2 Billion Informal Workers Reshape Global South Labour Policy

More than 60 percent of workers in the Global South — roughly 2 billion people — work informally, and in India informal employment exceeds 80 percent of total jobs. Those figures, cited in a new analysis from the Observer Research Foundation (ORF), frame the central constraint on labour market policy across low- and middle-income countries: most workers sit outside the systems that traditional job protection was built around.

The backdrop is one of genuine expansion. Social protection coverage in the Global South has more than doubled over the last two decades, according to the World Bank's State of Social Protection 2025, driven by economic growth, political incentives and welfare-state ambitions. The ILO's World Social Protection Report 2024–26 finds that more than half of the global population now has some form of coverage. In India, Brazil and South Africa, social protection has become integral to national development strategies.

Yet the trajectory differs sharply from the Global North. ORF's author, Sunaina Kumar, Director and Senior Fellow at ORF's Centre for New Economic Diplomacy, identifies the structural causes: constrained fiscal space, informal economies, younger and fast-changing demographics, uneven state capacity and diverse institutions. The market-oriented transitions of the 1980s and 1990s, she notes, contributed to greater precarity — leaving labour markets characterised by low wages, rural–urban migration, underemployment and precarious self-employment.

For an individual worker in these economies, the practical question is not unemployment insurance in the classic sense but access to any formal safety net at all. That is what the programmes ORF catalogues are designed to answer.

Three pillars, five programme types

The analysis organises labour market protection into three functions: protect (income support and public employment during insecurity), prepare (skills, finance and experience for labour market entry or transition) and transform (formalisation and readiness for green and digital shifts).

Several national programmes stand out:

• Public employment. India's Viksit Bharat – Guarantee for Rozgar & Ajeevika Mission (Gramin) guarantees 100 days of employment per year on a demand-driven, rights-based basis and has been especially successful employing rural women. South Africa's Expanded Public Works Programme (EPWP) provides income relief through temporary work, prioritising the most vulnerable.
• Formalisation. Brazil's Microempreendedor Individual (MEI) scheme cuts registration costs and simplifies tax and social insurance for micro-entrepreneurs and own-account workers, expanding access to formal employment and protection.
• Skilling. Mexico's Jóvenes Construyendo el Futuro offers up to 12 months of workplace training, a monthly payment and health insurance. Bangladesh's RAISE programme bundles skills training, apprenticeships, microfinance, stipends and job intermediation for low-income youth.
• Self-employment. India's DAY-NRLM builds livelihoods through women's self-help groups; Senegal's Yokk Koom Koom combines training, savings groups and micro-entrepreneurship.
• Future jobs. Ghana's National Green Jobs Strategy pairs skills and green enterprise development with a focus on youth and women, while Brazil's National Care Policy expands childcare and eldercare and invests in training and rights for paid care workers.

Six shifts ahead

The analysis sets out six directions for policy: linking skilling to actual placement outcomes rather than training targets; extending portable benefits and simplified registration to informal, self-employed and platform workers; using skills forecasting to prepare for AI, automation and climate-driven shifts; making formalisation worthwhile through access to social insurance and finance; investing in the care economy, particularly for women; and prioritising job quality so green and digital sectors do not simply reproduce informality.

Fiscal constraints remain the binding limit. Many countries face rising debt burdens and economic uncertainty; ORF suggests broadening the domestic tax base, redirecting subsidies, building shock-responsive welfare systems with dynamic social registries, and deepening South–South cooperation on knowledge transfer.

With jobs and productivity increasingly central to the political economy of development, the report concludes, Global South governments must build systems that both protect workers against shocks such as pandemics and AI-driven disruption and enable productive, resilient employment.