From informal to empowered

The informal sector in the Philippines, often overshadowed by the formal economy, is a vital force driving the country’s growth and resilience. It comprises a significant portion of the workforce, sustaining the livelihoods of millions of Filipinos who may not have access to formal employment opportunities.

From the bustling streets of urban centers to the remote corners of rural areas, informal workers are the backbone of the economy, contributing significantly to the nation’s GDP. These workers, ranging from motorcycle nanopreneurs to street vendors and home-based laborers, epitomize the entrepreneurial spirit and perseverance that have long been the hallmark of the Filipino people.
However, despite its substantial contributions, the informal sector faces numerous challenges that hinder its full potential. These challenges are multifaceted and complex, often leaving informal workers vulnerable and marginalized.

One of the most pressing issues is the lack of access to credit. Informal workers typically operate outside the bounds of formal financial institutions, relying instead on personal networks and community relationships to secure the funds needed to sustain their businesses. This “trust capital” is a double-edged sword; while it fosters close-knit community ties, it also underscores the precarious nature of informal work. Without formal contracts or legal protections, informal workers are at constant risk of exploitation and economic insecurity.

In addition to financial constraints, informal workers often lack access to social protection. Unlike their counterparts in the formal sector, they do not benefit from government-mandated benefits such as health insurance, retirement savings or paid leave. This absence of a safety net leaves them exposed to the full brunt of economic shocks, whether it’s a downturn in business, an unexpected illness or a natural disaster. The pandemic starkly highlighted these vulnerabilities, as many informal workers found themselves without the means to support their families during extended lockdowns and economic slowdowns.

The absence of opportunities for upskilling further exacerbates the challenges faced by informal workers. The rapid pace of technological advancement and the changing landscape of work necessitate continuous learning and adaptation. 

However, many informal workers are trapped in a cycle of low-skilled, low-paying jobs with little opportunity for advancement. This lack of upward mobility not only stifles individual growth but also limits the overall development of the sector.

Despite these challenges, the informal sector remains a critical component of the Philippine economy, and its potential for driving national prosperity cannot be overstated. The key to unlocking this potential lies in recognition and empowerment. Recognizing the contributions of informal workers is the first step toward integrating them into the formal economy. This can be achieved through policies that provide legal recognition, access to social protection and financial inclusion. By bringing informal workers into the fold, we can ensure that they receive the support and resources they need to thrive.

Empowerment also requires a concerted effort to provide informal workers with opportunities for education and skills development. Upskilling is not merely a pathway to better-paying jobs; it is a means of transforming the informal sector from a survival mechanism into a thriving economic engine.

The journey from informal to formal employment is best exemplified by the Angkas platform, which has transformed the lives of thousands of habal-habal riders – once part of the unregulated, informal economy – into thriving motorcycle taxi nanopreneurs. These riders, who previously struggled to make ends meet, now enjoy stable daily incomes of P1,000 or more, a remarkable shift from the uncertainty they once faced. But the benefits extend far beyond just income. 

Through Angkas, these riders are now provided with accident insurance, offering them and their families a much-needed safety net. Moreover, their formal recognition by the Pag-IBIG Fund has opened up access to housing loans, enabling them to secure homes – something that was previously out of reach.

In addition, their recent inclusion in the Social Security System (SSS) has provided them with lifelong benefits, marking a significant milestone in their transition to the formal economy. This shift has not only uplifted many of them from poverty but has also brought a new level of dignity and security to their work. The success of Angkas in formalizing the habal-habal riders demonstrates the immense potential that lies in recognizing and empowering the informal sector. By integrating these workers into the formal economy, we not only improve their quality of life but also strengthen the overall economic fabric of the nation.

Ambition is one of the most powerful forces driving the informal sector. Despite the limitations of their circumstances, many informal workers harbor dreams of a better future. However, these dreams are often constrained by a lack of resources and opportunities. To harness the power of ambition, we must create an environment where informal workers can achieve their goals. This involves not only providing access to capital and education but also fostering a culture of innovation and entrepreneurship.

The path to inclusive growth and prosperity in the Philippines is inextricably linked to the fate of the informal sector. By addressing the challenges faced by informal workers and providing them with the tools they need to succeed, we can build a more resilient and equitable economy. This requires a multi-faceted approach that includes policy reforms, investment in education and skills development and the promotion of financial inclusion. The road to inclusive growth is not without its obstacles, but the potential rewards are immense.

The informal sector is undergoing a quiet revolution, gradually transforming the economic landscape of the Philippines. As more informal workers gain recognition, upskill and access new opportunities, the sector’s potential for driving national prosperity becomes increasingly evident.

By embracing the informal sector and empowering its workers, we can unlock a future where economic growth is not just a statistic but a reality for all Filipinos.