Trade reforms should be designed and implemented in an employment-friendly way, making the reallocation of jobs more conducive to formal employment growth, according to a joint study by the World Trade Organisation and the International Labour Organisation.
The joint study has found that the high incidence of informal employment in the developing world suppresses countries' ability to benefit from trade opening by creating poverty traps for workers in job transition.
"Trade has contributed to growth and development worldwide. But this has not automatically translated into an improvement in the quality of employment. Trade opening needs proper domestic policies to create good jobs. This is all the more evident with the current crisis which has reduced trade and thrown thousands into informal jobs," WTO director-general Pascal Lamy said in a release.
The study focuses on the linkages between globalisation and informal employment and finds that informal employment is widespread in many developing countries, leaving thousands of workers with almost no job security, low incomes and no social protection. Levels of informality vary substantially across countries, ranging from as low as 30 per cent in some Latin American countries to more than 80 per cent in certain sub-Saharan African and South Asian countries, the WTO release said.
"The study confirms what we know from experience, that by promoting complementarity between decent work objectives and trade, financial and labour market policies, developing countries are much better placed to benefit from trade opening, advance the social dimension of globalisation, and to cope with the current crisis" said ILO director-general Juan Somavia, adding that it echoed the recent call by the G20 to implement "recovery plans that support decent work, help preserve employment, and prioritise job growth....and to continue to provide income, social protection, and training support for the unemployed and those most at risk of unemployment."
Informal employment involves private, unregistered enterprises, which are not subject to national law or regulation, offer no social protection and involve self-employed individuals, or members of the same household. In most cases, informality has remained high and has even increased in some countries, particularly in Asia, the release noted.