What policies can address informal activity in cities?

Policies addressing informal activity in cities can include legalisation, regulation, and provision of social protection.

Legalisation is one of the most effective ways to address informal activity in cities. This involves recognising the informal sector as a legitimate part of the economy and providing it with the same rights and protections as the formal sector. For instance, in some countries, street vendors are often considered illegal and are frequently harassed or evicted. However, if these activities were legalised, these vendors could be given designated areas to operate, which would not only provide them with a stable income but also contribute to the local economy. Legalisation can also involve simplifying the process of starting a business, making it easier for informal businesses to transition into the formal sector.

Regulation is another important policy tool. This can involve setting standards for informal businesses to ensure that they operate safely and ethically. For example, in the construction industry, informal workers often lack the necessary training and equipment to work safely. By implementing regulations, governments can ensure that these workers are properly trained and equipped, reducing the risk of accidents and improving the quality of their work. Regulation can also involve enforcing labour laws to protect informal workers from exploitation.

Finally, providing social protection is crucial for addressing informal activity in cities. Informal workers often lack access to social security benefits such as healthcare, pensions, and unemployment insurance. By extending these benefits to the informal sector, governments can provide these workers with a safety net, reducing their vulnerability to economic shocks and improving their overall well-being. This can be achieved through a variety of mechanisms, such as contributory schemes where workers pay into a fund in exchange for benefits, or non-contributory schemes where benefits are funded by the government or other sources.

In conclusion, addressing informal activity in cities requires a combination of legalisation, regulation, and social protection. These policies not only help to improve the lives of informal workers, but also contribute to the overall development of the city.