Global Shadow Economy: A Persistent Challenge Requiring Comprehensive Solutions

The battle against the shadow economy remains one of the most complex challenges faced by countries worldwide, driven by unique workforce conditions and socio-political environments. A study conducted by the Organization for Economic Co-operation and Development (OECD) sheds light on the extent of this issue, revealing that six out of 10 workers globally are engaged in informal employment, predominantly in developing and emerging economies. The report further underscores the intergenerational nature of informal work, with children of such workers inheriting vulnerability and often following the same path. Breaking this cycle necessitates strengthening social protection and implementing skill development policies, according to the OECD.

The 166-page analysis emphasizes that informal workers, constituting 60% of the global workforce, face challenges such as low wages, higher likelihood of poverty, and difficulties related to health and aging. Transitioning from informal to formal employment is deemed "extremely rare," and even when it occurs, income improvements for the poorest workers are not guaranteed, as per the report.

A key contributing factor identified is the low level of education among informal workers, with approximately 45% having, at best, a primary education compared to 7% in formal employment. The lack of education presents obstacles in accessing higher-paying jobs and adopting new technologies, thereby perpetuating the cycle of informal employment.

The OECD report serves as a call to action for comprehensive global transformation to address the intricate challenges posed by the shadow economy. Tackling informal employment requires multifaceted strategies encompassing education, social protection, and skills development policies to break the cycle and create avenues for sustainable and improved livelihoods.

The prevalence of informal employment on a global scale, as highlighted by the OECD study, underscores the urgency of adopting comprehensive solutions. Addressing the shadow economy demands coordinated efforts, emphasizing education, social protection, and skill development policies to empower workers, break intergenerational cycles, and foster sustainable economic progress.

By fLEXI tEAM