Informal sector weakens world trade
Dec 10, 2009
DESPITE the growth in global trade, working conditions and living standards of workers are still low in poor countries with a large informal sector, an economist with the International Labour Organisation (ILO), has said.
By Alice Kiingi
DESPITE the growth in global trade, working conditions and living standards of workers are still low in poor countries with a large informal sector, an economist with the International Labour Organisation (ILO), has said.
“One solution for such countries is the availability of active labour market policies. Another is education,†Ekkehard Ernst, principle economist for ILO’s International Institute for Labour Studies, said recently.
“Informal employment is a problem for less educated workers. Public money should be wisely spent to help improve basic education and allow students to reach a better degree through vocational training system,†he added.
Ernst was speaking in an online interview on globalisation and informal employment in developing countries, at the ILO headquarters in Geneva, Switzerland. The interview follows up on the solutions put across in the ILO and the World Trade Organisation’s 2009 online study on “Globalisation and informal jobs in developing countries.â€
The study recommended that emphasis be placed on training facilities and programmes for informal employees, lowering the burden of taxation for start-ups and small companies, and supporting firms in tapping into local capital market.
Ernst reiterated that developing countries can reap benefits from opening up trade in form of better paying jobs and decent working conditions and in seizing new breaks in export sectors.
“Opening only parts of the economy and keeping certain sectors protected from foreign competition are likely to worsen distortions in the economy. Global trade has the potential to raise global welfare and to improve employment conditions,†he said.
When countries open for trade, they need to be aware of the impact on their labour market and should support the development of new business, in particular in the export-oriented sector to create new opportunities, he added.
DESPITE the growth in global trade, working conditions and living standards of workers are still low in poor countries with a large informal sector, an economist with the International Labour Organisation (ILO), has said.
“One solution for such countries is the availability of active labour market policies. Another is education,†Ekkehard Ernst, principle economist for ILO’s International Institute for Labour Studies, said recently.
“Informal employment is a problem for less educated workers. Public money should be wisely spent to help improve basic education and allow students to reach a better degree through vocational training system,†he added.
Ernst was speaking in an online interview on globalisation and informal employment in developing countries, at the ILO headquarters in Geneva, Switzerland. The interview follows up on the solutions put across in the ILO and the World Trade Organisation’s 2009 online study on “Globalisation and informal jobs in developing countries.â€
The study recommended that emphasis be placed on training facilities and programmes for informal employees, lowering the burden of taxation for start-ups and small companies, and supporting firms in tapping into local capital market.
Ernst reiterated that developing countries can reap benefits from opening up trade in form of better paying jobs and decent working conditions and in seizing new breaks in export sectors.
“Opening only parts of the economy and keeping certain sectors protected from foreign competition are likely to worsen distortions in the economy. Global trade has the potential to raise global welfare and to improve employment conditions,†he said.
When countries open for trade, they need to be aware of the impact on their labour market and should support the development of new business, in particular in the export-oriented sector to create new opportunities, he added.