The International Labour Organisation (ILO) Recommendation 204 of 2015, has been extolled by various scholars and analysts as one of the most progressive instruments that can be used to both expedite the formalisation agenda and strategically locate the informal economy as a vehicle towards sustainable development and eradication of extreme poverty.
A good number of states have embraced and adopted the Recommendation 204 and have begun to put in motion interventions to ensure its actualisation.
However, there are other member states that have not embraced the recommendation and are doing everything to undermine its prescriptions.
What is the ILO recommendation 204?
The International Labour Organisation Recommendation 204 (R204) was adopted by the General Conference of the organisation in Geneva after having met during its 104th Session on June 1, 2015.
The preamble of the R204 explicitly recognises that the high incidence of the informal economy in all its aspects is a major challenge for the rights of workers.
This also includes the fundamental principles and rights at work, and for social protection, decent working conditions, inclusive development and the rule of law, and has a negative impact on the development of sustainable enterprises, public revenues and governments’ scope of action, particularly with regard to economic, social and environmental policies, the soundness of institutions and fair competition in national and international markets.
In its broad premise, The R204 encompasses 12 guiding principles designed at supporting the formalisation of the informal economy, promoting the economic inclusion of workers, recognising the fundamental rights of workers, and fostering an entrepreneurial spirit as well as contributing to decent work, social dialogue and civic participation.
More crucially, the recommendation sets out the new international standards with the aim of providing guidance for member states to facilitate the transition of workers and economic units from the informal to the formal economy, while respecting workers' fundamental rights and ensuring opportunities for income security, livelihoods and entrepreneurship.
In this article, we are going to analyse some of the 12 guiding principles explicitly explaining how member states can actualise them for the benefit of informal economy workers, who for a long time have been at the receiving end of archaic policies and bylaws.
Objectives and scope of R204
The R204 is anchored on three broad objectives that provides guidance to members to do the following:
n Facilitate the transition of workers and economic units from the informal to the formal economy, while respecting workers’ fundamental rights and ensuring opportunities for income security, livelihoods and entrepreneurship;
n Promote the creation, preservation and sustainability of enterprises and decent jobs in the formal economy and the coherence of macroeconomic, employment, social protection and other social policies; and
n Prevent the informalisation of formal economy jobs.
In terms of latitude and scope, The R204 refers to the term “Informal Economy” as covering all economic activities by workers and economic units that are, in law or in practice, not covered or insufficiently covered by formal arrangements.
This, however, does not cover illicit activities, in particular the provision of services or the production, sale, possession or use of goods forbidden by law, including the illicit production and trafficking of drugs, the illicit manufacturing of and trafficking in firearms, trafficking in persons, and money laundering, as defined in the relevant international treaties
The guiding principles
As they come up with coherent and integrated approaches to facilitate the transition to the formal economy, member states should be guided by the following guiding tenets:
- The diversity of characteristics, circumstances and needs of workers and economic units in the informal economy, and the necessity to address such diversity with tailored approaches;
- The specific national circumstances, legislation, policies, practices and priorities for the transition to the formal economy;
- The fact that different and multiple strategies can be applied to facilitate the transition to the formal economy
- The need for coherence and coordination across a broad range of policy areas in facilitating the transition to the formal economy;
- The effective promotion and protection of the human rights of all those operating in the informal economy;
- The fulfilment of decent work for all through respect for the fundamental principles and rights at work, in law and practice;
- The up-to-date international labour standards that provide guidance in specific policy areas
- The promotion of gender equality and non-discrimination;
- The need to pay special attention to those who are especially vulnerable to the most serious decent work deficits in the informal economy, including but not limited to women, young people, older people, indigenous and tribal peoples, persons living with HIV or affected by HIV or AIDS, persons with disabilities, domestic workers and subsistence farmers;
- The preservation and expansion, during the transition to the formal economy, of the entrepreneurial potential, creativity, dynamism, skills and innovative capacities of workers and economic units in the informal economy;
- The need for a balanced approach combining incentives with compliance measures; and
- The need to prevent and sanction deliberate avoidance of, or exit from, the formal economy for the purpose of evading taxation and the application of social and labour laws and regulations.
Legal and policy frameworks
The R204 further exhorts states to undertake a proper assessment and diagnostics of factors, characteristics, causes and circumstances of informality in the national context to inform the design, implementation of laws and regulations, policies and other measures aiming to facilitate the transition to the formal economy.
This also includes states adopting, reviewing and enforcing national laws and regulations or other measures to ensure appropriate coverage and protection of all categories of workers and economic units.
States should ensure that an integrated policy framework to facilitate the transition to the formal economy is included in national development strategies or plans as well as in poverty reduction strategies and budgets, taking into account the role of different levels of government.
Employment policies
At the heart of R204 is a reinforcement to all states to promote the implementation of a comprehensive employment policy framework, based on tripartite consultations. The consultations must encompass pro-employment macroeconomic policies that support aggregate demand, productive investment and structural transformation, promote sustainable enterprises, support business confidence, and address inequalities.
Furthermore, the framework must support trade, industrial, tax, sectoral and infrastructure policies that promote employment, enhance productivity and facilitate structural transformation processes.
Lastly, there is need for enterprise policies that promote sustainable enterprises and, in particular, the conditions for a conducive environment, taking into account the resolution.
Conclusion
Despite the R204 having been crafted and adopted in 2015, the majority of workers in the informal economy continue to work under extremely precarious conditions.
R204 provides an inclusive and progressive framework that recognises lack of protection of workers in the informal economy, and provide a shared guide for improving their protection and facilitating transitions to the formal economy.
By recognising the complexity of informality, the Recommendation covers various policy areas, including legal, incentives, compliance, enforcement, freedom of association, social dialogue, the role of employers and workers organisations as well as data collection and monitoring.
*Wadzai is the executive director of Vendors Initiative for Social Economic Transformation.
These weekly articles are coordinated by Lovemore Kadenge, an independent, managing consultant of the Zawale Consultants (Private) Limited, past president of the Zimbabwe Economics Society and past president of the Chartered Governance & Accountancy Institute in Zimbabwe . Email- kadenge.zes@gmail.com and Mobile No. +263 772 382 852
Harare, 14/06/2023
