Trade reforms are more employment friendly - ILO/WTO

13 Oct '09

4 min read

The higher the incidence of informality, the greater the vulnerability of developing countries to shocks like the ongoing global crisis. Countries with larger informal economies suffer more frequently from shocks and experience lower sustainable growth rates. Also, informal employment reduces the effectiveness of automatic stabilizers.

Integration into world markets and tackling informal employment through decent work policies should be considered complementary. Facilitating formality of firms and jobs helps a country to benefit fully from trade openness, improves living standards and gives workers access to decent working conditions. Social protection is also crucial for supporting transitions and realising the gains from open trade. Greater attention should be devoted to social protection policies as well as to the design of trade reforms.

The study suggests that trade reforms should be designed and implemented in an employment-friendly way, making the reallocation of jobs more conducive to formal employment growth.

World Trade Organization

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