The Invisible Backbone: Understanding Informal Workers in the Global Economy by Solidarity Center
Across the world, millions of people wake up each day to earn a living without formal contracts, social protections, or legal recognition. These individuals—informal workers—make up an essential yet often overlooked segment of the labor force. Whether they're street vendors, domestic helpers, construction laborers, or home-based artisans, they contribute significantly to local economies yet remain outside regulatory frameworks. In many low- and middle-income countries, informal employment is not the exception but the norm, accounting for over half of all non-agricultural jobs. Despite their critical role, these workers frequently lack access to minimum wage protections, health insurance, pensions, or safe working conditions, as the Solidarity Center explains. The growth of the informal economy is deeply tied to structural challenges in formal labor markets. Limited job creation in the formal sector, rural-to-urban migration, and the rise of subcontracting have pushed more people into unregulated work. For many, informal employment is not a choice but a necessity driven by economic survival. Women, in particular, are disproportionately represented in informal work, often juggling multiple low-paying jobs while performing unpaid care work at home. Young people, migrants, and marginalized communities also rely heavily on informal opportunities due to systemic barriers that prevent them from accessing stable, formal jobs.
While informal work provides livelihoods, it often comes at the cost of dignity, safety, and long-term security. These workers are typically excluded from labor laws and protections, making them vulnerable to exploitation, wage theft, and unsafe environments. The COVID-19 pandemic further highlighted this vulnerability as informal workers—lacking job security or social safety nets—were among the hardest hit by lockdowns and economic disruptions. Recovery has been uneven, with many still struggling to regain lost income, pushing them further into poverty and debt. Efforts to improve the conditions of informal workers must go beyond formalization through paperwork alone. Governments and policymakers need to recognize the economic value of informal labor and design inclusive policies that prioritize social protections, legal recognition, and access to public services. Social dialogue with worker associations, cooperatives, and grassroots unions is crucial to building trust and creating solutions that reflect the realities of informal work. Technology also presents new opportunities, enabling digital platforms to facilitate financial inclusion, identity verification, and access to information. Creating a fairer future for informal workers requires acknowledging their contributions and dismantling the systemic barriers that keep them on the margins. By doing so, societies can not only reduce inequality but also build stronger, more resilient economies grounded in equity and dignity for all workers—regardless of whether their labor is formal or informal.