The informal sector and social protection

Abstract

In recent years, there has been growing interest to extend social protection coverage to people working in the informal economy. Informal economy workers constitute substantial workforce in most countries and form a base for most economies. However, they are largely excluded from formal social protection coverage. Reasons for exclusion include inadequate legal coverage, lack of compliance and adequate monitoring mechanisms, lack of knowledge about social protection, high contribution rates, unattractive benefit package and mistrust. There are a range of policy options and modes of delivery that can be used to extend coverage. Coverage for informal economy workers in social protection is important. Contributions, benefit package and vesting period should all be tailored to attract people in the informal economy, according to each country setting, in order to protect people from social and economic risks.