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Informal Economy PERC-FNV project thematic workshop

27 June 2008: The workshop that discussed developments in framework of the CEE-NIS PERC/FNV Informal Economy project took place in Brussels, 24-25 June 2008. It assessed the national mapping programmes implemented in Georgia, Serbia, Ukraine and Croatia and provided the partner organizations with opportunities for exchange and discussion of specific priorities and actions.

Mapping exercise

The mapping was implemented in accordance with the guideline provided by the project tutor Pr. K. Petkov. It was aimed at providing insight for the unions on complexity and diversity of the phenomenon, its causes and implications and possible ways to take actions, on different levels of operations. Certain common features contribute to the overall approach to the phenomenon in the region:

- Informal economy is a hot issue in the economic and social reforms and public debates. It is a complex social, economic legal and political phenomenon, deeply rooted in the transitional societies. Trade unions are undertaking certain measures to limit non-registered work and to unionise different categories of workers;

- Non-registered employment is becoming the core segment of the whole informal economy sector / in parallel with corruption/. Recently labour inspectorates are more actively involved in this segment of the IE. Some legal changes, taken from good international practices, are also typical measure in the national action plans;

- International migration is contributing to the bad practices of black labour. Foreigners are regarded as one of the leading promoters of the unregistered employment. Remittances-official and unofficial - are creating a new, significant segment of the national balance of payments and even of the whole economic development in the region.

- Widespread deregulation and week social protection are regarded as the main feature of the ongoing informalisation of labour relations;

Each country of the project has its own specifics. In Georgia, more than half of the population is engaged in the informal economic relations and the new labour code – which made hiring and firing workers ultra-liberally flexible – actually institutionalize the pattern of “informal” labour as normal. In Ukraine, lack of trust in tax and social institutions facilitate undertable employment transactions, meanwhile informal labour relations often serve the interests of certain financial groups – operating in energy resource sector, for example. In Serbia, non-declared work for years was the survival strategy for population in the conditions of military operations and economic sanctions, however, and institutionalized itself as “normal” pattern of operations. In Croatia, different initiatives were undertaken by national centers to limit the underclared work, with labour inspections and municipal authorities, however, the full involvement of branches is vital for unionizing workers in booming sectors (tourism, construction, commerce).

2. Challenges for unions.

In general, two main challenges could be derived from the papers and the activities implemented:

-  law enforcement, when informal (or atypical) forms of labour exist despite the fact that legally they are not existing. The role of the state institutions is crucial here, to bring “dishonest employers” under legal frameworks, through positive or negative sanctions, including eligibility for tenders, to set up economic incentives for the workers to declare their labour, through access to social security, health and safety tutorship;

-  extension of self-employment schemes to diverse segments of labour market, en fin, actually legalizing these atypical forms as the only income strategy for considerable part of workforce. In this regard, in addition to work through state institutions, unions are actually exploring different patterns of working with these individuals, bringing them within formal labour frameworks and unions.

In group discussion, the participants have also highlighted specific challenges for unions to work in the context of informal labour relations:

-  specific categories of workers: “strong” workers, energetic and ambitious, for whom gambling on informal work brings high income, in times more than potential formal employment; “weak” workers, for whom precariousness of the informal work is tolerable in comparison with poverty of unemployment;

-  Invisibility of “informal work”, i.e. teleworking or domestic labour; ad-hoc employment relations: part-time, students, parallel employment;

-  Lack of trust: in social institutions and their ability to solve the specific issues, due to numerous failures in reform process, corruption and non-transparency, fear of punitive character of the state actions; in unions, due to rigidness and unwillingness of structures to tackle the challenge and to identify interests of different groups of workers, pour image of unions and their successes in formal sector, lack of instruments and real mechanisms for addressing interests of workers engaged in informal labour;

-  Governance failure, inefficient social dialog and institutional frameworks.

3. National actions

While the national centers only piloted systematic actions, certain concrete achievements can already be noted:

-  In Georgia, the street vendors unions was set up, that unifies self-employed of main markets. With the assistance of the GTUC the union merged with commerce union;
-  In Ukraine raising awareness activities on black mining brought public attention and initiated some action from the authorities;
-  In Azerbaijan, the round table on the issue brought great publicity and appraisal from the government side that led to improved cooperation with labour inspection;
-  In Croatia, “free from black labour initiatives” were successful in and partnership with municipalities were arranged;
-  In Kyrgyzstan, first tries to unionise booming sector of textile were successful, in particular, through the drive towards formalization; Bishkek market was unionized with the national centers facilitating negotiations for better working conditions;
-  In Albania, the unions are taking part in developing national strategy through tripartite discussions, etc.

Draft action plans were presented by the four organizations and commented by the audience. On a base of national papers, political discussions by the union leadership, the national teams will or adjust national actions plans and will submit them to the PERC. It was underlined that
-  the national plans have to be part of the national union programmes, with project contributing to the activities of the organisations, and discussed by the decision-making bodies, in a view of development to a unified trade union position / policy for national negotiations;
-  the national unions of different sectors – textile, transport, construction, commerce, agriculture, food processing, i.e. – are important for specific actions in their sectors and that national centre shall facilitate their involvement;
-  the success of the actions is linked with modernization of trade union approaches and structures.
-  the action plans shall be arranged in clear objective – expected results manner, providing justification in case of some specific elements (region, sector or group of workers, i.e.), prioritizing concrete initiatives and hints versus general discussions.

Hints or entry points for working with informal economy mentioned:

- health and safety (and working conditions in general);
- public procurement;
- education and training;
- labour legislation and its implications;
- social security coverage;
- pension and taxation reform;
- child labour;
- gender and equality discussions

4. Allies.

Taking into account one of the objective of the project – building wide alliances and cooperation with different organizations that could facilitate protecting rights of workers – the workshop brainstormed the list of organizations, in national context, that unions have or can consider situational allies. In a course of the project, the PERC and national teams will contact these organizations to inquire whether they will be interest to work together on specific issues. The organizations can be grouped in the following way:

-  anticorruption networks (transparency international, OECD network, national monitoring groups);
-  organizations dealing with migrants (IOM, diasporas, etc.)
-  health care organizations (Red Cross, national NGOs)
-  women’s, child labour and youth movements and networks (including IPEC, La Strada etc.);
-  human rights organizations;
-  solidarity support organizations (FES, Swiss labour association, ACILS)
-  governmental institutions (organizations for medical and pension insurance, labour and tax inspections, ministries and their related commissions (employment, migration, etc., statistics committee etc.)
-  interest based organizations: consumers, veterans and invalids organizations;
-  academic and educational institutions (research, universities, institutions of vocational trainings etc.);
-  mass media

5. Next steps

The four countries (Georgia, Croatia, Ukraine and Serbia) will finalise their mapping and present its outcomes to the leadership of their organizations, which will also discuss the draft action plans. Organizations from other countries (Montenegro, Albania, Azerbaijan, Armenia and Kyrgyzstan) will use the general guideline for initiating mapping exercise. The PERC will start preparing two sub-regional activities – one in NIS on “Patterms of collective representation of workers from informal economy”, with delegates of the respective unionized groups, and one in SEE, on a base of advice from the South and Eastern Trade Union Forum.

PowerPoint - 170 kb
FNV-PERC IE project activity report 1 year
PowerPoint - 427 kb
Ukraine presentation Rus
PowerPoint - 73.5 kb
Serbia presentation En
PowerPoint - 34 kb
Georgia presentation SE union En

this article has been tagged

South-East Europe , New Independent States , Caucasus , Central Asia , Organising and recruiting , Informal economy, shadow economy , SSO , Sustainable economic growth policies , Organisational development , Albania , Azerbaijan , Bosnia-Herzegovina , Croatia , Georgia , Montenegro , Serbia , Ukraine , employment policies , Kyrgyzstan
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