National Human Development Report 2016 "Informal work: from challenges to solutions"

06 May 2016
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Summary

National Human Development Report 2016 tackles the topic of informal work - a pressing topic that affects not only economy but all segments of society. Every third person in Montenegro is fully or partly informally hired which puts them at risk of poor social and health protection. The report is offering focused perspectives and analysis of national circumstances and strategies for reducing the scale of informal economy and advancing human development. The aim of the report is to bring together the human development facts, influence national policy and mobilize various sectors of economy and segments of society. It introduces the human development concept into national policy dialogue on informal employment—not only through relevant indicators and policy recommendations, but also through the country-led and country-owned process of consultation, research and report writing.

 

NHDR on informal economy results in a set of policy options on how to reduce the volume of informal economy in Montenegro with the specific focus on informal employment. In other words, the report’s aim is to support the transition to formal economy. A set of adequate policies and ways to overcome the barriers to formalization were identified, while at the same time taking into account the most common limitations for the transition to formal economy.

Highlights

  • Out of the total number of persons who work, 32.7% are either informally hired (22.3%) or have a part of their salary paid "cash in hand" (10.4%).
  • In 2014 the budget of Montenegro had the revenue smaller by 140,6 million euro because of the evasion in paying the appropriate taxes and contributions for informally employed workers on an annual level. That was 9.4% of the total budget revenues.
  • The rate of informal employment is the highest among young people (34% for the age group 15-24) and the oldest (73% for persons of 65+).
  • The poverty risk rate is significantly higher for informally employed persons than formally employed persons (17.1% in comparison to 5.9%).
  • As for the salaries, the mean incomes of the informally employed persons are on average by 28.7% lower than the incomes of formally employed individuals.