Social protection for the informal sector

Informal sector workers are generally not covered by adequate social protection. According to the International Labour Organization (ILO), between half and three-quarters of all non-agricultural employment in developing countries is informal. Informal employment is often characterized by a lack of protection in case of wages not being paid, lay-offs without notice or compensation, unsafe working conditions, and no social benefits such as pensions, sick pay, and health insurance.

PAGE projects in Togo, Burkina Faso and Bolivia investigated different aspects of how the informal sector populations in each country protect themselves against shocks such as accidents and illness, as well as planning for old age. In each of these countries, the majority of the labor force works in the informal sector and does not receive social protection via their employer nor the state.

Paying for social insurance

The evidence from Togo indicates that almost all (94.5%) informal sector workers are willing to pay for access to social insurance programs. Similar results were found in the areas of Burkina Faso where there is little social assistance for informal sector workers. In Togo, this willingness to pay for social protection is found to be affected by the monthly cost of social protection contributions and the type of social protection offered, with around 20% of informal sector workers being interested in health insurance and old age pensions. Men are found to be willing to pay more for access to social protection benefits than women. However, this may be because the proportion of women working in the informal sector with a monthly income below the minimum wage is higher than that of men.

In Bolivia, the PEP researchers found that although shocks to the household income – such as accidents, illness and death – can be mitigated or prevented through the implementation of social insurance programs for vulnerable households, currently the most common coping strategy is for household members to work multiple jobs

 

This article is the seventh in a series presenting general conclusions and findings drawn from PAGE projects across the globe, highlighting a list of specific themes that have emerged as particular trends from the research teams’ perspectives following the evaluation of their countries’ priority issues.

See also: 
Introducing a minimum wage can improve well-being
Why youth become entrepreneurs
Supporting female entrepreneurship to reduce poverty
How migration and remittances affect welfare and employment at home
Managing the mining industry to help reduce poverty
Cash transfers reduce poverty and improve well-being

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