4.3 Main sectoral approaches of policies designed to tackle the informal economy
As discussed above, the formulation of policies aimed at tackling the informal economy can be based on empirical or normative approaches. Beyond this basic divide in terms of approaches that is manifested mainly at the macro-level (e.g. through legislation, regulatory systems and creation of enabling environment), the tools and instruments used by the donors in their interventions aimed at the informal economy do not vary substantially. For example, provision of training, micro-finance, access to markets and services, advocacy, representation and voice are in general viewed as meritorious and justified in the informal economy projects by all donors.
Through their main components and variants, the policies tackling the informal economy can be analysed around three sectoral approaches that are: social protection, technical and vocational skills’ enhancement, and finance (especially micro-finance). Skills’ enhancement and provision of finance deal with the supply side of the informal production, seeking to improve or develop the means of production, increasing the manpower’s skills, or a more capital-intensive organisation of the micro-firms. Social protection on the other hand is a different approach that could be seen as intervening further to the supply side approach. As a matter of fact, it has often been undertaken independently and even prior to policies addressing the improvement of the means of production. By many aspects, a more universal social protection can be considered as an efficient means of increasing the productivity of the workforce, making it healthier, more confident in the future and in a soothed relationship with the employers.
4.3.1 Social Protection
4.3.2 Technical and vocational skills enhancement
4.3.3 Finance