Question

Which of the following is a potential policy issue related to the informal sector?

a.The access to and security of land by sector participants

b.The frequent financial bubbles related to the informal sector's access to capital

c.There are no real issues since the informal sector only exists in a few countries

d.The informal sector is highly regulated, and in need of a reduction in regulatory burden

Answer 1

d. The informal sector is highly regulated, and in need of reduction in regulatory burden

In 1993, the 15th International Conference of Labour Statistian at the ILO(International Labour Organisation) defined informal sector as a group of production units comprised of unincorporated enterprises owned by households, inlcuding informal own-account enterprises and enterprises of infromal employers typically small and non-registered enterprises.

and also defined the concept of informal employment as"all remunerative work that is from self-employment and wage employment that is not registered, regulated or protected by existing legal or regulatory frameworks, as well as non-remunerative work undertaken in an income-producing enterprise. Informal workers do not have secure employment contracts, work benefits social protection or workers representation.

Large informal sector is associated with low productivity, reduced tax revenues,poor governence, excessive regulations,poverty and income inequality.