#InformalTalks: Great 3rd webinar on Informal Economy and Social protection yesterday!

Dear Victoria,

Thank you for this useful information and the two interesting references. Actually, the same debates are taking place in France towards “re-qualifying” the labour relationship into contractual work. Furthermore some Deliveroo cyclists made a demonstration in front of the headquarters of the company a few days ago in Paris (see Le Monde 14-15/10/2018). They were complaining about their jobs becoming more and more casual and the working conditions constantly changing to be more and more badly paid at the end. From 7,50€ per hour and 2€ per delivery two years ago, it changed for 5,75€ per delivery one year ago and today (since June) it is 3€ per delivery plus a variable amount with a minimum of 5,30€ lowered to 4,80€ since September: the variable amount is set according to an obscure algorithm based on distances, elevation of the road and waiting time. Workers found that their earnings were declining while the distances exploded.

You may also be aware that the debates are on going at the International Conference of Labour Statisticians currently taking place at the ILO. (This conference is in charge of the definition of labour force concepts). Look at the titles of the sessions and download the reports at https://www.ilo.org/global/statistics-and-databases/meetings-and-events… :

Among them:

·  Room document 5 - Conceptual framework for statistics on work relationships 

·  Room document 6 - Statistical definition and measurement of dependent ‘self-employed’ workers  

·  Room document 9 - Multi-party work relationships; concepts, definitions and statistics 

·  Room document 10 - Testing of proposals for a revised International Classification of Status in Employment 

See also:

ILO, Income security in the on-demand economy: Findings and policy lessons from a survey of crowdworkers.

And

ILO, Digital labour platforms and the future of work. Towards decent work in the online world.

Reality is always running ahead legislations and the establishment of norms, but some progress are taking place.

Dear Jacques,

Thank you for this in depth answer, indeed the informal sector is quite amorphous and adaptable and will most liekly change and incorporate more workers from these platforms in the next few years. Basic social protection floors can cover the informal workers in these sectors where it is unlikely that weak taxing authorities and labour inspections can make employers (both the old type and new type) comply. Just wanted to share the recent state of things in Spain where a judge obliged Deliveroo and a similar company Glovo to make contracts and pay taxes and social security on workers (riders). The judge's decision was based on the fact that, according to legislation in Spain, these workers are not autonomous or even dependent autonomous workers (a type of worker that has also expanded and is legal in the EU) but rather "false" autonomous or self-employed workers given that it is the company or platform that organizes all the work. Interesting, no? In that sense, the organization of informal or platform workers is key to attaining their rights as dependent workers (i.e. they do not organise production). Here is a link in Spanish to a good in depth legal explanation (note the tilte, what is important is reality..!!)

http://www.eduardorojotorrecilla.es/2018/06/el-caso-deliveroo-valencia-…

Also, look at all the pyramidal schemes that "employ" women in their majority in selling their wares (Herbalife, Avon, Tupperware, AmWay, NuSkin, etc.) selling it at business opportunities https://pyramidschemealert.org/ who also do not pay taxes and have all their money in fiscal havens. So, interesetingly a lot of tax evasion and no social protection for millions that informal sector academia and policy don't take into account.

Thank you for this interesting question.

You question the why of concentrating on the formalisation of informal sector rather than the other segments of the informal economy (informal employment in the formal sector, domestic workers).

First one cannot speak of informal “companies” because the informal sector refers to individual enterprises and not corporate firms so it is better to refer to informal (unincorporated) businesses. If you have participated to the first webinar on definitions, size and trends, you will remember that the segment or component of informal businesses (informal sector) is predominant in most countries, especially in Africa and in Southern Asia where the informal economy provides more than 2/3 and even ¾ of the jobs outside agriculture. In developing countries in general, the informal sector is therefore the main concern. But statistics do exist on the segment of informal employment in the formal sector and they were also presented in the first webinar.

However you are right to insist on the importance of focusing on informal employment in the formal sector where a major trend over the globalisation process has been the casualization of jobs: it is precisely the reason why the definition of informal employment in 2003 came and completed the definition of employment in the informal sector adopted in 1993. Medium and large companies mobilise a casual workforce in developing countries as well as in developed countries, either directly (through what is euphemistically called non-standard forms of work), or mostly indirectly through a new putting-out system that consists in sub-contracting with smaller firms, intermediaries or informal enterprises with cascading effects so that at the end of the chain you can find home-based workers including child labour and not benefiting of any right. To the extent that these sub-contracted firms are informal, the question therefore comes back again to the transition of the informal sector, leaving it to the inefficient codes of conduct, the mobilisation of consumers or the extension of the Labour Law and the increase of labour inspections, to introduce more fairness in the process. These are, for sure, dimensions of the policies to be designed to ensure the transition from the informal to the formal economy.

You pointed out a very important issue that has not until now received sufficient attention in terms of measurement although many scholars and observers are aware of its increasing and even overwhelming acuity: the impact of collaborative platforms on employment, labour income, working conditions and living conditions, and more generally the digitalisation of the economy. Uber, Deliveroo or Amazon and also the industry of clickworkers are good examples of this tendency.  

Clickworkers are able to work when, and for how long they choose, doing routine analysis that would normally require months of work. Initially the clickworkers were volunteering for supporting scientific progress. A clickworker is a type of online worker, usually performing routine duties (such as data entry) within a crowdsourcing platform and generally on a per-task pay rate.

Deliveroo is a typical model of fragmentation of work and tasks that is interesting to study because it has recently provided room to new forms of sub-contracting, mobilisation of illegal/clandestine/undeclared work and implementation of new forms of income sharing similar to sharecropping. (Note: In agriculture sharecropping is the distribution by half of the crop between the landowner and the farmer who works the land (more sophisticated sharecropping agreements can divide the crop in 5 shares: one for the land, one for the seeds, one for the capital equipment, one for the working animals and finally one for human labour). These types of sharing exists in the informal sector: a hairdresser will receive half of the receipts made on the seat he has leased to a worker, and similarly the tailor will do the same on the sewing machine, or the owner of the oven with the baker, etc.). The task is the delivery of a good. The worker is the owner of the bicycle. He is paid by the task (the delivery). It has been observed that the worker (known from the platform) gets the job (the task) and, being the owner of the bicycle, has the work done by another worker (illegal or clandestine with no permit) who accepts to do the job for half-salary. And probably one can imagine the existence of intermediaries who owns several bicycles providing jobs to several illegal workers or even children.

Uber is operating with own-account drivers who own their capital equipment (cars) and are supposed to pay their social contributions and taxes as individual own-account entrepreneurs on a statutory basis in some countries, on a voluntary basis in other countries. Through organising, these workers have sometimes succeeded in being re-qualified as paid workers, with the payment of social contributions due by the platform. But as in the case of Deliveroo, cars’ owners can hire drivers in more or less complex systems of job-sharing or rather share-jobbing. 

Digitalisation therefore introduces the possibility of an extreme fragmentation of tasks and payment of work by the task or at piece rate, which means the dilution of labour into multiple fragmented tasks that offer wide possibilities of resorting to part-time jobs, multiple jobs holding, job sharing, low pay and escape from labour law. Such working conditions can only attract illegal migrant workers with no work permits. It is the most efficient method to push salaries downward, escape labour and social security laws and makes sub-contracting in cascade as well as child labour possible even in countries where the rule of law is supposed to be strictly enforced.

Note that Airbnb is a different model in the sense that it does not consist in a new way of hiring/mobilising labour but rather a new way of hiring housing capital or properties, here again by fragmenting the property to the extreme and transforming multi-year leasing agreements into day- or week-lease. But this kind of informality goes beyond the boundaries of what we are studying.

To what extent are these forms of employment captured in statistics of employment? It is highly probable that clickworkers do not show up in labour force statistics because they declare themselves as unemployed or inactive, or enter into these activities as their second job. The absence of work contract is a characteristic of these jobs: commercial contracts, if any, replace work contracts. Smart statistics on these new phenomena can only proceed from a combination of analyses based on labour force surveys, enterprise surveys, data provided by the platforms themselves and, more importantly, qualitative research at grassroots level.

In conclusion, informal markets witness of their highest faculties of adaptation: the worst forms of labour exploitation successfully manage to graft themselves on to these new forms of labour mobilisation so that the labour and social laws are always lagging behind. The informal economy is therefore far from being excluded from the digital revolution, and in many cases digitalisation will constitute a new screen behind which old forms of labour mobilisation and exploitation (informal work) will transmute to remain hidden along the transition process from the informal to the formal economy that ILC recommendation 204 attempts to generalise.

I hope these few remarks will provide some food for thought in your reflexions in the debate on the future of work.

Jacques Charmes

I wanted to flag some ideas, maybe for future seminars or research. I included these in a comment on one of the posted materials in the document section on formalising the informal sector:

I think that the debate that only concentrates in informal companies (ie those that do not pay taxes) is deceptive for two reasons: on the one hand many large companies do not pay taxes and also increasingly reduce the conditions of workers, including new companies "collaborative" like Uber, AirBNB etc .; and on the other hand, the percentage of employment created by this type of company would have to be measured (depending on the country and the sector it could be a significant amount or not). I also think that it has not been thought, in the debate about the future of work, how the informal market will adapt. Will all or only some of the sectors be automated? Will market segmentation increase in a way that also reflects growing inequality? What relationship can the informal market have with the digital revolution?