Your Views Matter
Studies show that informal sector is dominant in all developing countries in the world. Approximately 80% of enterprises in developing economies (which is around 280-340 million) are informal enterprises. It is important to note that informality also exists in the developed world and is estimated at 18.4 per cent of GDP (Gross Domestic Product) in 2013 in the European Union (EU-27) and 8.6 per cent on average in Australia, Canada, Japan, New Zealand and the United States, according to a recent International Labour Organisation (ILO) Report. The informal sector enterprises are very important given its contribution, in particular, to income generation. Despite their contribution to the economy, they are highly vulnerable and lack opportunities (such as access to finance and public infrastructure & markets) to grow and contribute in a more meaningful manner. Given their size and contribution, no government can ignore them. This is a big issue now-a-days. This is one side of the coin.
Conversely, this can’t be denied that informality negatively affects the development prospects of an economy due to loss of fiscal revenues as these activities are undertaken off the record. Moreover, it leads to unfair competition to formal enterprises.
This creates an obvious confusion whether to boosting the sector or diminishing it.
- Do you think transition to formality is the only solution?
- How do you think this should be done?
- Do you think skill development programmes are more important?
- What else?
Please share your views on this important subject.
Small and medium-sized enterprises (SMEs) or Micro and Small Enterprises (MSEs), whether they operate in formal or informal sector, matter a lot to any economy – be it developed, developing or transition economy. ISSME is committed to intensify the movement across the globe with the mission to enhance the state of micro and SMEs. Let’s join hands with us and become the change agent to fulfill this mission. We must understand that enhanced micro and SMEs means solution to plethora of socio-economic issues.