The informal economy remains one of the most entrenched challenges in the Arab region, where nearly 72% of workers operate outside the scope of labour regulations, social protection systems and financial inclusion mechanisms. Affecting an estimated 44.9 million individuals, informality disproportionately impacts youth, women and older persons. This is according to a new ESCWA report titled "The Hidden Sector: Just Transitions to the Formal Economy".
The report provides analysis of the drivers, characteristics and statistical trends of informality across the region. It also highlights the intersection of informality with structural unemployment, climate shocks, conflict and demographic pressures, showing how these reinforce cycles of exclusion and vulnerability.
To address these challenges, the report calls for inclusive and sustained policy frameworks that promote streamlined registration and licensing, integrated digital tools, accessible financing and expanded social protection systems.
