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Cooperatives mentioned in the ILO recommendation to tackle the informal economy

The International Labour Organization (ILO) has adopted a new international labour standard that is expected to help hundreds of millions of workers and economic units move out of informality and into the formal economy. Cooperatives are mentioned in this Recommandation as part itself of the transition, both in terms of enterprises & in terms of employment. Cooperatives are also mentioned in the legal and policy frameworks sections, by stressing that an integrated policy framework for the transition to the formal economy should include the promotion of entrepreneurship and of different types of business models, including cooperatives and other social and solidarity economy units.

15 June 2015

This text is the result of discussions which took place in a dedicated Committee of the 104th Session of the International Labour Conference (ILC) held from 1 to 13 June in Geneva to tackle a wide range of issues, including the transition from the informal to the formal economy. The Committee, composed of governments, trade unions and employers organizations, had already started its work at last year’s session of the ILC for 10 days, during which CICOPA was already present in representation of the International Cooperative Alliance (ICA), obtaining a series of mentions of cooperatives in the text. Addressing the Committee again this year, CICOPA explained the cooperative vision, on behalf of the ICA, arguing that cooperatives’ actual and potential contribution to the transition towards the formal economy should be clearly acknowledged.

The document ‘Cooperatives are key to the transition from the informal to the formal economy’, elaborated by CICOPA and distributed among delegates, argues that the cooperative entrepreneurial model is particularly adapted to lifting people out of poverty and carrying out the transition to the formal economy. “How do cooperatives and other social and solidarity economy enterprises contribute to the transition? By providing a socio-economic voice and representation to ordinary citizens, economies of scale, a wide array of enterprise support services (training and education, financing, advisory services etc.), and gradual administrative formalization”, said the Secretary General of CICOPA, Bruno Roelants.

The Recommendation – the first ever international labour standard specifically aimed at tackling the informal economy – was passed by 484 votes in favour and garnered outstanding support from the ILO’s tripartite constituents (government, employer and worker representatives). The vote by the International Labour Conference is seen as a crucial step in assisting countries to set up the necessary measures to promote decent job creation and sustainable enterprises in the formal economy.

The new international standard provides 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.
-  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
-  prevent the informalization of formal economy jobs.

Depending on the region, between 45 and 90 % of workers are in the informal economy. As for small and medium-sized enterprises with 10 to 250 employees, as many as 90 % are informal. The share of women in informal employment is higher than men in most countries, and other vulnerable populations, such as youth, ethnic minorities, migrants, older people and the disabled are also disproportionally present in informality.

The Recommendation n° 204 concerning the Transition from the Informal to the Formal Economy is available here

Read Bruno Roelants full speech at the Committee on the Transition from the Informal to the Formal Economy on 2 June here.