ILO supports formalization of enterprises and workers in forced displacement contexts

On 4 May 2023, the ILO organized a knowledge sharing event to discuss informality challenges affecting the livelihoods of refugees, migrant and host communities, and explored opportunities to promote transition to formality in forced displacement contexts. ILO experts from Kenya, Lebanon, Mauritania, Türkiye and Uganda presented their experiences and insights in implementing different intervention models to promote decent work in their countries.

How does informality constrain decent work in forced displacement contexts?

During the webinar, ILO experts highlighted how challenges related to informality such as low productivity, little or no access to basic services and infrastructure especially among rural populations, lack of documentation, and increased poverty levels affect enterprises and workers in forced displacement contexts. Nicholas Grisewood, ILO Global Programme Manager of the Partnership for Improving Prospects for Forcibly Displaced Persons and Host Communities (PROSPECTS) Programme, highlighted that the majority of refugees, internally displaced persons and host communities engage in informal work, whether as workers or entrepreneurs.

Complementing this, Florence Bonnet, an ILO Labour Market Specialist presented ILO’s integrated approach on transition to formality spanning across multiple policy areas, and underlined that interventions should address the roots causes of informality to be effective in the long-term. Specifically in forced displacement contexts, multiple pathways to formality have to be considered to reflect the diversity of the informal sector.
Furthermore, Francesco Carella, ILO Regional Specialist on Labour Migration and Mobility explained that in mixed migration contexts, informality exacerbates the vulnerabilities of refugee and migrant workers who suffer from weak bargaining position with no access to unions and other representative organisations. As such, efforts to promote formality should be seen as enhancing not just the working and living conditions of displaced persons but also social cohesion and resilience, and should include strengthening Public Employment Services and Vocational Training Institutes.
 

In forced displacement and mixed migration contexts, informality prevails with disproportional effects among women, young people and persons with disabilities.

Héloïse Ruaudel, Senior Technical Specialist on Crisis Migration, MIGRANT, ILO Geneva

What approaches can address informality?

Kareem Bayo, ILO Technical Officer on Enterprise Formalization and Transition to Formality of Forcibly Displaced Persons, presented a framework to categorize the different approaches that aim to reduce informality in forced displacement contexts, and shared insights on possible ways to assess the impact of these interventions. Restrictive mobility and encampment policies, and complicated and tedious status determination processes remain some of the key challenges experienced by refugee communities, and the ILO has been implementing different approaches to support the formalization of enterprises and the workers they employ both in direct and indirect ways. 

Experiences from different countries

ILO experts from the field shared their experiences in implementing these types of interventions. In Kenya, the ILO has supported dialogue with the local government, Chamber of Commerce and an association representing the informal economy to promote the transition to formality and to address decent work challenges faced by refugees and host communities.

Convening constituents to discuss informality is crucial to change mindsets and shape a country's trajectory to address informality and its challenges.

Lilyanne Velo, National Programme Coordinator, ILO PROSPECTS Kenya

Rayann Koudaih, ILO Enterprise Development Officer from the PROSPECTS Project in Lebanon discussed difficulties faced by refugee-owned businesses to formalize because registration processes are difficult, and lack business development support services and incentives to formalize. To address this, the ILO has been piloting interventions to support the small and medium enterprises (SME) ecosystem in agriculture and agri-food sectors through tackling work permit issues and other structural barriers to start and run formal enterprises.

In Uganda, where informality is high among nationals and forcibly displaced persons, the ILO has partnered with the Federation of Small-Sized Enterprises to build the resilience of over 200 micro enterprises through the PROSPECTS Project. This includes sensitization efforts to promote business formalization processes, and a gender-sensitive approach to entrepreneurship development through the ILO Gender and Entrepreneurship Together (GET) Ahead training.

In addition, Özgür Azizoğlu, National Officer for Business Development from Türkiye discussed the ILO-supported integrated approach to respond to the increase of refugees in the country. Their three-pronged approach focusses on skills development, supporting the creation and retention of formal jobs and strengthening of labour market governance, while technical and financial assistance has been provided to employers who comply with the law to facilitate transition to the formal economy.

Webinar participants also learned from experiences in the Hodh El Chargui region of Mauritania, one of the country’s poorest regions, where the ILO has helped to facilitate access to business formalization services, finance and social security for urban and rural refugees.

In Mauritania, the ILO’s collaboration with local authorities is critical. We support enterprise formalization through decentralization of services from cities to rural areas, where there is a large refugee population.

Guité Diop, Technical Manager, ILO Mauritania

Building on experience and expertise in addressing informality, the ILO, as part of the UN Common Pledge to the 2023 Global Refugee Forum, is committing to support governments and social partners in expanding interventions to reduce decent work deficits in the informal economy and promote formalization for refugees, other forcibly displaced persons and host community members.

The Enterprise Formalization team of the ILO SME Unit works with governments, social partners and key stakeholders to promote enterprise formalization interventions tailored to national contexts, while ensuring the preservation and improvement of existing livelihoods during the transition. For more information, please write to sme@ilo.org

PROSPECTS is spearheaded by the Government of the Netherlands and bringing together the International Finance Corporation (IFC), the International Labour Organization (ILO), the United Nations High Commissioner for Refugees (UNHCR), the UN Children’s Fund (UNICEF) and the World Bank (WB). PROSPECTS targets eight countries in East and North Africa and the Middle East, including Egypt, Ethiopia, Iraq, Jordan, Kenya, Lebanon, Sudan and Uganda. It seeks specifically to transform the way that stakeholders respond to forced displacement crises by 1) fostering an enabling environment for socio-economic inclusion, 2) improving access to education and protection for vulnerable children on the move and 3) strengthening the resilience of host communities. Please find more on PROSPECTS at www.ilo.org/prospects