Balancing Technology and Informality: How E-Government Can Shape the Future of Work

The ILO’s working paper New Technologies, E-Government, and Informality explores the relationship between technology adoption and informal employment. It finds that while technology can reduce informality by improving productivity and government capacity, it can also increase informal employment under certain conditions. E-government initiatives are highlighted as effective tools in reducing informality, particularly in the shadow economy. However, the paper underscores the need for additional policy interventions to address vulnerable employment and ensure equitable benefits from technological advancements.

In a world rapidly evolving with technological advancements, the impact of these changes on informal employment remains a critical issue. The International Labour Organization’s (ILO) latest working paper, titled New Technologies, E-Government, and Informality, explores this complex relationship, shedding light on the ways technology can both alleviate and exacerbate informality in the global workforce.

The Double-Edged Sword of Technology Adoption

As countries worldwide embrace new technologies, the effects on informal employment are proving to be multifaceted. The ILO's report emphasizes that while technology adoption can enhance productivity and streamline government services, it also has the potential to increase informal employment, particularly in low- and middle-income countries.

For instance, the proliferation of mobile phone subscriptions and internet access generally correlates with reduced levels of informality. These technologies can empower workers, offering them better tools and resources to engage in the formal economy. However, the study also points out that in some cases, the very same technologies can lead to an increase in informal employment. This paradox arises from the way technology can encourage the growth of own-account work—where individuals work independently, often without formal contracts or social protections.

The Role of E-Government in Reducing Informality

E-government initiatives have emerged as a powerful tool in the fight against informality. By leveraging digital platforms, governments can improve service delivery, streamline bureaucratic processes, and enhance public access to information. The ILO’s study finds that in most cases, e-government initiatives are effective in reducing informality, particularly in the shadow economy—the portion of a country’s economic activity that is not regulated by the government.

However, the report also notes that the success of e-government in reducing informality varies depending on the country’s income level and the specific type of informality being addressed. In high-income countries, where digital infrastructure is more advanced, the impact of e-government initiatives is more pronounced. Conversely, in lower-income countries, where access to digital technologies may be limited, the effects are less significant.

Policy Implications: Beyond Technology

The ILO’s findings suggest that while technology, particularly e-government, holds significant potential to reduce informality, it is not a one-size-fits-all solution. Policymakers must consider the unique socio-economic conditions of their countries when designing interventions to address informality.

For instance, while e-government can help formalize economic activities, additional policy measures may be needed to address vulnerable employment—where workers, despite being employed, lack basic social protections and labor rights. This is especially important in sectors where informal employment is deeply entrenched, and where technology alone may not be sufficient to bring about meaningful change.

The report advocates for a holistic approach, where technology is complemented by policies aimed at improving access to education, enhancing labor rights, and providing social protections. By addressing the root causes of informality, rather than just the symptoms, governments can create a more inclusive and equitable labor market.

Shaping the Future of Work

As the world continues to advance technologically, the challenge of balancing these developments with the realities of informal employment will only become more pressing. The ILO’s working paper offers valuable insights into how e-government and other technological interventions can be leveraged to reduce informality, but it also serves as a reminder that technology is not a panacea. Policymakers must remain vigilant, ensuring that the benefits of technological progress are equitably distributed and that vulnerable workers are not left behind.

In conclusion, the future of work will be shaped not just by the technologies we adopt, but by the policies we implement to ensure that these technologies foster a more formal, secure, and fair labor market.