The origins of informality: the ILO at the limit of the concept of unemployment

Official histories suggest that the International Labour Organization (ILO) adopted the term ‘informal sector’ as a replacement for ‘traditional sector’, which, in its pairing with the ‘modern sector’, had fallen out of favour. This article argues that the adoption of the informal sector concept is better understood as arising out of a different context: the ILO’s post-war efforts to generate a globally operational concept of unemployment for use in the ‘developing world’. ILO officials abandoned this project in the late 1960s when they realized that, where work for wages did not constitute a widespread social norm, an accurate measure of what they called ‘disguised unemployment’ was impossible to construct. That led the ILO to develop alternative constructs, including ‘employment in the informal sector’. However, it proved difficult for the agency to operationalize those, too, and it soon found itself losing control of the policy implications of the measures that it was producing.