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informal sector

Targeting which informal firms might formalize and bringing them into the tax system

David McKenzie's picture
I have worked for a while with different attempts to get informal firms to register their businesses and become formal. We have tried giving them information and actually paying them to formalize, lowering the cost of registering to zero, offering them accountants and increasing enforcement.

Should developing countries increase their minimum wages? Guest post by Andrés Ham

In the closing scene of Christopher Nolan’s The Dark Knight, Police Commissioner Gordon tells his son that Batman is “the hero Gotham deserves but not the one it needs right now” (video). This quote provides an interesting policy analogy with minimum wage increases. The benefits of raising minimum wages are something we believe workers deserve: better pay. Unfortunately, the costs tend to involve higher unemployment, which no country needs right now.
 

The 2016 Gates Letter is all about power

Suvojit Chattopadhyay's picture
Solar energy is used to light village shop, Sri LankaThe Gates have now made an annual tradition of publishing their development manifestos – they are in the form of letters that they write early in the calendar year. These letters contain not only their personal vision, but presumably, that of the Bill and Melinda Gates Foundation (BMGF). Broadly, my reaction to the letters in 2014 and 2015 were that they reflected an inordinate focus on technology-driven solutions. By those standards, I was in for a surprise this year as I read the 2016 Gates Letter.

In his section, Bill Gates outlined his dream of an “energy miracle”. This is easily one of the most important priorities for the globe. Experts are united that clean energy is the way forward. Falling oil prices might just present a serious challenge to this push, but hopefully this is a temporary glitch that will not derail investments in research and development in the search for clean energy. This search also ties in with the Gates’ traditional areas of strength, which are science and technology-driven, looking to extend the frontiers of knowledge in an effort to improve human welfare.

As critical as advances in science and technology are, Gates does well to remind us of the power that governments have and thereby, points to the importance of generating a political consensus:
 

“Governments have a big role to play in sparking new advances, as they have for other scientific research. U.S. government funding was behind breakthrough cancer treatments and the moon landing. If you’re reading this online, you have the government to thank for that too. Research paid for by the U.S. government helped create the Internet.”

A virtuous circle: Integrating waste pickers into solid waste management

Martha Chen's picture
Waste – its generation, collection, and disposal – is a major global challenge of the 21st century. Recycling waste drives environmental sustainability by reducing greenhouse gas emissions and stimulates the economy by supplying raw materials and packaging materials.
 
Waste pickers are the principal actors in reclaiming waste for the recycling industry. Across the world, large numbers of people from low-income and disadvantaged communities make a living collecting and sorting waste, and then selling reclaimed waste through intermediaries to the recycling industry. Where others see trash or garbage, the waste pickers see paper, cardboard, glass, and metal. They are skilled at sorting and bundling different types of waste by color, weight, and end use to sell to the recycling industry. Yet waste pickers are rarely recognized for the important role they play in creating value from the waste generated by others and in contributing to the reduction of carbon emissions.
 
Fortunately, around the world, waste pickers have been organizing and cities have begun to promote the virtuous circle that comes with integrating waste pickers, the world’s recyclers, into solid waste management.
 
Brazil was the first country to integrate waste pickers, through their cooperatives, into municipal solid waste management systems and the first to adopt a National Waste Policy, recognizing the contributions of waste pickers and providing a legal framework to enable cooperatives of waste pickers to contract as service providers. The national movement of waste pickers in Brazil was awarded a contract to clean the stadiums during the World Cup.
 

Creating Better Jobs in South Asia

Preet Rustagi's picture

Despite rapid economic growth in South Asia, the majority of workers in the region have low-paid jobs in the informal economy, where productivity is sub-standard and social protection is lacking. In fact, a new report on labor in India – by the Institute for Human Development (IHD) in New Delhi – estimates that 276 million workers live below a poverty line of $2 per day . What can be done to create better jobs in the region? Preet Rustagi, a Professor at the IHD, argues that the key will be improving the quality of human capabilities, notably through better education and skills training.

Crafting Policies Where Informal is Normal – Part 1

Martha Chen's picture

In the developing world, the informal workforce is at least half of the total workforce, and therefore subject to with low incomes, high risks, and no formal contracts or benefits. We recently spoke with Martha Chen, a Lecturer at the Harvard Kennedy School and the International Coordinator of the WIEGO Network. In part 1 of this two-part series, she argues that "informal is normal."