National Human Development Report 2016

Informal work: from challenges to solutions

For more than a decade, the UNDP in Montenegro through the preparation of Human Development Reports has been drawing the attention to important issues affecting the socio-economic development of Montenegro. These reports have stimulated debate and mobilised support for needed improvements and transformational changes.

National Human Development Report 2016 tackles the topic of informal work — a pressing topic that affects not only the economy but all segments of society. A third of all people in Montenegro are fully or partly informally hired, which puts them at risk of poor social and health protection. The report offers focused perspectives and an analysis of the national circumstances and strategies for reducing the scale of the informal economy and for advancing human development.

The aim of the report is to bring together the facts on human development, influence national policy and mobilise various sectors of the economy and all segments of society. It introduces the concept of human development into national policy dialogue on informal employment — not only through relevant indicators and policy recommendations, but also through the country-led and country-owned processes of consultation, research and report writing.

What is the project about?

The NHDR on informal work results in a set of policy options on how to reduce the volume of the 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 the formal economy.

A large share of informal work, which is one of the features of Montenegrin labour market, emphasizes the need to develop the institutional environment that will provide incentives to formalize work in the informal sector. Therefore, this Report analyses causes and consequences of informal economy with an emphasis on the informal work. The informal economy and informal work are observed through the lenses of human development, i.e. ensuring the opportunities for people to enjoy long, healthy and creative life.

The NHDR has opened the debate on informal employment and its repercussions on inequalities

and poverty. To make employment reduce poverty, the challenge is not only to create jobs, but also to create decent jobs: ones that offer adequate pay and a sufficient level of social protection. Jobs in the informal sector frequently fail to offer just that. In the context of the unfolding economic crisis it is important that the commitment to poverty reduction is maintained.

The recommendations defined in this document that are aimed ultimately at the formalization of labour and at overcoming exclusion and marginalization, are based on the systemic approach and aligned to the Sustainable Development Goals of the 2030 Agenda. Most of those who work informally are insufficiently protected from the various risks to which they are exposed: illness or health problems, unsafe working conditions and possible loss of earnings. In this context, the NHDR is designed to appeal to a wide audience, to catalyse public debates and mobilize support for action and change, going beyond providing recommendations to reducing informal work, but influencing the overall structural reforms Montenegro is heading towards.

The report reveals some striking data, including the fact that the rate of informal employment is the highest among young people (34% for the age group 15-24). With this in mind, the project incorporated a special component dedicated to youth economic empowerment. The intervention will focus on the implementation of key recommendations from the report. Youth Informal employment, being an inseparable part of the informal economy, represents a crucial issue for economic policy-makers, especially of the labor market policy and fiscal policy relying on evidence based research. This will be addressed through enabling quality transition of young men and women to the labor market by creating favorable conditions for decent work and overall youth empowerment.

What have we accomplished so far?



  • National Human Development Report 2016 - "Informal work: from challenges to solutions" was officially launched on the 9th of May 2016;
  • An animated online platform was developed to present the findings in an interesting and easily digestible way: www.nhdreport.me
  • NHDR on Informal Work was endorsed by the Government and is already influencing a set of policies which will include disaggregated socioeconomic data drawn from the report, e.g. National Sustainable Development Strategy 2016-2030, Economic reform agenda 2016-2018, Structural reforms plan, etc.
  • During the process of development of the NHDR 2016 - specific gender dimension findings resulted in concrete recommendations on policies designed to address women’s economic empowerment.

Who finances it?

Donor name

Amount contributed

Government of Montenegro

USD 206,510

Delivering Results Together Fund (DRTF) USD 149,148

Delivery in previous fiscal years

December 2015

USD 142,115

December 2014 USD   40,000

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