The coronavirus pandemic has hit the developing world’s informal economy hard. Existing on the margins, with no access to social safety nets such as unemployment insurance and pensions, many of the 2 billion informal workers around the world were already barely keeping their heads above water before the lockdowns. One analysis estimated that 1.6 billion informal sector workers worldwide would suffer a 62 percent decline in income in the first few months of the crisis alone, with workers in lower-income countries projected to see their earnings shrink by 88 percent.
But the pandemic may finally bring a much-needed evaluation by governments and international financial institutions of their failures to effectively understand and address labor inequalities that have created a semipermanent marginalized, vulnerable underclass of global workers. This week’s meeting of the International Monetary Fund and the World Bank and ministers of economy and finance from all over world presents a perfect, near-post-crisis moment to consider their obligations to the plight of informal sector workers.
According to the International Labor Organization, in 2020 more than 2 billion people — or 62 percent of the global workforce — were employed in the informal sector, the bulk of them in the developing world. Eighty-five percent of the workforce in Africa, 59 percent of workers in the Asia Pacific and 53 percent of laborers Latin America work in the informal sector.
These workers not only bore the brunt of the covid lockdown measures, but they also were largely left behind by the stimulus packages that governments implemented. Many packages relied on tax relief, extended unemployment benefits or cash transfers that excluded many informal sector workers.
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