Social Security for the Informal Sector: A New Challenge for the Developing Countries

Informal sector workers constitute a large and increasing part of the labour force in most developing countries. Many of them are not able or willing to contribute a significant percentage of their incomes to finance formal sector social insurance benefits that do not meet their priority needs. Therefore, informal sector workers themselves need to (and have) set up health and other social insurance schemes that better meet their needs and contributory capacity. In addition, special social assistance schemes are necessary to protect the most vulnerable groups outside the labour force. This article also assesses some key implications of these developments for formal social insurance schemes.