Return to the main Informal Sector page
Return to the main Informal Sector pages
The Informal Sector
A question of definition:
What is the informal sector?

Whats in a name? Whats the difference?


Whats in a name? Whats the difference? Love-hate relationships with formal sectors - What should the response of the governments be? Poverty alleviation and job creation - Different sectors, common goals What do we do? Is the informal sector a transitionary sector?? The informal sector and Small and Medium Enterprises Interconnectedness, partnerships and continuity with the formal sector
W hat exactly is the informal sector? How can we define it? Most definitions focus on what it is not - in terms of being non-regulated, non tax paying etc.

The key to a better understanding of the informal sector, and development of effective policies, is a useable definition. This section explores and outlines some of the definitions adopted for the informal sector.


The 'informal sector', which essentially covers the unorganized spectrum of economic activities in commerce, agriculture, construction, manufacturing, transportation and services, now absorbs as much as 60% of the labour force in urban areas of developing countries.
- ILO
Current thinking at ILO:

Decent Work and the Informal Economy


The portion of a country's economy that lies outside of any formal regulatory environment. Informal sector activities are rarely reflected in official statistics on economic activity (for example, gross domestic product)." - Source
Economic activities that are not regulated by labour or taxation laws or monitored for inclusion in gross domestic product estimates eg water sellers, street vendors, buskers, shoe-shiners." - Source
Work that is outside the formal sector, not officially registered and sometimes illegal." - Source
In contrast with the formal sector, the informal sector encompasses economic activities that are not recorded by the state, ie activities to which the state has no means of access. Further reading on the informal sector." - Source
In economics the informal economy is the system of exchange used outside state-controlled or money-based economic activities." - Source

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Comments and suggestions - hsrinivas@gdrc.org