The Hidden Sector: Just Transitions to the Formal Economy

The informal economy remains one of the most entrenched challenges in the Arab region, where nearly 72 per cent 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.Over 90 per cent of young people and older workers are informally employed, reflecting systemic failures in both labour market entry and retirement security.Women are overrepresented in the most precarious categories such as unpaid family work and low-wage domestic employment, with up to 47 per cent of women in Yemen and Egypt working without pay or independence.These dynamics not only undermine individual well-being and productivity but also erode social trust, as many workers choose informality in response to burdensome bureaucracy, corruption, and weak social contracts.The report provides a comprehensive analysis of the drivers, charac