What is the problem? 

After gaining independence, the state has not implemented such reforms that would create an appropriate environment for the formalization of informal labor.  

Since 2022, the Government of Georgia has launched various projects related to the promotion of employment, including the formalization of informal labor. With this sub-program, the employee must take the initiative and request the employer to formalize their employment relationship.  

Furthermore, in some cases, the state is involved in fight against informal workers with violent means, subjects of which often are the outside vendors. Local municipalities prohibit outside vendors from trading at various locations. In such cases, families are often left without a source of income. And, when the state demands formalization of labor, the needs of the workers are not taken into account, in order such people to not remain without income and subsistence minimum. 

At the same time:

• There is segmentation in the labor market, the formal sector is not sustainable, and in this context, the rights of workers are often violated.

• People involved in informal labor are usually poor. They work a lot, and sometimes even at several jobs. Therefore, they are unable to accumulate economic wealth and be involved in professional development activities.

• Employers who employ informal workers often enter into labor relations with the worker in such a way as to avoid taking on/fulfilling labor obligations and responsibilities.

What can be done to solve the problem? 

The current challenges that the state is facing require an intersectional study. 

• One of the mechanisms to solve the problem could be the policy of encouraging formalization. 
• The state agencies should work on the change in coordination, which will be focused on the formalization of both the informal sector and informal work.

It is important to actively conduct research with informal workers, often accompanied by statistical data about them because it will be useful both for advocacy and for the development of labor standards. Collecting such information will also help the state to focus on social issues such as:  

• work of minors,   
• domestic work,  
• outside trade,
• and etc.  

Programs that aim to improve the economic well-being of the poor must be accompanied by informal employment statistics and needs because today a large proportion of socially vulnerable people are involved in informal work. 

Many informal workers are unable to escape poverty. In fact, the conditions under which they work serve to their disadvantage and poverty. In order for the state to be able to eliminate and prevent existing problems, it should see its own role and not try to emphasize the blame of particular individuals.

Recommendations of the International Labor Organization 

In 2015, at the 104th session held in Geneva, the International Labor Organization presented recommendations related to the transition from the informal to the formal economy: 

• Countries should facilitate the transition of workers and economic entities to the formal economy so that entrepreneurship is insured and workers are not left without income or subsistence minimum. 
• Facilitate the creation, maintenance, and sustainability of enterprises and decent jobs in the formal economy, as well as prevent the informalization of jobs in the formal economy. 

According to ILO’s recommendations, countries should consider the following when developing coherent and integrated strategies to promote the transition to the formal economy: 

• In the informal economy, the diversity of characteristics, circumstances, and needs of workers and economic entities. 
• Ensure effective promotion and protection of the rights of all people involved in the informal economy. 

With this step, the goal of the state should be sustainable development, eradication of poverty, and promotion of economic growth strategies, at the same time, creating decent jobs in the formal economy. In addition, it is crucial to create or strengthen an appropriate regulatory body that will have a mandate to control and effectively inspect labor.

Challenges 

Informal work/sector involves a significant share of the employed in Georgia and the world.

In some countries, its rate is increasing, which was also facilitated by the COVID-19 pandemic. There are assumptions that over time, new forms of employment will emerge, which will be associated with new challenges.

The economic crisis caused by the pandemic made the weaknesses and instability of informal employment more visible. According to the ILO, the economic situation of informally employed people became even more unstable during the pandemic, when lockdowns were announced in countries. These processes especially affected those countries where social protection was not systematic and well organized, including Georgia. 

What should be in the state's interests? 

It should be in the state's interest to make formal employment appealing to citizens using various instruments, where the social security system and additional benefits will play an important role. 

The country must provide: a decent pension; decent minimum wage; unemployment benefits/insurance; facilitation of employment; maternity leave; protected, safe working conditions, affordable health care, etc.  

The state should strengthen and increase the role of the labor inspectorate because it is the main body responsible for enforcing the legal rights of employees in the country. The Labor Inspectorate should develop such an instrument that will make it possible to gradually facilitate the formalization of informal employment and the sector and will be focused on supporting/encouraging workers and economic entities. Moreover, the labor inspectorate should actively recommend the conclusion of a labor contract in cases where there is another type of oral or written agreement between the employer and the employee. 

It is necessary to take effective steps because informal workers are in an unequal environment. It is important for the state to take care of the citizen, to offer him/her systematic, organized social protection, otherwise the citizens will constantly work hard in the informal sector, but will still be in poverty, beyond social protection, additional benefits, and economic stability.