New Framework Launched to Tackle Informality in MENA Economies and Enhance Job Formalization

Launched on August 6, 2024, in Quezon City, the Framework provides a structured approach to evaluate how economic and social policies impact the formalisation of jobs and businesses.

The International Labour Organization (ILO), the Organisation for Economic Co-operation and Development (OECD), and the United Nations Development Programme (UNDP) have unveiled a groundbreaking tool aimed at addressing the challenges of informality in the MENA region. The newly developed Policy Assessment Framework is part of a comprehensive report titled Informality and Structural Transformation in Egypt, Iraq, and Jordan: A Framework for Assessing Policy Responses in the MENA Region.

Launched on August 6, 2024, in Quezon City, the Framework provides a structured approach to evaluate how economic and social policies impact the formalisation of jobs and businesses. It was created through extensive research and consultations with regional experts and policymakers, and tested on policies from Egypt, Iraq, and Jordan implemented during and after the COVID-19 pandemic.

Peter Rademaker, Deputy Regional Director for Arab States at the ILO, highlighted the Framework's significance, noting that it will help identify effective strategies, analyze challenges, and set priorities for enhancing formalization. He emphasized its importance given the high levels of informality in the region and its alignment with the ILO's Transition from the Informal to the Formal Economy Recommendation, 2015 (No. 204).

Despite progress in reducing informality over the past two decades, it remains widespread in MENA economies, accounting for over 58% of employment and more than 20% of GDP. Informality can exacerbate vulnerabilities during economic shocks, such as those caused by the COVID-19 pandemic.

Andreas Schaal, Director of OECD Global Relations, stressed that the Framework supports sustainable and inclusive growth while addressing the green and digital transitions and ensuring equitable work conditions. He emphasized the importance of multilateral cooperation in tackling informality and promoting the 2030 Agenda for Sustainable Development.

Marina Walter, Deputy Director of the Regional Bureau for Arab States in UNDP, noted that informality serves as a critical coping mechanism for poverty alleviation when formal job opportunities are insufficient. The report outlines specific policy measures that have successfully increased formality in Egypt, Iraq, and Jordan, including affordable social insurance, active labor market policies, and improved business registration processes.

The Framework is designed to be adaptable beyond the MENA region, offering a valuable tool for policymakers and researchers worldwide. It aims to enhance the effectiveness of policies aimed at reducing informality and fostering formal economic activities, ultimately contributing to more stable and equitable economic environments.