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Study: Informal employment at record levels

PARIS – More than half the world’s workers, especially women in poor countries, are in informal jobs with low pay and no protections – and the global economic downturn threatens to push the number even higher, according to a report released Wednesday.

Instead of cracking down on employers who hire under-the-table workers, the Organization for Economic Cooperation and Development is urging governments and donor countries to reach out to them with “unconventional” aid.

The Paris-based OECD estimates that 1.8 billion people are working without a formal labor agreement worldwide, compared to 1.2 billion who are officially employed.

The crisis is likely to swell the numbers of those outside the official realm, said Johannes Jutting, an author of the report.

“The finding that is more worrisome, even before the crisis we already have … 1.8 billion people informally employed,” he said.

The study, conducted over the past two years, defines the “informally employed” as workers with no access to any social protections, including pensions or unemployment or health benefits.

The study predicts the number of informally employed will grow to to two-thirds of the world’s work force by 2020 assuming stable population trends, but could go higher if more jobs are lost to recession.

The report urges governments and donors to give informal businesses better access to resources such as micro-credits.

Providing access to tap water to vendors who sell food on the street was one example Jutting cited of a way governments could help bridge a gap in trust between informal workers and the authorities.

He also suggested cutting down on regulations needed to open a business. “Don’t make them go to 10 people in local governments, have a one-stop shop,” he said.

He acknowledged that could be a challenge in many poor countries, where social benefits are seen as an unaffordable luxury. But he said the alternative, in the long term, is worse.

“Informal employment is at record levels worldwide with severe consequences for poverty in poor countries,” the report says. “The financial crisis is throwing many people out of work and, in developing countries with no unemployment insurance, they are forced to take informal jobs with low pay, no protection and high risk exposure.”

The study’s researchers were surprised that the numbers of informal workers were so high even in times of growth, Jutting said.

In India, for example, nine out of 10 employees or approximately 370 million people do not have formal social security, Jutting said.

“We always believed that growth would take away informal employment,” he said.

The global figures do not include people employed in the black market. They do include self-employed farmers.

Jutting said that even taking farmers out of the mix, 75 percent of the working population in sub-Saharan Africa is in the informal sector. In south and southeast Asia, that figure is 70 percent, compared to about 50 percent in Latin America.

He said women are disproportionately represented in the worst-paying jobs, and that the wage gap between men and women is larger in off-the-books jobs than in official ones.

AP-WS-04-08-09 1254EDT

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