A new report from the International Labour Organisation outlines a set of propositions on how countries should go about formalising the informal economy. The report provides the basis for negotiations on the subject at the International Labour Conference in Geneva in June 2025.

Formalising the informal economy is a burning issue, particularly for countries in Africa. In some, such as Nigeria and Ghana, more than 80% of the workforce is informal.

According to the ILO report, the informal economy is a “structural barrier” to social justice and decent work. This is so because informal enterprises do not pay tax, therefore governments do not have the public revenue to meet their sustainable development goals.

Based on my research and policy work on the informal economy I believe that the ILO’s analysis, and its proposed solutions, are flawed. In my view, they follow a long tradition of misplaced thinking about the formalisation of informal work.

The ILO has the view that all “independent workers” should be “brought under” laws that regulate enterprises. And it assumes that providing “independent workers” with access to finance, business and skills training, and access to markets (“business development services”), will lead to more “productive” enterprises that create jobs.

I don’t agree.

Business development services have been tried in many countries since the 1990s – without success.

Clearly, informal enterprises that earn above the tax threshold must be “brought under”...

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