What is the Informal Market?
When we speak about the informal market, we are mainly referring to jobs and services that are not officially registered or taxed by the government (also known as the gig economy). Although some people may assume that it involves illegal activities, it's essential to understand that many legal businesses also operate without formal registration. In simple terms, informal market workers don't have official contracts or agreements with the government. However, they still play a significant role in the global workforce, with many people finding employment and participating in this type of labor market.
About 60 percent of the global population participates in the informal sector. Although it is mostly prevalent in emerging and developing economies, it is also an important part of advanced economies.
Is the informal market good or bad for the economy?
The informal market is a multifaceted topic that has both positive and negative implications for the global economy. Its impact is not easily characterized as solely good or bad. Instead, the informal market presents a complex landscape with various outcomes that can either benefit or pose challenges to the economy.
Positive Impact -
The informal market has positive impacts by providing employment opportunities for individuals with limited access to formal jobs, fostering entrepreneurship and innovation, offering flexibility and adaptability, contributing to local economic growth, cultivating social support networks, and preserving traditional skills and cultural practices. While challenges exist, addressing them is crucial for maximizing the positive aspects of the informal market and promoting inclusive economic development.
Negative Impact -
The informal work economy has its drawbacks, particularly when it comes to laborers from marginalized communities who often lack formal contracts. This leaves them vulnerable to significant levels of exploitation by those in positions of power. Exploitative practices such as unfair wages, unsafe working conditions, and a lack of social protection - even human trafficking and debt bondage, can occur without legal protection. Consequently, these individuals face a heightened risk of economic insecurity, limited access to benefits, and a lack of recourse in the face of exploitation.
However, efforts are underway to protect the labor force in the informal market through legal recognition, social protection programs, skills training, access to finance, awareness and advocacy, collaboration among stakeholders, and data collection and research. These comprehensive measures aim to establish fair working conditions, extend benefits and support, enhance productivity, raise awareness, foster supportive ecosystems, and inform evidence-based policies for the well-being of informal market workers. By addressing the unique challenges faced by these workers and promoting their rights and livelihoods, these initiatives contribute to inclusive economic growth and social development. In countries like India, the National Commission for Women (NCW) proposed the Protection of Women Domestic Workers Bill in 2010, which aimed to grant legal recognition and protection to domestic workers. The bill sought to establish provisions for minimum wages, social security, and other benefits for these workers.
Ethical Working Conditions and Practices -
As a brand, it is crucial for us to acknowledge and raise awareness about the issue of exploitation in the informal work economy. At Flourish Planet, we are committed to addressing this concern.
As a global platform partner with brands who align with our values and are purpose driven like Made For Freedom, Korrisa, Likha, and all the other brands in our ecosystem, we prioritize ethical working conditions and practices and ensure transparency in pricing for all the artisans involved. Our mission is to support these talented individuals by providing them with equitable trading methods and a platform to showcase their skills. Through these efforts, we aim to uplift artisans to make a sustainable living while preserving and celebrating their unique talents.