The Definition of Informal Economy
In each country of the world, the existence of an informal economy
cannot be ignored, the informal economy can be defined as the economy which is
not reported in official figures is known as the informal economy. There is no protection
to the labor of that economy and even they are not registered. The people do
more work in very low package or even we say at nominal packages. Grey economy
is also another name of this economy. These workers are specified as the street
hawkers, the workers who work in any construction work are called the persons
of the informal economy. These people get no protection from and state and similarly,
they do not pay the taxes to the state. All employees or workers who perform
the lobar activities from outside of the registered government labor market are
part of this economy.
The Importance of the Informal Economy
This economy is very important, because it contributes to the development
of any country, despite that the workers are getting very low wages in this
economy even then it contributes to increasing the GDP of any country.
Informal Economy of Pakistan
The informal economy or Grey economy exists in every country of
the world. So, similarly, in Pakistan, this economy exists in large numbers. Where
workers have limited access to labor welfare services. The Labor Force Survey
2017-18 states that the informal sector accounts for 71.7 percent of the
employment in main jobs outside agriculture, more in rural areas (75.6 percent)
than in urban areas (68.1 percent). Overall, there has been a slight decrease
in the informal sector if we compared to the Labor Force Survey 2008-09 data on
the informal sector which shows the informal sector accounts for more than 73.3
percent of the employment in main jobs outside agriculture. The key sectors of
employment in the informal economy are wholesale and retail trade
manufacturing, community/social and personal services, construction, and
transport. Following the 18th Constitutional Amendment, in 2010, which resulted
in the devolution of labor administration from Federal to Provincial
Governments, efforts have been made to formulate provincial labor policies. In
2018, the provincial governments of Punjab, Sindh, and KP developed their
respective Labor Policies with a focus on contemporary labor issues and
challenges. The Punjab Labor Policy 2018, incorporates, for example, areas such
as the effective implementation of labor standards, social dialogue,
improvements in workplace safety, living wages, child and bonded labor,
awareness-raising, and excellence in labor inspections regime. The informal
economy in Pakistan is characterized by several decent work deficits and
challenges including rights at work, child and bonded labor, social protection,
lack of sustainable employment, working poverty, gender-based discrimination.
The DWCP (2016-2022) has focused on promoting decent work in the rural economy,
which constitutes a large segment of the informal economy in the country.
Besides, rural economies are characterized by low productivity, informality,
and weak enforcement of laws, among others.
Special thanks to the international labor organization, please
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