Key takeaways
- Over two billion people, 58% of the global workforce, work informally (ILO).
- About three-quarters of Pakistan's workers, and 69% in cities, are informal.
- Formal workers produce two to three times as much as informal ones.
- Punjab's handcart scheme was undermined by inflated costs and bribery.
- Treat informal workers as development partners, with services, credit and measured outcomes.
In this Dawn column (July 2025), Dr. Ghulam Mohey-ud-din argues that the street economy is one of the main engines of Pakistan’s cities, and that treating vendors and informal workers as a nuisance to be managed wastes a large source of growth.
The argument
The International Labour Organisation estimates that more than two billion people, nearly 58 percent of the global workforce, work informally. In developing economies the informal sector contributes between 15 and 35 percent of GDP, according to World Economic Forum figures. In Pakistan roughly three-quarters of the workforce, and about 69 percent of urban workers, sit outside formal structures, and the sector accounts for around a third of national output.
Productivity is the cost of exclusion. Without credit, training, infrastructure or legal protection, informal workers produce far less; the column notes that formal workers produce two to three times as much.
Punjab’s model handcart initiative, with 1,000 carts rolled out in Lahore and plans for 40 districts, shows what structured support for vending could look like. But reports of inflated costs, corruption and bribery in its rollout illustrate a wider risk: a well-designed policy that fails in execution damages trust in the next reform. International examples succeed when they combine vending zones, digital registration, microloans and training with clear accountability.
What needs to change
- See informal workers as development partners and involve vendors in designing policy.
- Transparent procurement and public accountability built in from day one.
- Micro-enterprise zones with sanitation, lighting and storage.
- Digital registration, skills certification and flexible microcredit.
- Tracking of outcomes: legal status, municipal revenue and access to credit.