Consultancy on Integrated Approaches for Employment Formalization in the Asia Pacific Region
NGO Jobs / UN Jobs Vacancy
Terms of Reference for the Research on Integrated Approaches for Employment Formalization in the Asia Pacific Region
In 2016, about 2 billion workers were in informal employment, representing more than 60 per cent of the global workforce. Most of these workers making their living in the informal economy are concentrated in Asia-Pacific countries, summing 1.3 billion people, or 68.2 per cent of the employed population in the region.
Asia is the region with the fastest GDP growth rate in recent times, but the region is extremely diverse and includes some of the wealthiest countries on Earth and two-thirds of the world’s poor. Informality is prevalent in all sectors, accounting for 94.7 per cent of agricultural employment (reaching a high of 99.3 per cent in Southern Asia), 68.8 in the industrial sector and 54.1 in the services sector.
Informal enterprises, usually unregistered economic units employing fewer than ten workers, account for 80 per cent of enterprises in the world (ILO, 2020). In South Asia, self-employed and MSMEs account for more than 80 per cent of employment (Kok, J. D., & Berrios, M., 2019).
However, 50 per cent of paid employees are also informal in Asia-Pacific. A trend towards “informalisation” of employment in the formal sector is noted over the past years. A trend intensified during the COVID-19 pandemic, even in developed economies.
The prospects of the region’s current and future labour force remain a concern given the prevalence of informality among the young population. Around 86.3 per cent of young workers aged 15-24 are in informal employment in the region compared with 67.1 per cent of adult workers (25+). While the share of women in informal employment (64.1 per cent) in Asia and the Pacific is lower than the share of men (70.5 per cent), women are often found in the most vulnerable situations, such as domestic home-based workers or contributing family workers.
Informal employment is highly concentrated in countries with lower income per capita. Hence, it is a more prevalent feature of developing countries (Narula, 2020; Alon et al., 2020). Data show that, on the average, the share of informal employment is 71.4 per cent in developing and emerging Asian countries and 21.7 per cent in developed Asian countries. Nonetheless, there are higher-income countries with persistent levels of informality. In South-East Asia, both low-middle-income and upper-middle-income countries have high and persistent informality levels, with 75.2 per cent of the workforce in informal employment.
Observing countries individually, the scenario is diverse. The shares of informal employment range from high levels above 90 per cent (94.3 per cent in Nepal, 93.6 per cent in Lao and 93.1 per cent in Cambodia) to the lowest with proportions below 20 per cent in Japan.
The changes on informality in the region have also been distinct, happening at different times, in different contexts and with different outcomes for the economy and labour market. The labour market transformations in Asia have refuelled discussions of the relationship between economic growth and informality. Suppose growth was the only (or the principal) determinant of informality. In that case, there should be much lower levels of informality in the Asian region than in other regions - but this is not the case.
Multiple causes are behind the stubborn levels of informality. As illustrated above, one of the informal economy's key factors is the pattern of growth of a country. Where economic growth is lagging or where growth had not created jobs and transformed labour abundant sectors, there is a persistently higher share of informal employment. Formalization requires expanding opportunities in the formal sector and preventing fall-outs from the formal economy.
Where firms operate and where workers are hired, a formal status implies that they enjoy the protection of laws and institutions as economic units and as workers, respectively. This would involve visibility and legal recognition of economic units and workers, sufficient for them to claim rights and support and be obligated to comply. This implies a first step of being identified or registered in relevant forms. It also means that institutional mechanisms need to be adapted to the specificities of non-traditional types of employment, such as domestic workers, seasonal workers, mobile vendors and transport operators. The use of technologies for the transition to formality seems to be marked in the Asian case, particularly for the registration of businesses, enterprises or companies and registration, filing and payment of taxes.
Several countries in the Asia-Pacific region are promoting initiatives to increase the levels of formalization in their economies. These efforts include policies to adapt social security models for some particular groups, increase compliance; initiatives to promote and facilitate business formalization.
However, most of these initiatives have not been properly coordinated, and an integrated approach to the phenomenon is lacking. They are initiated and managed by different institutions without utilizing their interconnections and administrative coordination. Instead, each institution tries to solve a specific problem on its own despite that they target the same groups, being these economic units or workers.
The complexity of the phenomenon requires countries to change their mind-sets and develop a different type of approach. The report on transition from the informal to the formal economy presented at the 2014 ILO International Labour Conference highlighted that where integrated approaches have been adopted, formalisation results have been more robust. The report mentions that integrated approaches should give attention to a series of aspects such as:
· Sustained economic growth with quality jobs;
· Improved legislation;
· Organization and representation; encouragement of equality and the fight against discrimination (women workers or migrant workers);
· Stronger institutions;
· Social dialogue promotion
· Support for corporate initiative;
· Development of professional skills, funding; extension of social protection; and
· Local economic development.
While there have been many studies and debates on the causes and nature of economic growth and its prospects in Asia and the Pacific, their labour market transformations have been less extensively discussed, particularly the evolution of informality in their economies.
Thus, recognizing the diverse experience in the Asia Pacific region in the efforts towards formalization, a transition to the formal economy is a condition to realize decent work for all and recognise that formalization is achieved through different, yet coordinated pathways, the ILO is developing a tailored conceptual framework focused on the promotion of an integrated approach towards formalization for the region, building on the work done by the office at a global level and in other regions.
The conceptual framework should learn from successes in other regions and the countries within the Asia Pacific region. Thus, considering that literature on other regions' experiences is already available, such as for Latin America and the Caribbean, the ILO seeks to document and organize the successful experiences from countries in the Asia Pacific formalize informal employment in an integrated manner.
To this end, the ILO intends to hire a consultant to produce a report on Integrated Approaches for Employment Formalization in the Asia Pacific Region. Particular attention should be given to countries that managed to achieve high levels of formalization of its economy and labour market, concrete examples of instruments used and lessons learned, as to inform not only the development of a conceptual framework for the region but also to promote knowledge sharing and exchanges between countries.
Objectives of the Assignment
This assignment aims to conduct research and produce a report on Integrated Approaches for Employment Formalization in the Asia Pacific Region.
The report should explore: what are the integrated approaches that exist in the region, what are their components and how are they implemented; how the countries are currently dealing with the crisis and informalization risks; how are countries progressing along with the transition to the formal economy using integrated approaches, achievements, lessons and recommendations for action; and summarise the essence of the integrate formalization practices in the region – among other relevant elements. The report should also take in consideration issues of gender-sensitivity, inclusion and sustainability.
Scope of the Work
Under the overall guidance of ILO’s Decent Work Teams in Bangkok and New Delhi, with the support of the Social Protection Project Officer in CO-Kathmandu, and in collaboration with ILO Regional and Country Offices in the Asia Pacific region, the consultant is expected to perform the following tasks:
i. Conduct an in-depth desk review of relevant literature on formalization initiatives in the Asia Pacific region (and beyond, for relevant links to findings in the region), with particular focus on integrated approaches used by countries with low levels of informality;
ii. Develop the research protocol, including interview questions, confidentiality form, and other required elements to facilitate the process of implementing the research in an effective, culturally appropriate, gender-sensitive, and ethical manner;
iii. Conduct interviews with ILO officials (DWT technical specialists and CO officers);
iv. Provide a framework for understanding integrated approaches, taking as reference ILO literature and ILS (particularly R204) and experiences in other regions; unbundle its components and assess the benefits of their harmonization. Consideration should be given to areas of laws and policies that need coherence, and registration systems that can cross-reference, among others. Contemporary solutions, such as one-stop shops, digitization, block-chain technologies, that enhance integration and streamlining between public governance functions and with economic actors will be studied;
v. Conduct interviews with relevant stakeholders in the region, particularly those with in-depth insight over the following:
a. successful implementation of integrated approaches on formalization;
b. analysis of obstacles and deterrents to integrated approaches in the region and how to overcome these
c. entry points in selected countries to pilot and enhance integrated approaches
d. expected benefits in terms of compliance and access to productive resources that can be linked into integrated solutions
vi. Detail cases of success and identified good practices on developing, implementing, and managing integrated approaches and initiatives; identify countries that are better placed to implement or intensify integrated approaches
vii. Produce a report on the findings of the research, including an executive summary (max. 60 pages);
viii. Support the preparation and participate in the launch of the report and the presentation of its findings in a virtual event;
The following deliverables are expected:
Annotated Report Outline, describing the intended structure and content for the research report – to be delivered by 10 March 2021;
Draft Research Report, containing the results of the research for review and feedback of ILO’s team and relevant stakeholders - to be delivered by 03 May 2021;
Final Research Report, including an executive summary and slide presentation on the research and its findings, following feedback and inputs received from ILO and relevant stakeholders – to be delivered by 15 June 2021;
From 01/03/2021 to 15/06/2021.
Qualification & Experience Required
The consultant is expected to have the following skills and expertise:
· Advanced degree in economics, development studies, social sciences or related discipline;
· A minimum of ten (10) years’ of work experience with labour market research/analysis, informal economy, informal labour and related areas. Familiarity with the Asia Pacific region is an advantage;
· Have proven knowledge of and experience in implementing research methodologies, including quantitative and qualitative data collection methods. Track record in producing regional studies and research is an advantage;
· Excellent writing and communication skills in English; and,
· Strong interpersonal skills and the ability to communicate and work well with diverse people.
 The background section is drawn from Estupinan, Xavier and Mohit Sharma, 2020. Job and Wage Losses in Informal Sector due to the COVID-19 Lockdown Measures in India; ILO, 2018. Women and Men in the Informal Economy: A Statistical Picture. Third Edition; and ILO, 2020. Global Employment Policy Review 2020: Employment policies for inclusive structural transformation.
 For example: Social security systems in the EU and Latin America allow contributions by employers of hourly, daily and seasonal workers. Welfare boards in India, funded through a levy on the industry, protects seasonal workers with no fixed employer. Employer funds set up in the EU and US gig companies aim to provide a range of benefits, including social security, guaranteed income, and health insurance.
 Bhattarai, Tejeshwi Nath. 2018. Emerging Trends in the Use of Technology as a Driver of the Transition to Formality: Experiences from Asia and the Pacific.
 Implemented policies involved business entry reforms (Bangladesh, Indonesia, Sri Lanka and Viet Nam); simplified tax and contributions assessment and payment regimes (Pakistan and Viet Nam); access to public procurement (India); access to inclusive financial services (India); access to entrepreneurship training, skills development and tailored business development services (India); access to social security coverage (India and Thailand) and e-formality (Bangladesh, Indonesia, India, the Philippines and Sri Lanka).
 For instance: ILO, 2014. Thematic Labour Overview 1: Transition to Formality in Latin America and the Caribbean.
How to apply:
Qualified and experienced national experts are requested to submit the application (expression of interest) by 15 February 2021, to André Bongestabs (firstname.lastname@example.org) and updated CV, expected daily rate of consultancy and availability during the period.
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