Bringing previously uncovered workers under social security legislation
Many workers in the informal economy may not be, or only insufficiently, covered by the existing legal framework for different reasons. The legislation may not foresee coverage for certain sectors of the economy (such as agriculture), certain occupations (such as domestic workers) or certain types of employment (such as self-employment or casual employment). As a result, those workers may be fully or partially excluded from the scope of social security and labour legislation.
This module addresses the extension of coverage from a legal perspective, focusing on bringing previously uncovered workers under the scope of social security and labour legislation. It discusses specific challenges and policy options, guided by international social security standards and good practices.
Relevant international labour standards
- What are the legal barriers that workers and employers in the informal economy face? Which groups of workers are excluded from the scope of social security and labour legislation, and which are the gaps with regard to the implementation and enforcement of the law?
- How can workers in the informal economy be brought under the scope of legislation in an effective way, adapted to their needs and circumstances?
- How can legal frameworks be adapted to cover previously uncovered workers, and what other measures are necessary to ensure effective protection?
- Legal exclusion: Many workers in the informal economy work in sectors of the economy, in occupations or types of employment which are outside the scope of the existing legal framework. For example, social security legislation may explicitly or implicitly exclude workers in agriculture, domestic workers, self-employed workers, or workers in enterprises with less than five workers. In addition, workers in “new” forms of employment may not be covered, such as workers on digital platforms.
- Weak implementation of laws: Legislation may exist, but it may not be implemented at all, or only partially, due to either a lack of sufficient institutional capacity for its implementation or because it is out of sync with its environment and in need of amendments or detailed regulations.
- Lack of enforcement and control: Legislation may be implemented, but it may not, or only half-heartedly, be enforced. In many cases, such a lack of enforcement may be associated with a lack of inspection capacities, particularly in sectors of the economy which require a higher level of resources than others, because of geographic distance or the structure of the economic units.
Extending social insurance coverage to cover previously uncovered workers through adapted measures that specifically meet their needs, prioritizing mandatory coverage
- Lowering or removing minimum thresholds in the law that effectively exclude some workers, such as thresholds regarding the size of the enterprise, minimum working hours or earnings.
- Extending coverage to previously excluded categories of workers, such as domestic workers or agricultural workers, through adapted measures.
- Broadening the concept of “employee” in social security or labour legislation to clarify employment relationships and protect workers.
- Extending coverage to self-employed workers through adapted measures that take into account their specific needs and situations.
Combining social insurance and non-contributory (tax-financed) benefits
- Introducing or strengthening non-contributory (tax-financed) schemes anchored in law, as to ensure at least a basic level of protection, such as universal child benefits, disability benefits or social pensions.
- Introducing or strengthening legal provisions that ensure at least a basic level of protection, e.g. through minimum benefit guarantees or the subsidization of contributions for low-income workers.
Ensuring that national legal frameworks are in line with international social security standards, in particular:
Ensuring that the extension of legal coverage is accompanied by effective measures to facilitate implementation
- Ensuring the participation of stakeholders in defining adapted solutions, such as through multi-stakeholder national dialogues with the participation of workers’ and employers’ organisations and other stakeholders.
- Accompanying the implementation of new laws with awareness-raising campaigns.
- Engaging with partners to support the implementation of the law, such as workers’ and employers organisations, or civil society organizations.
- Ensuring that the extension of legal coverage is accompanied by effective measures to overcome administrative barriers (see chapter 5), financial barriers (see chapter 6), enhance compliance (see chapter 7), as well as awareness-raising and trust-building (see chapter 3).
- In order to extend social security coverage to workers in the informal economy, legal frameworks need to be adapted so as to effectively cover and protect these workers – not just on paper, but in reality.
- International labour standards in general, and social security standards in particular, provide important guidance for more effective national legal frameworks that are adapted to the realities of both workers and employers.
- The extension of legal coverage is not sufficient to achieve effective coverage and facilitate the transition to the formal economy. Additional measures are necessary to make sure that the legal frameworks are effectively implemented and enforced, including awareness-raising and trust-building, removing administrative and financial barriers to coverage, and ensuring that these measures take into account, and are adapted to, the specific needs and circumstances of workers and their employers.