Informal Work Is the World's Default Arrangement, and the Statistics Are Only Now Catching Up

by Marcus Lindqvist · August 27, 2026

Global Economy Reporter, The Globe Ledger

The employment statistic that gets quoted in most countries is the unemployment rate. For most of the world's workers it is close to irrelevant. Unemployment measures people actively searching for work and available to take it, a condition that presupposes an income to search from. In economies where the alternative to working today is not eating tomorrow, almost nobody is unemployed for long, and the interesting variable is not whether people work but under what arrangement.

The International Labour Organization's Employment and Social Trends 2026, its flagship labour report published on 14 January 2026, states that 2.1 billion workers remain in informal employment; the report does not attach a reference year to that count. A separate ILOSTAT review of the decade since 2015, working from ILO modelled estimates, puts the informal employment rate at 57.9 per cent of global employment in 2025, against 57.4 per cent in 2015. In ten years of growth, digitalisation and policy attention, the share moved by half a percentage point in the wrong direction.

What informal actually means

Informal is not a synonym for illegal, and it is not a synonym for street trading. The ILO's framework treats informality as a property of both economic units and jobs, and separates the two. The informal sector is a characteristic of the economic unit - the enterprise, its registration, its accounts. Informal employment is a characteristic of the job: work that, in law or in practice, is not covered by formal arrangements, of which an employer's social security contribution, paid leave and an enforceable contract are the usual markers.

Those two can come apart in either direction. A registered, tax-paying firm can employ people informally, and does so extensively: ILOSTAT's Decent Work Reality Check analysis finds informal jobs inside formal-sector units accounting for as much as 86 per cent of all informal jobs in Nauru and 76 per cent in Brunei Darussalam. The revised standards adopted by the 21st International Conference of Labour Statisticians in 2023 were written to capture exactly this. They recognise that informality occurs in economic units of the informal sector, in units of the formal sector and in households; they define the formal sector, the informal sector and the household own-use and community sector by the formal status of the economic unit and the intended destination of what it produces; and they introduce the concept of informal productive activities, accepting that an activity can be partly informal rather than forcing a binary. This matters for reading the numbers over time. When a country adopts the newer standard, its measured informality rate can move without anything changing on the ground, so any comparison across years or countries has to establish which standard produced each figure.

Where it concentrates

The global average conceals a very steep gradient. On the ILOSTAT ten-year review figures for 2025, informal employment stands at 88.6 per cent in the least developed countries - down only marginally from 90.0 per cent in 2015 - 87.6 per cent in sub-Saharan Africa and 83.9 per cent in Central and Southern Asia.

Sector explains much of that. In the ILOSTAT Decent Work Reality Check analysis, agriculture concentrates a third of informal jobs globally, but the composition differs enormously by income level: agriculture accounts for 62 per cent of informal employment in low-income countries against 9 per cent in high-income ones. After agriculture, a further 14 per cent of informal jobs worldwide are in wholesale and retail trade, 12 per cent in manufacturing and 11 per cent in construction.

Status at work predicts it better than sector

The strongest single predictor in the ILOSTAT analysis, based on a subset of twenty countries with data aligned to the 2018 classification of status in employment and the 21st ICLS resolution, is not what someone does but the legal shape of their working relationship. Contributing family workers hold informal jobs in every country with data but one. Dependent contractors - a category the 2018 classification created for workers who are nominally independent but economically reliant on a single other entity - have an informality rate of 100 per cent in all but three of those countries. Among independent workers without employees, more than 95 per cent hold informal jobs in three-quarters of the countries with data.

Being an employee is the strongest protection, though far from a guarantee. Hours and sector follow the same logic: across those twenty countries the median informality rate is 85 per cent for part-time workers against 63 per cent for full-time, and 79 per cent in the private sector against 18 per cent in the public sector, with wide national variation. Education tracks it closely at the bottom and loosely at the top. Workers with less than basic education are in informal employment at rates between 90 and 100 per cent. Workers with advanced education are typically in the 10 to 40 per cent range — but not always: in Brunei Darussalam a quarter of informal workers hold advanced qualifications. Informality is a feature of labour market structure, not simply of individual skill.

What follows from it

The consequences show up in two places. The first is income. The ILOSTAT decade review counts 284 million workers, 7.9 per cent of the global employed population, living in extreme poverty in 2025 on less than three US dollars a day in purchasing-power-parity terms - a rate down 3.1 percentage points since 2015, but still around 40 per cent in sub-Saharan Africa and the least developed countries. Employment and Social Trends 2026 gives a comparable figure of nearly 300 million workers in extreme working poverty. The global labour income share, the portion of output going to workers rather than to capital, edged down from 53.0 per cent in 2015 to 52.6 per cent in 2025.

The second is protection. The ILO's World Social Protection Report 2024-26, published on 9 September 2024, finds that as of 2023, 52.4 per cent of the world's population was covered by at least one social protection cash benefit - up from 42.8 per cent in 2015 - leaving 47.6 per cent, some 3.8 billion people, entirely unprotected. Coverage runs from 85.9 per cent in high-income countries and 71.2 per cent in upper-middle-income countries down to 32.4 per cent in lower-middle-income and 9.7 per cent in low-income countries. Only 28.2 per cent of children receive a family or child cash benefit and only 16.7 per cent of unemployed people receive cash unemployment benefits. Average expenditure runs at 12.9 per cent of GDP on social protection excluding healthcare and a further 6.5 per cent on health, 19.3 per cent in total, with sharp differences across income groups.

Why the headline labour numbers miss it

Set that against the indicators that lead most coverage. Employment and Social Trends 2026 projects a global unemployment rate of 4.9 per cent for 2026 — a projection, not an observation — which reads as a labour market in good order. The same report projects a global jobs gap, its broader measure of people who want work and cannot get it, of 408 million for 2026, and counts 260 million young people not in employment, education or training, about a fifth of the world's youth. It also records that women are 24.2 per cent less likely than men to participate in the labour force and hold roughly two-fifths of global employment. Low unemployment and mass informality are not in tension; in much of the world they are the same fact described by an instrument that was not built for it.

Informality also determines who absorbs a shock. The ILO's Employment and Social Trends: May 2026 Update models a scenario in which oil prices rise to roughly 50 per cent above their January-February 2026 average, and finds informal workers overall more exposed than formal workers, reflecting their concentration in more energy-intensive sectors. Its headline figures - hours worked down 0.5 per cent in 2026 and 1.1 per cent in 2027, equivalent to about 14 million and 38 million full-time jobs, with labour income losses of roughly 1.1 and 3.0 trillion 2021 PPP dollars - are the output of that scenario. The brief itself says the results should be read as a scenario-based estimate rather than a forecast, and they carry no weight as a prediction of what will happen.

The measurement story is the one to watch over the next few years. As countries move onto the 2023 standards, informality rates in some economies will appear to jump, and much of that movement will be visibility rather than deterioration. The point of the 21st ICLS revision was that informality is not confined to the informal sector: it sits inside registered firms and inside households too. The statistics are being rebuilt to say so out loud.