Informal Economy Workers Face Distinct AI Transformation Patterns

Workers in informal economies, particularly prevalent in developing nations, experience artificial intelligence’s impact differently than formal sector workers. Informal work’s lack of structure and regulation creates both vulnerabilities and potential adaptation flexibilities as AI transforms labor markets globally.
Research shows 60% of jobs in wealthy nations and 40% globally will be affected by AI. Informal economy workers may experience these changes differently given their work’s unregulated nature. Informal workers are largely absent from the approximately 10% with AI-enhanced jobs given technology access barriers.
Young workers in regions with large informal economies may find traditional entry through informal work affected by AI just as formal entry-level positions are. However, informal economy’s flexibility might allow faster adaptation to changing conditions than rigid formal structures. The net effect remains uncertain.
Experienced informal economy workers lack the employment protections and transition support available to some formal sector workers. When AI disrupts their livelihoods, safety nets may be unavailable. However, skills in navigating uncertain economic conditions could prove valuable in AI-transformed labor markets.
Governance of informal economy AI impacts proves particularly challenging given these workers’ limited connection to formal institutions. Labor organizations struggle to represent informal workers. International development cooperation could address informal economy AI impacts, but requires approaches beyond formal labor market interventions.