How Informal Work Marginalizes Women in the Global Economy

Millions of women across the globe wake up each day to work without contracts, pensions, or even the promise of tomorrow’s wages. They stitch garments in their homes, sell vegetables on street corners, care for children in other people’s houses, and harvest crops on land they don’t own. This is the reality of the informal economy, where nearly 60 percent of women’s employment globally exists outside the protections of labor laws and social security systems.

When work doesn’t count: women in the informal economy 🔗

The informal economy includes all economic activities that operate without state regulation or protection. Women working in this sector face a double burden. Not only do they earn their living in unregulated roles, but their contributions often go uncounted and unrecognized in official economic measures.

The numbers tell a stark story. Four out of every five jobs created for women are in the informal economy, compared to two out of three for men. In low-income countries, the situation is even more extreme. More than 90 percent of employed women work informally, compared with 87 percent of men.

These women work as domestic helpers, street vendors, home-based garment workers, agricultural laborers, and waste pickers. They provide essential services and products that keep economies running, yet they do so without basic protections like minimum wage guarantees, health insurance, paid leave, or retirement benefits.

The poverty trap of informal work 🔗

Informal employment doesn’t just mean uncertain wages. It creates a cycle of economic vulnerability that’s difficult to escape. Women in informal work typically earn far less than their counterparts in formal employment. The gender wage gap stands at 20 percent globally, meaning women earn only 80 percent of what men earn, and this figure understates the reality in developing countries where informal work dominates.

The financial consequences compound over time. Without access to social security, women cannot build retirement savings. Women’s average pensions are more than 30 percent lower than men’s in countries like France, Germany, Greece, and Italy, directly contributing to higher rates of poverty among elderly women.

According to UN Women projections, if current trends continue, more than 342 million women and girls will be living on less than $2.25 per day by 2030. The overrepresentation of women in informal work is a significant factor in this persistent poverty.

Globalization’s role in pushing women to the margins 🔗

The growth of informal work among women isn’t accidental. It’s deeply connected to how globalization has reshaped labor markets over the past several decades. Multinational companies seeking to maximize profits have increasingly turned to flexible labor arrangements that minimize costs and regulatory obligations.

The race to the bottom 🔗

Global competition has created what researchers call a “race to the bottom” in labor standards. Companies relocate production to countries with lower wages and weaker labor protections, or they outsource work to subcontractors who operate informally. This strategy particularly affects women, who are actively sought by employers based on assumptions about their willingness to work for lower wages and their presumed docility.

In export-oriented industries like textiles and garment manufacturing in Bangladesh, China, and Thailand, women workers are often actively recruited because employers believe they will accept conditions that male workers might reject. The feminization of certain industries is not about equal opportunity but about exploiting gender inequalities for economic gain.

Trade liberalization and structural adjustment policies have further pushed women into informal work. When economies open to global competition, small-scale farming and local industries where women are heavily represented often cannot compete with imported goods. Women then shift into informal food trading, seasonal agricultural work, or piece-rate production at home, losing whatever formal protections they may have had.

Supply chains built on invisible labor 🔗

Modern global supply chains depend heavily on informal work arrangements. A garment sold in a high-street store in Europe or North America may have been sewn by a woman working from her home in South Asia, receiving piece-rate wages with no contract or benefits. She is several steps removed from the brand that profits from her labor, making accountability nearly impossible.

Research shows that women comprise approximately 80 percent of workers in global garment supply chains. As multinational corporations seek cost reductions, suppliers compress wages and working conditions, particularly affecting female workers at the bottom of these value chains.

The pressure to keep costs low means that work is increasingly outsourced to home-based workers who absorb the risks and costs of production without any of the protections that factory workers might have. These women purchase their own materials, use their own electricity, and work whatever hours necessary to meet deadlines, all while earning far less than minimum wage.

The human cost: rights denied and futures stolen 🔗

Working in the informal economy means more than low pay. It means operating outside the framework of rights and protections that formal workers take for granted.

No legal protections 🔗

Women in informal employment have little recourse when they face exploitation. They cannot join unions, file complaints about unsafe conditions, or demand payment for overtime work. Most people enter the informal economy not by choice, but due to a lack of opportunities for formal work. They experience dangerous working conditions, low and irregular wages, and have limited or no access to social security benefits.

The lack of labor law protections leaves women vulnerable to various forms of abuse. Domestic workers, who are predominantly women and often migrants, face risks of sexual harassment, physical abuse, and wage theft with no legal channels for redress. Agricultural workers are exposed to toxic pesticides without safety equipment. Home-based garment workers develop chronic health problems from repetitive motions and poor ergonomics.

Exclusion from social security 🔗

Perhaps the most devastating long-term consequence of informal employment is exclusion from social security systems. Without access to unemployment insurance, women have no safety net when work disappears. Without health insurance, illness can be financially catastrophic. Without maternity benefits, pregnancy can force women out of work entirely.

Globally, 73.5 percent of women in wage employment do not have access to social protection. This means that the majority of women workers face their entire working lives and old age without any formal support system. When they can no longer work, many elderly women fall into poverty.

Job instability and uncertainty 🔗

Informal work is characterized by extreme instability. Orders can dry up overnight. Employers can dismiss workers without notice or severance pay. Seasonal work leaves women without income for months at a time. This chronic uncertainty makes it impossible to plan for the future, invest in education for children, or build any financial security.

The COVID-19 pandemic starkly illustrated this vulnerability. When lockdowns were imposed, millions of women in informal work lost their livelihoods immediately with no unemployment benefits or savings to fall back on. Many have still not recovered.

Barriers to upward mobility 🔗

Women in informal work face significant barriers to improving their situations. Without formal employment records, they cannot build credit histories or access loans to start businesses. Without contracts or recognized job titles, they struggle to prove their skills and experience. The sectors where they work offer little opportunity for skill development or advancement.

Women working in the informal economy are over-represented in the most vulnerable types of employment, including domestic work, food production, and agriculture. These sectors typically offer no training programs, no career ladders, and no pathways to better opportunities.

Breaking the cycle: what needs to change 🔗

Addressing the marginalization of women in informal work requires action at multiple levels. Governments should take steps to review and reduce legal barriers to workers’ access to social security programs, regardless of whether they work in formal, informal, or non-traditional employment.

Some countries have made progress by extending social protections to previously uncovered groups through mechanisms like social pensions financed by government revenue. Labor organizing among informal workers has also shown promise. The international domestic workers’ movement successfully advocated for ILO Convention 189 on decent work for domestic workers, extending labor protections to a predominantly female workforce often excluded from labor laws.

Policy approaches must address both immediate needs and long-term structural change. This includes increasing access to finance and skills training, strengthening property rights, extending legal protections to informal workers, and establishing binding mechanisms to hold multinational corporations accountable for gender impacts throughout their supply chains.

The formalization of informal work is not a quick fix, but a long-term process requiring sustained commitment. It involves registration, taxation, organization and representation, legal frameworks, social protection, and business support. Most importantly, it requires recognizing that women’s informal work is not marginal but central to global economies, and that these workers deserve the same rights and protections as any other worker.

What do you think? How can global supply chains be restructured to protect women workers at the bottom of the chain? What role should consumers play in demanding better conditions for the women who make the products we buy?

References

1. https://knowledge.unwomen.org/en/articles/facts-and-figures/facts-and-figures-economic-empowerment
2. https://www.weforum.org/stories/2024/06/what-is-the-informal-economy/
3. https://www.unwomen.org/en/news/in-focus/csw61/women-in-informal-economy
4. https://www.striking-women.org/module/rights-and-responsibilities/workers-rights-globalised-world
5. https://socio.health/gender-and-society/globalisation-impact-women-gender-inequalities/
6. https://www.ohchr.org/en/statements-and-speeches/2025/03/dhc-addresses-panel-rights-work-and-social-security-informal
7. https://www.cnn.com/2025/03/07/world/womens-equality-at-work-globally-as-equals-intl-cmd
8. https://www.hrw.org/news/2023/05/25/questions-and-answers-right-social-security