Law and the Informal Economy

Informal Workers engaged in Law Exposure Dialogue


WIEGO Specialists

Marlese von Broembsen
Law and the Informal Economy

Pamhidzai H. Bamu-Chipunza
Africa Coordinator,
Law and the Informal Economy

Tania Espinosa Sánchez
Latin America Coordinator,
Law and the Informal Economy

WIEGO launched the Programme on Law and the Informal Economy in October 2015. The programme aims to (a) analyze and improve legal and regulatory frameworks for informal workers and (b) empower workers’ organizations to fight for their recognition and rights as workers on a local and international level. The programme builds on the work achieved by the Law and the Informal Economy Project.

In 2006, WIEGO established a project on Law and the Informal Economy with a pro-poor, and pro-women perspective. The project commenced with pilot programs in India and Colombia, and was implemented in five countries: Ghana, India, Peru, South Africa and Thailand. The project focused, in particular, on own-account workers in the lowest segments of the informal economy. (See country-specific outputs)

The Law & Informality Project documented how laws and regulations – or their absence – impact on different groups of informal workers. The project identified labour legislation, environmental laws, municipal laws, sector-specific laws (e.g., agriculture, fisheries), right-to-information laws and property laws as having significant impact on different sectors in the informal economy.

Legal Recognition of Informal Workers

Domestic Worker, Peru
Juan Arredondo, Getty images / Reportage

Law is essential to improving livelihoods and lives. But legal and regulatory frameworks are designed for the formal economy. Too often, the law fails to protect and support informal workers. Instead, legislation, and the way it is enforced, often criminalizes informal workers’ livelihood activities.

Informal workers – like all workers – require a regulatory framework that protects their rights in the workplace, balances the needs of all stakeholders, and promotes a climate of stability and security. An appropriate legal framework can encourage economic development that allows informal workers to achieve their full potential as workers and, often, as micro-entrepreneurs.

It is widely assumed that informal workers, businesses and activities operate outside the reach of the law. However, in many countries, informal workers and their livelihood activities fall under the punitive arm of the state and outside the protective arm. Most often, informal workers and businesses are excluded from labour, employment and business legislation, and are denied the rights and entitlements afforded to formal employees and businesses. At the same time, informal workers, businesses and activities are regulated by a complex range of national, sector-specific and city-level legislation that are punitive in their effect, compromising their livelihoods and often violating their human rights. Police harassment of informal traders is ubiquitous, contravention of legislation is most often treated as a criminal offence, and informal workers are denied basic due process protections under rule of law.

In most countries, the legal framework focuses only on formal relationships, which for workers means labour and employment legislation based on an employer-employee relationship. Policy for informal workers is either in the form of small business support (with an emphasis on supply-side interventions such as micro-finance and business training), or poverty-alleviation projects (particularly for women, who are over-represented in the most low-income sectors). Informal workers — whether own-account workers, outworkers that participate in global value chains, or atypical wage workers whose rights have been eroded through corporate outsourcing and subcontracting — want to be recognized as workers, who make a substantial contribution the economy.

Formalizing the informal economy should mean extending recognition, voice, economic opportunity, social protection and due process to informal workers — in short, realizing ‘decent work’ for the informal economy. It means building the organizational strength and capacity of informal workers to claim rights as workers and citizens, and crafting new conceptual frameworks that enable the legal recognition and protection of informal workers.

Goals & Activities

Domestic Worker, South Africa
Jonathan Torgovnik, Getty images / Reportage

The goals and activities of the Programme on Law and Informal Employment include:

  • To build the capacity of organizations of informal workers to advocate and negotiate for legal change.
  • To provide legal support to organizations of informal workers in their bargaining, negotiations and advocacy
  • To develop resources on law and informal workers that meet the differing needs of MBOs, legal practitioners, legal academics, governments, NGOs and others.
  • To challenge current legal frameworks that exclude, penalize or criminalize the livelihood activities of informal workers, and to contribute to the re-conceptualization of law to include and protect informal workers.

Impact & Achievements

Past Activities

Resources on Law and Informal Workers

Head Porter, Ghana
Jonathan Torgovnik, Getty images / Reportage

The Law & Informality Project microsite includes:

  • Law Observatory of legal documents on the informal economy that WIEGO and its partners have collected from different jurisdictions worldwide
  • Country Reports about WIEGO's project on Law and the Informal Economy
  • Legal Briefs exploring selected topics 

Legal resources relevant to specific sectors: