The informal workforce is, by labor-share, the global majority of the working world, and the policy discourse keeps treating it as a residual category that economic development will eventually erase. The International Labour Organization's flagship statistical work has put global informal employment at roughly 60% of all workers, with the share much higher in low- and middle-income countries and stubbornly non-trivial even in high-income ones. The argument here is unsentimental: informality is not a stage countries pass through on the way to formality. It is a steady-state feature of modern labor markets that policy can shape, but not abolish, and the workers in it are entitled to protections, portable benefits, and bargaining rights regardless of whether their employer is willing to call them "employees."
The scale and composition of informal work
The ILO's Women and Men in the Informal Economy: A Statistical Picture (most recently updated in 2023) provides the headline figure: roughly 2 billion of the world's workers, about 60% of total employment, are in informal arrangements. Sub-Saharan Africa and South Asia have informality shares above 80%; Latin America hovers around 50%; the OECD average is much lower but non-trivial, particularly in southern Europe. In the U.S., the Bureau of Labor Statistics' Contingent and Alternative Employment Arrangements survey, last fielded in 2017 and supplemented by various 2022–2024 working papers, has estimated that roughly 10–16% of U.S. workers were in some form of non-standard arrangement, with substantial variance depending on definition.
The composition matters. Informal work spans street vending and waste-picking in Mumbai, domestic work in Manila, home-based garment production in Dhaka, ride-share and delivery driving in São Paulo and Los Angeles, day-labor construction in Houston, and freelance creative work in Berlin. The shared feature is not poverty — some informal workers earn well — but rather the absence of an employer who, under existing law, is responsible for paying into social-insurance systems, providing health coverage, or guaranteeing minimum hours.
The three forces reshaping informal work now
Platform companies. The rise of Uber, Deliveroo, Rappi, Ola, and dozens of regional analogs has formalized data about a kind of informal work that used to be invisible — while leaving the underlying employment classification contested. The European Union's Platform Work Directive, adopted in 2024 and being transposed into national law through 2026 and 2027, creates a rebuttable presumption of employment for platform workers meeting defined criteria. Uber BV v. Aslam (U.K. Supreme Court, 2021) reclassified Uber drivers as "workers" entitled to minimum wage and paid leave. The U.S. has gone the opposite direction in some states: California's Proposition 22 (2020), upheld in Castellanos v. State of California (California Supreme Court, 2024), classified app-based drivers as independent contractors with a narrower benefits package.
Climate and migration shocks. Brookings Institution and World Bank research on climate-displacement scenarios suggests that the number of climate-displaced workers will grow materially through the 2030s. Most will enter labor markets at the informal end, at least initially. The U.S. agricultural workforce, the Gulf-state construction workforce, and the southern-European hospitality workforce are all already shaped by similar dynamics in the present.
Automation pressure on formal employment. McKinsey Global Institute's The Future of Work reports and the World Economic Forum's Future of Jobs series have, in their various editions, estimated that a significant share of routine formal jobs are exposed to automation. The transition path is not always to another formal job; for some workers, it is to informal arrangements that the employer prefers because they are cheaper and less regulated.
What portable benefits actually look like
The most promising policy response to the informality of modern work is not to force every job into the W-2 box. It is to detach benefits from employer status — the model that several jurisdictions have begun to implement. Washington State's portable-benefits work, including SB 5777 (2023) and related initiatives, has experimented with employer-and-platform contributions into worker-owned benefit accounts that travel with the worker. New York City's Deliveristas legislation (2021–2023) addressed app-based food delivery workers with minimum-pay floors and bathroom-access mandates. The U.K., Spain (the 2021 Rider Law), and several Latin American jurisdictions have run parallel experiments.
The conceptual model behind these efforts is that some bundle of social-insurance contributions, paid time off, retirement savings, and skills-training funding should be associated with the work done, not the employment classification. The OECD's Employment Outlook has, in successive editions, argued for portable-benefits architecture as a primary policy response to the rise of non-standard work. The U.S. federal government has been mostly absent from this conversation; the action is at the state and city level.
What workers and worker organizations are doing themselves
The collective-bargaining response to informal work has produced several genuinely novel forms. The Self-Employed Women's Association (SEWA) in India, founded in 1972, has organized more than 2 million informal workers — vendors, home-based workers, agricultural workers — into a federation that operates as union, cooperative bank, and policy advocate simultaneously. The Independent Drivers Guild in New York and Los Angeles has negotiated for app-based drivers without converting them to formal employees. Domestic Workers United and the National Domestic Workers Alliance have, since 2010, won state-level domestic worker bills of rights in at least ten U.S. states. These are not the AFL-CIO model, but they are recognizably labor organizing, adapted to the legal classification each set of workers actually has.
Synthesize: the informal workforce is not a problem to be solved by formalization alone; it is a population to be protected through portable benefits, sectoral bargaining where possible, and clear regulatory floors against the worst employer practices. The countries that have moved fastest on portable benefits are running an experiment whose results will shape the next twenty years of work-rights policy. The countries that have moved slowest are betting, implicitly, that the informal sector will shrink on its own. The evidence does not support that bet.
Informality is not a stage of development; it is a steady-state feature of modern labor markets. Portable benefits and sectoral bargaining are the policy frontier — not the project of dragging every gig into a W-2.
For the wider argument on how this is being settled jurisdiction by jurisdiction, see The Gig Economy Settlement →.
Updated May 21, 2026. This piece was substantively rewritten as part of NWLB's 2026 editorial refresh.
