What are the Policy Implications of the Informal Sector Becoming the Informal Economy?

by ALTMAN, M., 2007
Research Report, Employment Growth & Development Initiative, Human Sciences Research Council

Altman considers the meaning of informality and related policy implications. She sees the concept of the ‘informal sector’, which often refers to micro, unregistered enterprise, as a narrow construct that is not really a sector at all. Instead, Altman is concerned with the character of precariousness in the broader workforce. ‘Informality’ is seen to entail precariousness in that the activity operates outside of bureaucratic rules or regulations. This is an important concept for poor working people, who are in the majority in developing countries. This approach forces us to focus more centrally on the contributors to uncertainty in their livelihoods. Focusing policy on structural solutions to reduce precariousness in the assembly of household livelihoods is particularly important in a developing country context where there is less access to fiscal resources as well as limited resources to ensure regulatory compliance. Micro-economic interventions have less impact on poverty reduction in an unsupportive structural context.