Question

Should the informal sector be repressed or encouraged by policy makers?
Discuss.
Answer in 1000 words

Answer 1

The Informal sector is main source of employement in developing countries, it must be encouraged by policy makers.This sector can be improved by the government through their full support and implementing different prograame to boost informal sector. Small business with great potential to grow or a high frequency of consumers must be aimed toward by the govt and developed through the creation of flea markets which will increase standards of the conditions these people add and it is an initiative that brings in additional employment. This can also be enhanced as a sector through the emergence of young entrepreneurs as their ideas and plans can be turned into physical projects which will inspire young people to work harder.

The government should aim to work with the informal sector rather than going against. In LEDCs especially the informal sector contributes to over 40% of employment so removing it might mean that way less people are working within the country.

Hundreds of millions of people – including most of the world's poorest and most vulnerable citizens – live, work, trade and produce in informal markets. In many countries this informal private sector is greater than the formal sector in terms of employment and even output.

There are multiple perspectives on the informal economy. Some of them associate it with lost revenue, unfair competition, low productivity, human rights abuses and environmental degradation; while others associate it with entrepreneurship, flexibility and resilience.

But there's growing recognition that they will even be more innovative, resilient and resource-efficient than their formal counterparts.

This is similarly becoming increasingly clear that if they attempts to achieve green growth and sustainable development are to succeed, they must be rooted in a sound understanding of the informal economy – especially if such efforts are to be inclusive, and to profit the poor.

While output in informal sector and employment can be expected to decline as an economy develops, episodes of economic uncertainty and stagnation can stunt the increasing formalization of economic activities. we can cosider case of Fiji highlights the importance of developing and maintaining a sound business environment to sustain a transition from informal to formal sector activities. Itprepares for a return to representative government, policy transparency and predictability is seen to improve and this should reinvigorate private investment and formal sector activity in general.

The phase of transition from informal to formal sector activities, in principle, is an encouraging sign of economic development. The formal sector is usually more productive than the informal. this subject to government taxation and social security contribution, thereby making the overall economy more conducive to sustainable growth.

The formal sector, particularly the private sector and little and medium-sized enterprises, will become far more crucial to job generation than ever before. To ensure that formal sector growth are often translated into job creation, it's essential that appropriate labor laws and regulations are implemented, sufficient social and employment provided, and private sector development in policy agendas advocated.