Why the informal sector still has no seat at the table

Every year, International Workers' Day is observed across the nation with due solemnity, serving as a symbolic reminder of the struggle for fair wages and safe working conditions.

However, the stark reality remains that while formal sector employees enjoy certain legal protections, tens of millions of workers in the informal sector remain deprived of basic rights.

Despite the seminars and discussions surrounding May Day, the deep-seated disparity between these two classes of labour shows little sign of improvement.

The informal sector is the true driver of Bangladesh's economy, accounting for approximately 85% of total employment.

This vast workforce includes rickshaw pullers, construction workers, domestic helpers, small shop assistants, transport workers, and agricultural labourers.

Despite their contribution, they operate outside the framework of institutional protections.

Most of these workers do not have written appointment letters, regulated working hours, or guaranteed overtime pay.

Furthermore, when faced with accidents, illness, or unemployment, they find themselves without any effective social safety net.

A significant portion of the country's labour force remains excluded from state legal protections.

Recent amendments to the Labour Act have drawn criticism for failing to incorporate the majority of informal sector workers.

Out of the estimated 85% of the workforce engaged in this sector, the new law only covers domestic workers and some employees in specific agricultural farms—representing barely 5% of the informal labour force.

This leaves nearly 80% of all workers without a legal platform to seek remedies for wage disputes or basic rights violations.

According to the latest data from the Bangladesh Bureau of Statistics (BBS), out of a total labour force of 63.5 million, approximately 56.5 million are employed in the informal sector.

Labour experts argue that the primary goal of labour law reform should have been to bring all workers under a unified legal umbrella.

Syed Sultan Uddin Ahmed, executive director of the Bangladesh Institute of Labour Studies (BILS), noted that while reform commissions recommended universal social security, the final legislation left the vast majority of informal workers in a legal vacuum.

The amended Labour Act has introduced several changes, particularly regarding trade unions and worker benefits.

A minimum of 20 workers is now required to form a union in a workplace. Furthermore, a single institution can now have a maximum of three trade unions, down from the previous limit of five.

To prevent fragmentation, workers are prohibited from joining multiple unions, with penalties for violations.

In a positive move, the law now officially bans the practice of "blacklisting" workers.

This prevents employers from creating databases of terminated workers to bar them from future employment opportunities.

Maternity leave has been increased from 112 to 120 days, and annual festival holidays have been extended from 11 to 13 days.

Additionally, a provision has been made for establishments with 100 or more workers to participate in provident funds or the national pension scheme.

The most pressing issue for informal workers is irregular and inadequate wages.

Even when performing similar tasks to those in the formal sector, informal labourers receive significantly lower pay.

Amidst rising inflation and the soaring cost of daily essentials, their real income is shrinking.

This wage gap, coupled with the lack of market-aligned daily rates, makes it nearly impossible for these families to maintain a decent standard of living.

Women in the informal sector face a twofold deprivation.

Whether working as domestic helpers or agricultural labourers, they are frequently paid less than their male counterparts for the same work.

Beyond wage discrimination, they deal with a lack of workplace safety, social recognition, and total exclusion from the protections afforded by labour laws.

Recommendations for inclusive labour policy

Economists and labour specialists emphasize that bringing the informal sector into the mainstream requires a comprehensive shift in policy.

Key recommendations include creating an easy, accessible system for all informal workers to register with the state, establishing and enforcing a minimum wage structure that applies across all sectors, extending health and accident insurance specifically tailored for the informal workforce, and ensuring equal pay for equal work and specific safety protections for female labourers.

Until the gap between symbolic celebrations and the harsh reality of the informal labour market is bridged, achieving Sustainable Development Goals (SDGs) will remain an uphill task.

Moving beyond the formalities of May Day to implement effective legal and social protections is now a matter of national urgency.