The informal economy is made up of informal people and the expression “informal economy” encompasses a huge diversity of situations and phenomena. Indeed, the informal economy manifests itself in a variety of forms across and within economies. Formalization process and measures aiming to facilitate transitions to formality need to be tailored to specific circumstances that different countries and categories of economic units or workers face (ILO, 2018).

In many countries, the rights of informal people are not recognised by law and in many instances, they are referred to as ‘illegal’. The informal sector represents not only an important part of the economy but also of the labour market, and assists with the creation of employment and income generation.

In the waste sector, the informal economy plays a crucial role in income generation and also helps vastly with recycling activities and waste segregation.

Waste pickers form part of the informal economy and are people who salvage recyclable material. Many waste pickers seen and interviewed as part of my work were ‘individual’ scavengers with no national insurance or personal identification documents. They live in poor conditions, they work in unsafe situations and mainly they are ‘illiterate’ or have basic education. Individual scavengers have independent characteristics and in general do not follow certain rules and regulations, which potentially leads to problems and sometimes conflicts between them and developers.

Many of these illegal occupants or informal people are forced to relocate or may lose their jobs as a result of new developments or modernisation projects. The informal people with no legal rights are identified as ‘vulnerable’, and therefore a set of effective measures need to be implemented to protect and support this group.

But how and what are the challenges?

  • There are many challenges that developers could face when it comes to the informal economy/people:
  • People in this sector have developed independent habits and culture and therefore they find it difficult to work in a formalised way (i.e. certain hours, work rules)
  • They are difficult to be identified through a formal process; reluctant to be consulted or reveal their identity
  • They are illiterate and cannot read or understand written information
  • They may lack confidence and therefore do not feel part of a certain society
  • They are solely dependent on informal economy and have no other skills to find alternative employment opportunities


So what could developments/investments do?

Developers could play a vital role in transforming an informal economy to a formal economy; or provide noticeable support to informal people in order to improve their livelihood.
Some of the key support programmes that could be offered by developers:


Provision of training and capacity building is one of the effective ways of empowering this group, so not only they will learn new skills but also they will find confidence in order to claim their own rights. In particular, women and children who work in this sector are more prone to abuse, danger at work and unsafe situations. Therefore, it is crucial that affected informal people are identified at the early stage of development and be consulted meaningfully.

This blog is written by Bita Rais ‘Principal Social Specialist’ at WSP UK.

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