How Local and National Governments
Can Support the Urban Informal Economy
More than 50 per cent of the urban work force in most developing countries is informal ‒ ranging from over 80 per cent in South Asia to over 51 per cent in Latin America. With their work, urban informal workers make important economic, social, and environmental contributions to their cities and countries.
Yet despite their contributions, informal workers’ lives and livelihoods continue to be vulnerable for many reasons. Many myths about the informal economy prevail in the minds of city policymakers and the general public ‒ among them the notion that equates the informal economy with illegal activities. These misconceptions have influenced existing local legal frameworks and policies to the detriment of the livelihoods of informal workers. They have also permeated the visions of urban designers and policymakers as they define the future of cities.
Visions of urban development need to be revisited to address inequalities. According to the United Nations, half of the world’s population live in cities, and it is expected that the trend will continue, especially in developing countries. Cities have become important economic hubs in the world, gathering economic production, and, increasingly, political power. This trend, combined with the transfer of responsibilities from national to local governments over the last decades, have created increasing global competition among cities for investment and resources.
And just as cities rise economically, the levels of inequality within cities are increasing, creating important social, economic, and governance challenges for local authorities. In the Habitat III process, the agreement and implementation of the New Urban Agenda can provide an opportunity to address these challenges, and to create a new and inclusive vision of city development – one where formal and informal livelihoods are promoted, social and economic gaps can be reduced, and political rights can be exercised.
WIEGO has committed to ensuring the voices of urban informal workers can be heard in the Habitat III process, with the hope and expectation that the New Urban Agenda will include urban informal workers as key stakeholders working with local and national governments to implement the Agenda over the coming 20 years. As one contribution to this process, the WIEGO Network has launched an MBO Platform to help guide local and national governments that seek to implement the Agenda in an inclusive and participatory way.
What Do Urban Informal Workers Need from City Governments?
The following are common needs of urban informal workers that should be taken into account by local governments as they seek to implement the New Urban Agenda in an inclusive and participatory way:
- Recognize informal workers as legitimate stakeholders with the right to participate in urban planning processes.
- Provide new and expanded legal frameworks to protect working poor in the informal economy and their rights and entitlements as workers, including the right to work (e.g. to vend in public spaces), commercial rights, and land-use/tenure rights.
- Create an economic policy environment supportive of informal operators, especially the working poor, that is not blind or biased against them. This requires addressing biases in existing economic and sector policies, as well as designing and implementing targeted policies.
- Create demand for the goods and services produced by informal enterprises and workers through local government procurement.
- Fairly allocate urban space and other resources to support the livelihoods of the poor.
- Increase economic opportunities -- to reduce crime and violence.
- Increase access to basic urban services: housing, water, sanitation, and electricity, as well as improved, adequate, affordable and more accessible transport services that allow them to transport their goods to relevant markets.
- Design skills development plans and other business and financial supports for informal workers so that they can increase their income potential.
- Design urban housing projects while bearing in mind that these spaces are used both to live and to work. They should also be developed to offer access to economic opportunities to informal workers without the need to travel long distances.
Social Protection and Safety at Work:
- Provide adequate and affordable health care services/centres, accessible to informal workers, including convenient opening hours.
- Provide child care centres to keep children out of child labour. The issue of child care must be a priority, given the overrepresentation of women in the informal economy.
- Adequately regulate and provide access to appropriate infrastructure to ensure informal workers’ occupational health and safety.
Collective Bargaining and Representation:
- Designate spaces for dialogue and tripartite forums at the city level where informal workers can participate directly. Informal workers must be able to directly regulate their working conditions through collective bargaining processes that involve democratically elected representatives of these worker organizations (rather than representatives of other trade unions speaking on their behalf).
- Create appropriate bargaining forums at the city level, enshrined in law, and with sufficient budgetary provision for them to function effectively. This requires designing the rules of participation, establishing criteria for determining the issues for negotiation, and envisaging how such new forums will engage with the wider policymaking and regulatory frameworks so that these become a meaningful part of participatory decision-making.
- Avoid counterproductive effects by both national and local governments by doing away with Special Economic Zones (SEZ) and other measures that create further informalization.
- Write city policies that ensure youth can become fully integrated in labour markets with protection against becoming another vulnerable sector of the labour force.
- Support and fund the creation, registration, and strengthening of informal workers’ organizations, such as workers associations, cooperatives, and trade unions.
Recognizing that national governments also play an important role in creating an enabling environment for the livelihoods of urban informal workers through the legal and policies frameworks, and by correcting existing biases against their livelihood activities, the MBO Platform also has guidance for national governments – with sector-specific points outlined in relation to street vendors, home-based workers, and waste pickers. Click here to see the full MBO Platform and to read more about WIEGO’s role in the Habitat III process on the road to Quito.
 Vanek, Joann , Martha Alter Chen, Françoise Carré, James Heintz and Ralf Hussmanns. 2014. Statistics on the Informal Economy: Definitions, Regional Estimates & Challenges. Working Paper 2. Manchester: WIEGO. P. 1
 U.N. 2016. Sustainable Develoment Goals. Goal 11: Make cities inclusive, safe, resilient and sustainable.