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134 Int'l Lab. Rev. 705 (1995)
The Informal Sector: Legalization or Laissez-Faire

handle is hein.journals/intlr134 and id is 719 raw text is: International Labour Review, 1995, Vol. 134, No. 6

The informal sector:
Legalization or laissez-faire?
t is an undisputed fact that the informal sector is a growing and
increasingly complex phenomenon in the economic, social and political
life of many developing countries. In Latin America, this sector accounted
for 83 per cent of the 10.1 million jobs created between 1990 and 1993; ' in
Africa, two out of three city-dwellers already earn their living in this
survival sector, which is expected to generate 93 per cent of additional
urban jobs in the 1990s.2 The promotion of this sector is one of the main
issues in development policy today.
With the adoption of structural adjustment policies and the revival of
neo-liberal doctrines in the 1980s, two opposite and controversial positions
emerged with respect to this sector. On the one hand, there were the
advocates of stricter control over the conditions for engaging in informal
activities in order to guarantee a return on investment in modern enterprises,
given the threat of unfair competition from the informal sector (this view was
very widespread in Africa, as a result of the decline of the regulatory role of
the State). On the other hand, there were those who believed that the
legislative and administrative system must be thoroughly reformed in order
to free the initiative and economic potential of microenterprises (the
approach adopted by the neo-liberal reform movement in Latin America).
Both of these perspectives are reflected in the ILO's Employment Policy
(Supplementary Provisions) Recommendation, 1984 (No. 169), which calls
for recognition of the importance of the informal sector as a source of jobs
(27 (1)), but simultaneously calls on countries to seek progressively to
extend measures of recognition to the informal sector, though it recognizes
that integration of the informal sector may reduce its ability to absorb labour
and generate income (29 (2)).
* Entrepreneurship and Management Development Branch, International Labour
Office. This article was prepared with the assistance of Bertrand Gaufryau and Benoit
ILO: Panorama laboral 1994, in Informa (Lima), 1994, No. 1.
2 ILO: World Labour Report (Geneva, 1992).

Copyright 0 International Labour Organization 1995

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