discuss union issues with young people during skiing activities. These experiences may not be replicable in all developing countries because of resource constraints, but they are indicative of innovative measures which trade unions could consider in order to bring young people in the informal sector closer to unions.

Throughout all regions of the world, music and sport are effective channels for establishing contact with young people. At the local community level, trade unions may wish to consider organizing social activities in conjunction with junior football, softball and other sporting teams in which young people participate. Teams might be sponsored or activities arranged to coincide with sporting activities that attract large audiences. Where possible, unions might consider trying to encourage local sporting idols to help explain the need for collective action and a "team spirit" among workers.

The same message can be broadcast through the entertainment industry and will probably reach an even wider audience than the sports medium. Only a decade ago the idea that unions could be organizing such events would have been inconceivable. This no longer seems to be the case, however. In 1997, Britain’s biggest free summer music festival (Respect 97) was organized by the Trades Union Congress (TUC) as part of its campaign against racism. The TUC’s unique staging of a festival with a serious message was acclaimed by politicians, performers and celebrities and brought together thousands of people, particularly young people, in the cause of combating racism. These strategies also seem to be applicable in developing countries. In March 1999 UNISON in the United Kingdom organized another major concert in order to draw attention to their campaign to promote the minimum wage and protect youth wages. Trade unions may be able to learn from a major campaign undertaken by the International Committee of the Red Cross which involved engaging the leading musicians throughout Africa to produce a CD of popular music with a strong message about the horrors of war and the desire for peace. Young people can also be reached through magazines devoted to trend-setting music, fashion, art and cultural activities. Unions in some countries have experimented with advertisements in such magazines about the role and benefits of unions.

In contemplating innovative ways to attract young people it is important that unions clearly link the activity or medium used to concrete trade union issues and do so within an organizing context. It is important that trade unions are not perceived as just another church group or NGO that is promoting youth activities.

Helping people to get their first job is another obvious way for unions to demonstrate their value to young people. This might involve unions in providing training schemes for job search and interview techniques or more elaborate skill development. For example, in Cameroon, unions include young unemployed women in training schemes. A union in Bulgaria helps young women to find jobs to prevent them from being drawn into prostitution.

Strategies to mobilize and involve young people are critical because the latter not only represent the future of unions but are also capable of great activism. In April 1999, the ICFTU launched a new international campaign to protect young workers by encouraging them to join trade unions. The campaign, which will be run through to 7 December 1999, has as its slogan "The future starts now — join a union" and is intended to help fight youth unemployment. Young workers in the informal sector are one of the target groups of the campaign.

In an effort to integrate young people not only as members but also as real activists, several unions are devoting particular attention to training. In the United States, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), through its Organizing Institute, runs different programmes aimed at bringing young people into the labour movement as organizers. As a part of the "Union Summer Programme" young people come from unions as well as from campuses and community organizations to learn about organizing skills. Ideally, they remain active after the programmes by forming a student/labour action coalition, teaching others about unions, eventually becoming a union organizer or contributing in some other way to the labour movement. Unions in other countries are following this example and experimenting with similar schemes. For instance, through an organizing institute known as "Organizing Works", the Australian Council of Trade Unions (ACTU) recruits around 40 people each year, mainly university graduates, trains them in organizing and sends them out to affiliates to supplement their organizing work.

Box 14
Targeting young workers in the Philippines

Recently, the Youth Committee of the Trade Union Congress of the Philippines (TUCP) launched a letter campaign to ask the IMF and the World Bank to release special funds specifically allocated to young people, particularly young women. It has also requested the Government to launch job-creating programmes on the basis of labour-intensive activities to absorb some of the young jobless.

Young women (18-25 years old) represent 90 per cent of the workforce in the export processing zones in the country. The TUCP has set up a team, composed mainly of young women, specialized in organizing in the export processing zones. The strategy used is quite original in the sense that they do not organize at the workplace; instead, they contact the young women in their homes. After work, they go from door to door. Although this approach is time-consuming, it has proved to be successful. Despite the huge number of restrictions on trade union organizing in export processing zones in the Philippines, the TUCP has succeeded in creating over the past two years a total of 27 new trade unions where there were none before.

4.2.6. Awareness-raising and the media

A prerequisite for convincing workers to cooperate with or even join a trade union is to make them aware both of their rights as workers and of the benefits of unionization. In other words, it is important to make them realize that unionization is a present reality and not a thing of the past. Innovative strategies are necessary because workers in the informal sector are generally "invisible" and scattered, and difficult to contact. It is important to strengthen self-confidence and self-respect among these workers and ensure that they do not feel isolated.

One way to build solidarity among workers is to use awareness-raising campaigns that focus not only on their legal rights but also on union successes in improving their position. The focus and strategy of such campaigns certainly need to be adapted to the group targeted. The TUC in the United Kingdom reported that its campaign to reach out to atypical workers was very successful for part-time workers but had no impact on homeworkers.

Positive media coverage is an integral part of raising awareness and mobilizing around union activities. Unions need to be visible to their current members, potential members and the community at large. Especially when unions are improving services or adopting policies that benefit workers in the informal sector, the message should be publicized not only for organizing purposes but also for gaining support among the general public. In addition, governments and employers are more likely to listen to unions if they are aware of the effect that bad publicity can have on the public image of their businesses.

Box 15 contains information on a campaign organized by the United Farm Workers (UFW) in the United States for strawberry pickers, in which it involved well-known politicians and movie stars in order to focus attention on the poor working conditions in this sector. The union also mobilized a large number of workers from outside this sector to join demonstrations in support of the strawberry pickers and secured the support of relevant corporations. This approach proved very successful in the United States because the union was able to capture the attention of the wider public through the extensive media network that exists in that country. However, it is recognized that in other countries access to the media and the ability of unions to involve national celebrities in campaigns may be more difficult to achieve. Nevertheless, participants may wish to discuss how this type of campaign might be modified and made more applicable to the situations that prevail in developing countries.

Box 15
Campaigning for strawberry pickers in the United States

Strawberry picking is a difficult job: the fragile crop demands delicate and precise labour, entirely unmechanized. Data from the United States show that the working day is up to 11-12 hours long. Because of the harsh conditions, the large majority of workers are under 30 years old and do not stay in the same work for more than four years. Despite the skill and speed needed to perform this task, the average picker’s wage is lower than that of most other unskilled farm workers. Employment patterns in this sector indicate a significant gender bias: female workers are normally the last people hired, and never get the better-paid positions.

Since the beginning of the 1990s, the United Farm Workers (UFW) has made a substantial effort in the United States to organize strawberry workers and fight for better working conditions, including higher wages, access to medical care, fresh water, clean bathrooms and an end to harassment by employers. In response to this campaign, union membership rose from 21,000 to 26,000 between 1993 and 1997.

The union opted for a pragmatic approach aimed at maximizing the visibility of the situation of these workers through an awareness-raising campaign, involving well-known politicians and movie stars, as well as large numbers of civil society groups. In April 1997 some 30,000 workers and activists from 36 states and three countries joined strawberry pickers in the biggest demonstration in the history of the UFW, and in the birth of what many called the biggest movement for social change since the 1960s.

One essential element of the campaign was to enrol corporations in the struggle. The union succeeded in convincing hundreds of supermarket operators across the United States to support the concept of "5 cents for fairness": an increase of 5 cents in the price of strawberries to provide workers with better working conditions.

In January 1998 for the first time in the previous 15 years the largest direct employer of strawberry workers in California boosted the hourly wage for pickers by 13 per cent; several other companies implemented health plans. By 1998 more than 6,000 supermarkets had endorsed the campaign.

Although this is an example of success with a pragmatic approach to unionization, workers in the strawberry fields, mostly immigrants, are still living well below the poverty line and the issue of increasing their wages and improving their working conditions remains at the heart of the UFW agenda.

For example, the choice of the appropriate type of medium is an important component of an effective strategy aimed at raising awareness. Informal sector workers generally have a low level of education. Illiteracy rates are high, particularly in rural areas. The print media are therefore not useful as a means of reaching out to the majority of these workers. However, in Africa and Latin America rural radios have proved to be an effective means of education on health-related issues. Participants may therefore wish to discuss how radio can be used more effectively and more widely to transmit information to informal sector workers in developing countries. Perhaps unions could think of sponsoring simple advertisements or community advice announcements on the radio. For example, a short message that contains information about a wage increase or some other benefits that the union has recently obtained for members would perhaps help to initiate discussions in local communities and at social events about trade unionism and the benefits that can be derived from collective action. Perhaps a radio campaign with a message such as "Let your voice be heard: join a trade union", followed by the name of the local union and information about how to contact it, might be considered. There are numerous other possibilities that could be explored, including the use of radio programmes that allow audience participation via the telephone. Although many informal sector workers will not have access to a telephone, the national and local trade unions normally do have such communication facilities, and trade union officials can therefore actively participate in radio debates that will reach a wide audience.

It is worth recognizing that in most countries the media have so far had a strong tendency to ignore unions or portray them negatively to the general public. Less than one-fifth of the unions analysed in the ILO-ICFTU survey felt that the media were supportive of them. Strong relationships with the media should therefore be considered as a strategic means of boosting awareness of the labour movement and its impact in the community. Some unions in developing countries have already made a start. One union in Ghana has a special annual project to present an award at a Media Encounter to journalists who have projected the trade union movement in a positive way throughout the year. Similar awards could be created for films concerning trade union experiences in the informal sector, to be presented within the framework of regional or subregional festivals. For instance, since 1997 the Panafrican Film and Television Festival of Ouagadougou (FESPACO ) in Burkina Faso has included a special award for health and safety at work. The film that won this award at the 1997 festival was selected in the official competition of the 1997 Cannes Film Festival. Unions could consider sponsoring a special trade union award at similar events.

Attracting good media coverage, however, is the result of systematic work and often of ongoing relationships with individual reporters. In some countries ownership of the media outlets may be concentrated in the hands of people opposed to the social and political objectives of trade unions. Naturally, this does not make the task of improving the image of trade unions easy. However, it should not result in despair and disillusionment about bias in the media. Journalists and reporters with a reputation for independence and objectivity can be sought out and encouraged to cover stories that present unions in a more favourable light.

Choosing the right person to act as media spokesperson for the trade union movement is critical; verbal communication skills are obviously important, but it is also important that the spokesperson conveys an image of a dynamic and modern organization that is committed to improving the social and economic situation of a broad spectrum of the population rather than protecting a privileged elite. Participants might wish to discuss the characteristics necessary for an effective media spokesperson and the possibilities of establishing a more professional and experienced media unit within national trade union centres.

4.2.8. International trade union networking, codes of conduct and framework agreements

As noted previously, the dramatic expansion of SMEs and casual labour has made it possible for multinational companies to indirectly utilize the labour of informal sector workers through subcontracting arrangements. Homeworkers and children are often to be found at the very end of extensive and global production chains. Attempts by trade unions to counterbalance this trend through an independent national strategy are proving fruitless. The experience of the trade union movement in recent decades clearly confirms that if worker exploitation and trade union abuses are to be effectively resisted, cooperation at the international level is crucial.

A central and long-standing objective of international trade union activities is the promotion of a link between labour standards and trade matters. This issue is assuming even more importance at present since the third Ministerial Conference of the World Trade Organization will take place in the United States just a few weeks after this meeting on the informal sector.

Another important aspect of international trade union cooperation is the negotiation and implementation of codes of conduct and framework agreements with multinational companies. Since the 1970s, many codes of conduct have been adopted by multinational enterprises. Until recently, most of them were developed and adopted unilaterally by management and their main purpose was to improve the public image of the corporation. Evidence suggests that most of these codes addressed health and safety issues, with only a small percentage referring to freedom of association and collective bargaining rights (ILO, 1998c). More recently, the general trend has changed owing to concerted pressure by the trade union movement on both the corporations and the general public. Emphasis has been placed on negotiating codes that include reference to all the fundamental labour standards as laid down in the core ILO Conventions. In this way, negotiated codes can be instrumental in promoting the rights of workers to organize and bargain collectively, particularly in countries where trade union rights are not recognized under the law. One of the most progressive codes was negotiated by the ITGLWF, the International Federation of Commercial, Clerical, Professional and Technical Employees (FIET), the ICFTU and the International Federation of Association Football (FIFA) in 1996 and has been a model for more recent initiatives in this area.

Union involvement in negotiating codes is also the best way to guarantee that effective implementation and monitoring mechanisms are adopted. The reality is that most codes adopted so far do not include adequate enforcement provisions. The verification procedure, if it exists, relies on internal monitoring by the management of the parent company. This explains why the public credibility of most codes remains problematic. The credibility of codes depends on a number of factors, including explicit reference to all the core ILO Conventions; the extent to which contractors, subcontractors and consumers know about the existence of the code and appreciate its meaning; the ability of workers covered by the code to make contact with those persons with real managerial power in the parent company and submit complaints without fear of reprisals; and provision for regular external and independent monitoring.

One of the objectives of the international trade union movement in this field is to establish an institutional framework that will facilitate the implementation and external verification of codes of conduct. The trade union movement, through the Workers’ group of the Governing Body of the International Labour Office, has repeatedly requested that the ILO assume greater international leadership in the development and implementation of this framework. Discussions on this subject are making some progress within the ILO and will be pursued further in the near future. However, it is clear that codes are not the only solution to the adverse impacts of globalization; in the long run, workers through trade union organizations must protect themselves from exploitation. It is clear also that codes are not to be regarded as a substitute for national labour legislation or collective bargaining. In the short to medium term, however, codes of conduct, if properly applied, can make a substantial contribution to reducing abuses of workers’ rights.

Box 17
Codes of conducts in practice

The practical importance of codes of conduct is demonstrated by a recent experience in the Philippines, where the TUCP successfully used a code of conduct adopted by a multinational enterprise for organizing a union among 275 workers (all but 47 of whom were women) in Monasteria Knitting, Inc. The company operates in the Bataan Export Processing Zone, and supplies knitwear sweaters to the United States and Europe. As in similar cases, the company had resisted attempts to establish a union and, in fact, the first attempt at organizing workers in the company back in 1991 resulted in the company’s closure for a year. The management of the company had consistently claimed that attempts to establish a union would result in the cancellation of contracts with buyers in the United States and Europe. The union in fact turned this argument against the company. Organizers, schooled in codes of conduct, convinced local workers and the management that if buyers, which included the GAP company, learned that Monasteria Knitting was violating their own codes of conduct, they would cancel their contracts with the local supplier. A blitz organizing programme with three to four organizers, supported by youth and other community groups, made the difference. The workers, assured of the effect of codes of conduct, remained loyal to the union throughout three weeks of forced leave, which started the day after the union was registered on 8 February. The company reacted angrily: 63 union activists were either transferred or retrenched. But after a week of protest action and a five-day strike, Monasteria Knitting eventually backed down and recognized the union, reinstating all the dismissed activists.

 

Another new trend, closely related to company codes of conduct, is the negotiation of framework agreements between international trade union centres and multinational companies and/or employer groups that represent particular industries. For example, an agreement was recently reached between the International Federation of Building and Wood Workers (IFBWW) and the multinational IKEA, which is one of the world’s largest retail chains in the furniture sector. The agreement covers matters concerning working conditions, the natural environment and health and safety for workers at enterprises throughout the world that manufacture and supply goods for IKEA. Under the agreement, IKEA will demand of its suppliers that their workers enjoy working conditions which at least comply with national legislation or national agreements. Furthermore, suppliers must respect any relevant ILO Conventions and Recommendations relating to their operations. This means, for example, that no child labour can be tolerated and that workers have unrestricted rights to join trade unions and to free collective bargaining. These rules already apply in manufacturing companies owned by IKEA.

Participants may wish to discuss progress in the evolution of international cooperation with regard to linking trade and labour standards, codes of conduct and framework agreements. The discussions on codes might focus on measures to improve the content of codes, the negotiating process and the implementation and verification process.

 

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