Green economy must work for street vendors as well as Wall Street

Press release, 24 February 2016

Plans agreed by the world's governments in 2015 to address climate change and eradicate poverty currently do little to meet the needs of more than half the world's population, say experts from the International Institute for Environment (IIED) and the Green Economy Coalition (GEC).

Hội An, Vietnam: in many towns in the developing world, street vendors constitute a significant share of total employment in the informal economy (Photo: Khánh Hmoong, Creative Commons via Flickr)

The landmark Paris climate summit agreement that aims to move countries towards a low carbon, green economy, as well as many national green growth plans and the Sustainable Development Goals (SDGs), make little reference to the billions of people globally living in the informal economy. 

Up to 80 per cent of people in the poorest countries earn their living in the informal economy (see also 'Women and men in the informal economy: a statistical picture' (PDF)).

Unless immediate steps are taken to try and better understand the needs of those who live, work and trade in this part of society, these people risk being further marginalised by the planned low carbon, green economy changes.

Experts from IIED, the GEC, Women in Informal Employment: Globalizing and Organizing (WIEGO), the Center for International Forestry Research (CIFOR) and the OECD's Sahel and West Africa Club are holding a one-day event in Westminster on 25 February with representatives of government, civil society, business and research organisations to discuss the informal economy, hear international case studies and look at ways that inclusive green growth can make a genuine difference to people who survive at the fringes.

Oliver Greenfield, convener of the Green Economy Coalition, said: "The economic transition must answer a fundamental question – if you didn't have a stake in the unfair fossil fuel economy, how do you get a stake in the green economy? 

"Our ambition is prosperity for all and that means it benefits the street vendor in Tunisia as much as it benefits the commodity vendor in Wall Street."

There is a gap in most governments' understanding of why people live and work in the informal sector, as well as understanding the concept of informality itself. 

It is largely equated with illegal activity, but this is not accurate. For example many global supply chains rely on workers in the informal sector for the production of goods, chief examples being garments, tea, coffee, chocolate and forestry products. 

The informal economy – that part of the economy that sits outside of the formal regulatory environment – is most widespread in developing countries, but industrial countries also have examples, where it is more often referred to as a shadow or black economy.

In many countries the informal private sector employs more people than formal economic activity; many workers essentially operating as micro, small and medium enterprises, making this the world's biggest private sector. 

There is also a great deal of entrepreneurial innovation in the informal economy – which can also be seen as an economy of necessity – and while these groups are ignored, this means that opportunities for smart, sustainable development that works for communities are being missed. 

Key groups within the informal economy play an important role in climate change mitigation. In India, street traders and home-based workers – representing 11 per cent and 18 per cent respectively of all urban workers – are likely to leave a smaller carbon footprint than their formal counterparts. 

In developing countries around one per cent of the urban workforce is engaged in recycling, one of the cheapest and fastest ways to reduce greenhouse gas emissions and a labour-intensive model of waste management that provides some 15-20 million jobs worldwide. 

The event will use examples from artisanal mining, food and agriculture, forestry, and urban food vending and waste collection to look at the reality of informality in the 21st century. 

Oliver added: "We ask world leaders to take advantage of the information coming out of the event. We are ready and willing to work with governments to make their green economies work for everyone."

IIED and the GEC would like to see green growth action plans explicitly engaging with informality, as well as government ministers in countries including informality in their portfolio, which has the potential to deliver successes against other development targets such as gender equality and fighting child poverty.

Contact

For more information, images and interviews, or if you would like to attend some or all of the event, please contact IIED media and external affairs manager Katharine Mansell – tel: +44 (0)20 3463 7399; email: katharine.mansell@iied.org; Skype: KHMansell

Notes to editors

About the one-day event: "The biggest 'private sector': What place for the informal economy in green and inclusive growth?"

The conference (download the programme (PDF)) will review informal economies in diverse contexts – from food distribution and mining to forestry and waste collection. The programme features speakers from the International Labour Organisation, and from Ethiopia, Indonesia and Brazil. The presentations will showcase innovations in policy and practice. Read more on the IIED website.

Definition of informal economy

There is still no single common understanding of the informal economy and each school of thought has its limitations and advantages (Gërxhani 2004, Chen 2012, Andrews et al. 2011). More broadly, economic informality can be described by three concepts: 

  • The informal sector, which refers to production and employment in unregistered enterprises 
  • Informal employment, which focuses on employment outside of the labour protection regulations of a given society, whether in formal or informal firms, and
  • The informal economy, which covers all firms, workers, and activities that operate outside the legal regulatory framework of society, and the output that they generate (Meagher 2013).

(From Informal and Green? The forgotten voice in the transition to a green economyEmily BensonSarah Best, et al. (2014) IIED)

IIED is a policy and action research organisation promoting sustainable development and linking local priorities to global challenges. We are based in London and work on five continents with some of the world's most vulnerable people to strengthen their voice in the decision-making arenas that affect them.

About the GEC: Founded in 2010, the Green Economy Coalition is the largest global alliance of organisations working on a green economy. Members include more than 40 global environment and development NGOs, trade unions, private sector and academics. The coalition is campaigning for the transition to green and fair economies.