1. INCLUSIVE CITIES &
THE URBAN INFORMAL WORKFORCE
MARTY CHEN
LECTURER IN PUBLIC POLICY, HARVARD KENNEDY SCHOOL
AFFILIATED PROFESSOR, HARVARD GRADUATE SCHOOL OF DESIGN
INTERNATIONAL COORDINATOR, WIEGO NETWORK
MEXICO CITY CONFERENCE NOVEMBER
24, 2014

2. PRESENTATION
My presentation will be in 3 parts:
 Informal Sector, Informal Employment & Informal Economy
 Definitions
 Data
 Urban Informal Employment
 Size & Composition
 Driving Forces
 Inclusive Cities
 Policy Stance
 Policy Vision

3. INFORMAL SECTOR, INFORMAL
EMPLOYMENT, INFORMAL ECONOMY
There are three related official statistical terms and definitions which are
often used imprecisely and interchangeably by analysts and observers:
• informal sector refers to the production and employment that takes place
in unincorporated enterprises that might also be unregistered or small (1993
ICLS)
• informal employment refers to employment without social protection (i.e.
without employer contributions) both inside and outside the informal
sector: i.e., for informal enterprises, formal enterprises, or households
(2003 ICLS)
• informal economy refers to all units, activities, and workers so defined and
the output from them (ILO 2002).
In sum, the informal economy is the diversified set of economic
activities, enterprises and workers that are not regulated or protected by
the state; and the output from them.

4. INFORMAL EMPLOYMENT:
2003 International Conference of Labour Statisticians
 Self-Employed in Informal Enterprises (i.e. unincorporated
enterprises that may also be unregistered and/or small)
 employers
 own account operators
 unpaid contributing family workers
 members of informal producer cooperatives
 Wage Workers in Informal Jobs (i.e. jobs without employment-linked
social protection)
 informal employees of informal enterprises
 informal employees of formal firms
 domestic workers hired by individuals/households without
employer contributions

5. INFORMAL EMPLOYMENT AS
% OF NON-AGRICULTURAL
EMPLOYMENT 2004-2010
Average & Range by Regions
South Asia: 82%
62% in Sri Lanka to 84% in India
Sub-Saharan Africa: 66%
33% in South Africa to 82% in Mali
East and Southeast Asia: 65%
42% in Thailand to 73% in Indonesia
Latin America: 51%
40% in Uruguay to 75% in Bolivia
Middle East and North Africa: 45%
31% in Turkey to 57% in West Bank & Gaza
Source: Vanek et al. WIEGO Working Paper No. 2, 2014

6. INFORMAL EMPLOYMENT:
COMPOSITION IN DEVELOPING REGIONS
Informal wage workers outside informal enterprises
(i.e. for formal firms or households)
around15% of non-agricultural employment
Self-employed as % of informal non-ag employment
Employers = 1-4%
Unpaid family workers in family firms = 5-12%
Own account workers = 35-53%
Source: Vanek et al. WIEGO Working Paper No. 2, 2014
Three Key Points:
# 1 - a significant share of informal wage employment is outside informal
enterprises (i.e. for formal firms or households)
# 2 – most informal self-employed do not hire workers
# 3 – labor laws & regulations have limited salience for informal self-employed
– what matters are sector-specific policies (notably urban
policies for urban self-employed)

7. SPECIFIC GROUPS OF URBAN
INFORMAL WORKERS
 Domestic Workers = 6% of employment in Lima and 8% of employment in
Buenos Aires; 5% of urban employment in India and 3-9% of employment
in African cities where data available
 Home-Based Workers = 3% of employment in Buenos Aires; 14% and 6%
of urban employment in, respectively, India and South Africa
 Street Vendors = 1% of employment in Buenos Aires; 3% of urban
employment in Brazil; 4% and 15% of urban employment in, respectively,
India & South Africa
 Waste Pickers = 1 per cent or less of urban informal employment in cities
or countries where data are available
 All Four Groups = 23% of urban employment in India
Source: ILO-WIEGO 2013. Women & Men in the Informal Economy:
A Statistical Picture; Chen and Raveendran WIEGO Working Paper No. 7,
2014.

8. INFORMAL EMPLOYMENT
IN MEXICO
Size: informal employment.
 51.8% of national employment.
 45.2% of urban employment.
Composition: two types of informal employment as
percentage of urban* employment.
 25.4% inside informal enterprises.
 19.8% outside informal enterprises.
* Localities ≥ 100 thousand inhabitants.

9. URBAN INFORMAL EMPLOYMENT
IN MEXICO
 Employment inside informal enterprises in
urban areas amounts to 6.4 m (2.3 m. are
women).
 56.2 % of the total urban informal
employment.
 Informal employment outside informal
enterprises is about 4.9 m. and a majority of
them women (2.6 m.).
 43.8% of total urban informal employment.

10. URBAN INFORMAL EMPLOYMENT
IN MEXICO
 There are 6.5 m. informal paid dependent workers
(employees).
 2.0 m. working for informal enterprises.
 4.5 m. working outside informal enterprises.
• 1.1 m. paid domestic workers.
• 3.4 m. working for formal enterprises.
Source: INEGI. ENOE, Third Quarter 2014 (from Rodrigo Negrete).

11. EXCLUSIONARY URBAN POLICIES:
THREATS TO URBAN LIVELIHOODS
 Urban Livelihoods:
o impacted by municipal policies + regulations + practices – more so than
labor law or national policies
o overlooked or undermined by municipal authorities and urban planners +
excluded from or destroyed by urban renewal schemes
 Key Urban Informal Groups – threats to livelihoods
o home-based producers: lack of basic infrastructure services, especially
irregular supply of electricity + single-use zoning regulations + slum
relocations
o street vendors: insecure workplace + abuse of authority by local officials
and police, especially bribes, confiscation of goods, evictions and
relocations
o waste pickers: lack of rights of access to waste + lack of integration into
solid waste management system
o all three groups: lack of accessible/affordable transport + lack of integration
into local economic planning

12. INCLUSIONARY URBAN POLICIES:
PROMISING EXAMPLES
 Home-Based Workers:
o Ahmedabad, India: in situ upgrading of slums with provision of basic
infrastructure services
 Street Vendors
o Lima, Peru – New Metropolitan Street Vending Ordinance to regulate
vending in public space, issued in May 2014
o Ferias Libres in Multiple Cities, Chile: rotating location of markets to reduce
impact on traffic + legal framework to legitimize street markets
 Waste Pickers
o Belo Horizonte, Brazil: sheds and other infrastructure for waste picker
cooperatives to sort, bundle, process and store waste
o Bogota, Colombia: integration of waste pickers into solid waste
management,; payment to waste pickers for collecting and sorting waste

13. INCLUSIVE CITIES:
POLICY RECOMMENDATIONS
Home-Based Workers: quality
housing + de facto tenure +
basic infrastructure services
Street Vendors: legal access to
public space in natural markets
Waste Pickers: inclusion in
solid waste management
All: recognition of contributions
+ representation in planning

14. INCLUSIVE CITIES:
GUIDING PRINCIPLES
 Most developing economies are hybrid economies – mix of both
modern-traditional and formal-informal – and should remain so.
 The size, composition, and contribution of the informal economy
need to be fully counted in official statistics and fully valued by
policy makers.
 Informal workers, activities, and units should be included in local
economic planning.
 Informal workers need to have representative voice in rule-setting
and policy-making bodies.

15. INCLUSIVE CITIES:
VISION FOR THE FUTURE
“The challenge is to convince the policy makers to promote and
encourage hybrid economies in which micro-businesses can co-exist
alongside small, medium, and large businesses: in which the
street vendors can co-exist alongside the kiosks, retail shops, and
large malls. Just as the policy makers encourage bio diversity, they
should encourage economic diversity. Also, they should try to
promote a level playing field in which all sizes of businesses and
all categories of workers can compete on equal and fair terms.“
Ela Bhatt
Founder, Self-Employed Women’s Association (SEWA), India
Founding Chair, WIEGO
Member, The Elders

16. FOR MORE DETAILS
Please visit www.wiego.org
THANK YOU!