Integrated approaches for formalization in Asia and the Pacific

While economic growth is a necessary condition for the transition to from the informal to the formal economy, it is insufficient. In Asia-Pacific region, one of the fastest growing regions over the past decades, a number of countries with different economic characteristics, and with different incidences and forms of informality, have implemented various types of policies and interventions to advance formalization – yet around 65.9 per cent of total employment in the Asia-Pacific region is informal. Developing economies in the regions face challenges in formalizing businesses, employment and activities, while high-income countries that had significantly reduced informality over time, are now faced with increasing challenges in keeping the incidence low. Evidence from the plethora of approaches used around the world to address informality in different contexts and with different degrees of effectiveness, point to the need for an integrated approach to formalization. An integrated approach refers to a set of coherent and harmonized policies that address multiple aspects of informality, ideally, through a whole-of-government approach.

The notion of which is enshrined within the ILO’s Transition from the Informal to the Formal Economy Recommendation, 2015 (No. 204). The policy brief highlights why the multi-faceted dimensions of informality demand an integrated approach to formalization, outlines the nature of an integrated approach to employment formalization, reviews the extent that countries in Asia-Pacific are applying integrated approaches to formalization, and provides examples and an action-oriented outline for advancing integrated approaches to formalization in the region.