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Arab Watch on Economic and Social Rights: Informal Employment

The Challenge

A feeling of disempowerment led a Tunisian street vendor to set himself on fire in late 2010. Tarek el-Tayeb Mohamed Bouazizi ignited the series of popular uprisings known now as the Arab Spring. He was part of the informal economy, unaffiliated with a larger employer and uninsured. Outside of the agricultural and governmental sectors, informal labor makes up most of the work forces in Arab countries in the Middle East and North Africa, and accounts for a large share of GDP. Like Mohamed Bouazizi, individuals in informal positions typically lack health care and other benefits associated with being part of formal economies, and their unhappiness with such vulnerability puts countries at risk of future conflict and unrest. How can the rights of those in the informal economy be codified so as to guarantee workers’ welfare? What can be done to bring them under the socio-economic umbrella that takes care of those who are part of the formal labor force?

What’s in the Report

A two-part examination, the report dives deep in defining what the informal economy is and what conditions lead, in each country, to its existence. Using international and regional data and statistics, it breaks down who takes part in the informal economy, what categories of work make up this economy, and the impact other demographic variables like migration, baby booms, unemployment rates, and gender make in this calculus. The report identifies significant differences in the countries under consideration that affect the entire discussion--for instance, whether the country is oil exporting or a former European colony, and considers the toll taken on employment by the rise and fall of the oil industry.

The report demonstrates how trends in Arab countries of the Middle East and North Africa have contradicted long-held assumptions about informal economies. That is, economic growth does not on its own shrink the informal economy, as was historically understood. Rather, the nature of the growth is a factor in the size of the informal economy; where technology has taken hold and allowed, for example, for the rise of Uber, so too have spiked rates of informal laborers who work on their own behalf. The report explores other findings that offer notable correctives to traditional thinking, namely that high rates of informality occur in countries where laws are less strict, rather than more strict, and that “informal labor in Arab countries is mostly waged labor, except in rare cases, which contradicts another idea that says that informal labor is a choice, as young people entering the job market have no choice but to find any type of livelihood, no matter how fragile or temporary.”

The report examines policy approaches to the informal economy and interrogates the debate over whether and how to formalize it, in particular with regard to the question of unionizing. It takes up examples from other parts of the world--Peru and India--and lays out specific policy recommendations regarding how to proceed. Additionally, it offers extensive individual, analyses on informal labor in each of the countries considered, which include Algeria, Bahrain, Egypt, Iraq, Jordan, Lebanon, Mauritania, Morocco, Palestine, Sudan, Syria, and Yemen.