Concepts and definitions

2.1. Social security and social protection

For simplicity, the terms “social security” and “social protection” are used interchangeably within this study, although it is recognized that in certain contexts social protection is interpreted as having a broader character than social security (ILO, 2014). At the country level, social protection or social security can be understood as

“a set of policies and programmes designed to reduce poverty and vulnerability by promoting efficient labor markets, diminishing people’s exposure to risks, and enhancing their capacity to protect themselves against hazards and interruption/loss of income”

(ADB, 2013, p.2).

There are multiple ways of viewing social protection systems and policies. ILO (2014) takes a lifecycle approach that looks at social protection policies, from realizing children’s full potential

through income security and cash transfers for poor families, to protecting working age adults (covering unemployment benefits, employment injury protection, disability benefits, maternity protection, etc.), to pensions for older citizens’ post-retirement. The International Social Security Association (ISSA, 2013) pins down five types of social security programs for cross-country comparison, including: 1) old age, disability and survivors, 2) sickness and maternity, 3) work injury, 4) unemployment, and 5) family allowances. The Asian Development Bank deconstructs the concept of social security into three components of social insurance, social assistance and active labor market programs (see Table 1).

Table 1. Social protection programs and their subcomponents

Item Social insurance Social assistance Labor market programs Program

description

Mitigates problems for population groups that are vulnerable to common risks, such as illness, unemployment, work injury, maternity, or old age. These groups are often not poor, at least not before confronting a particular risk.

Commonly provided as transfers to groups, such as the poor, who cannot qualify for insurance or would otherwise not receive adequate benefits.

Actively help people to secure employment, such as through employment services, skill development and training, or special work programs. The SPI project includes passive labor market programs, such as income support for the unemployed, under social insurance.

Subcomponents • Health insurance

• Pensions

 Other forms of social insurance (unemployment benefits, severance payments, benefits from provident funds)

 Social transfers

• Child welfare

• Health assistance

• Assistance to the elderly

 Disability programs

 Disaster relief

• Cash- or food-for- work programs

 Skill development and training

Source: ADB (2013)

ILO (2014, p.163) states that social security can be condensed into two main (functional) dimensions, i.e. “income security” and “availability of medical care”, as reflected in ILO’s Declaration of Philadelphia (1944). These two functional dimensions broadly frame the scope of social protection studied within this paper. On one hand, they can be seen in the light of

“protective” mechanisms to minimize risk against transient poverty by providing social safety

nets; on the other hand, they can be seen at a more “preventive” level aimed at eliminating risks, by making structural improvements to increase social resilience in general (Canagarajah and Sethuraman, 2001). Where the informal economy is concerned, both are needed: protective mechanisms for short term relief against uncertain employment circumstances, and preventive mechanisms to raise the quality of employment in general, transitioning from informal to formal in the longer term.

Before further discussion, the concepts about informal work should be clarified.

2.2. The informal sector and informal employment

In a working paper published by Women in Informal Employment Globalizing and Organizing (WIEGO), Vanek et al. (2014) clarify terms related to informal economic activities based on the ICLS resolutions and guidelines:

“The informal sector refers to unincorporated enterprises that may also be unregistered and/or small; informal employment refers to employment without social protection through work both inside and outside the informal sector; and the informal economy refers to all units, activities, and workers so defined and the output from them.” (p.6, emphasis in original)

An important point here is that workers that are not covered by social protection exist both within and outside the informal sector. Figure 1 provides a better visualization of this. Within the informal sector, informal employment includes employers, employees, own account workers, contributing family workers and members of co-operatives. Outside the informal sector, there are four possibilities, as follows:

1. employees in formal enterprises (including public enterprises, the public sector, private firms and non-profit institutions) not covered by social protection;

2. contributing family workers in formal enterprises;

3. producers of goods for own final use by their household (e.g. subsistence farming), if considered employed according to the international definition of employment; and

4. employees in households (e.g., domestic workers) without social protection.

Figure 1. Components of informal employment (17th ICLS guidelines), Source: ILO (2013)

The difference between the informal sector and informal employment brings important implications to the scope of discussion and following policy recommendations. One takes the enterprise approach (characteristics of the production unit in which activities take place), while the other focuses on labor (characteristics of the persons or jobs involved) (ILO, 2013). A comprehensive approach would take an overall view on the informal economy covering both the informal sector and informal employment outside the informal sector. This is also in line with the context of social resilience. Therefore, the scope of discussion within this paper will cover all employment without social protection and policy recommendations will also be aimed towards a broad vision of social protection for all.

The breakdown in Figure 1 of the types of workers under informal employment illustrates the heterogeneity of the group. Besides the distinction between informal employment within formal and informal sectors, employment status brings forth different considerations for policy interventions. Those who work in the informal economy can be broadly classified into wage workers and non-wage workers, as depicted in Table 2 (adapted from Chen et al. 2001); the former also known as dependent workers and the latter, independent workers. Social protection

needs are different between these two groups, as is the level of precariousness of their work.

Social protection needs also differ depending on characteristics of the individual informal worker, such as income level, gender, nature of work within the sector, or legal status as a local or a migrant worker.

Table 2. Types of employment within the informal economy (adapted from Chen et al., 2001)

Non-wage Workers Wage Workers

 Employers, including:

 owners of informal enterprises

 owner operators of informal enterprises

 Self-employed, including:

 heads of family businesses

 own-account workers

 unpaid family workers

 Employees of informal enterprises

 Domestic workers

 Casual workers without a fixed employer

 Homeworkers (also called industrial outworkers)

 Temporary and part-time workers

 Unregistered workers

For the informal sector in particular, Canagarajah and Sethuraman (2001) argue that there are varying levels of informality within the sector, adding to the heterogeneity of informal organizations. They suggest that the informality is a spectrum; often the enterprises involved in the informal sector have “partial” recognition and access to resources and markets. Small and medium enterprises, due to their limited resources, often choose to comply some regulations that grant them partial recognition. As a risk minimizing strategy they only comply with regulations that threaten their very survival as a business and improve their income.