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Defining the Informal Economy

As defined in he Report to the Director General to the International Labour Conference in 1991, the informal economy refers to:

Very small units producing and distributing goods and services and consisting largely of independent, self employed producers in urban or rural areas some of whom employ family labour and or hired workers or apprentice’s which operate with very limited capital or non at all, which utilize low level of technology and skills; which therefore operate at low level of productivity and which generally provides low and irregular incomes and highly unstable employment to those who work for it.

They are informal in the sense that they are for most part unregistered and unrecorded in official statistics and they tend to have little or no organized access to organized markets, to credit institutions, to formal education and training institutions or to any public service amenities; they are not recognized, supported or regulated by the government and 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 law they almost invariably beyond the pale of social protection, labour legislation and protective measures at the workplace.


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