Program Supporter The US Department of State
GFI implemented PILAR (Promoting Informal Labor Rights), a two-year project funded by the US Department of State to improve government capacity to collect data on the informal sector while developing strategies that encourage formalization and provide capacity building to informal sector workers in Nicaragua and Guatemala. Using GFI’s multi-stakeholder approach, we have worked with a broad range of formal and informal worker organizations, government ministries, the private sector, and key civil society organizations.
The national roundtables in each country focused on strategies for formalization looking at cross-cutting issues such as labor rights, women and informality, and vulnerable groups. The strategies included incentives - for example, social security and better access to financial services and credit - to bring informal workers into the formal economy and improved government practices - such as streamlining bureaucratic practices and improving tax collection. Participants of the roundtables, as well as various individual meetings, included government leaders, labor union officials, civil society leaders, private sector representatives, and informal workers. PILAR worked to influence policy makers by building consensus among the private sector and civil society, finding government allies, and working with multi-lateral organizations, such as the ILO, to cement policy recommendations under internationally-recognized standards.
A tangible result of PILAR is the Roadmap to Formalization, a document that compiles the consensual recommendations of the many stakeholders. The Roadmap's specific proposals are different in each country, as it is based on the cultural, political, and economic realities of the diverse sectors of workers and microenterprises as well as on each country's laws. However, the core findings can be systematizes: First, decent work is the Roadmap's guiding principle. It was clear through the survey and national roundtables that improving competitiveness and extending labor rights is not mutually exclusive; in fact, formalization can serve as a tool to establish long-lasting business and attract sustainable investment. Second, one of the pillars of good governance is sound information; hence the roadmap focuses on improved labor statistics for the design of government programs. Taxation is also at the crux of formality. Informal workers and enterprises pay "taxes" in the form of bribes or other hidden costs, which through effective governance can be directly collected and used for improved government services. Finally, reducing administrative barriers is necessary to ease the entry of workers and enterprises, taking into consideration the high level of illiteracy and the importance of work hours for street workers. To start implementing integrative policy, the Roadmap recommends launching a simplified registration system called "monotributo."
This will allow workers to register with ease and pay a set fee, which gives them access to social security and other benefits of formalization. The roadmap was presented on October, 2010, at the National Palace in Guatemala City by GFI's President, Karen Tramontano to Mr. Edgar Rodriguez, Minister of Labor, who accepted it on behalf of the Guatemalan government. During the presentation, the Minister of Labor committed his government to work on the implementation of the recommendations, stressing the importance of the Roadmap as a tool for the design of effective public policies and requested the future assistance of GFI. In Nicaragua, Verónica Rojas, Vice Minister of Industry and Commerce (MIFIC), stressed the importance of the Roadmap's recommendations for reaching out to informal workers in a more effective manner and ensure the most successful application of the "One-Stop Window," for which GFI currently assists in it's outreach and dissemination strategy.