Social Protection for Developing Countries: Can Social Insurance Be More Relevant for Those Working in the Informal Economy?

Abstract

The main reason for the exclusion of workers in the informal economy from statutory social security coverage has been described by Van Ginneken as the fact that these workers “are unable or unwilling to contribute a relatively high percentage of their incomes to financing social security benefits that do not meet their priority needs”. This naturally leads to the need for researchers to determine the priority needs of workers in the informal economy and explore ways of extending social protection to such workers. The needs and aspirations of those working in the informal economy may be said to pertain to two related issues: the first is to improve and maximise their employment potential and the second is to extend their coverage under social protection measures.The article is divided into four sections. The first presents an analysis of conceptual issues relevant to the present enquiry. The second describes the labour market and social protection challenges to be considered in endeavours to make social insurance relevant to informal economy workers in Southern Africa. The third section discusses possible recommendations to make social insurance more relevant to those toiling in the informal economy, on the one hand by considering ways to extend social protection to those workers and their families and, on the other hand, to investigate to what extent it is possible to strengthen the linkages between the two economies. The final part presents some remarks on the way forward.