Informal Employment

Prepared by Peter Lichang Kuo

In 1985, a senior executive from an American company told me, "Taiwan's national income has already reached ‘USD 3,000’ per capita. It's no longer worth investing here!" I replied, "Even if it reaches $30,000, it would still be worth investing!" They actually began to withdraw investments and close their factories in Taiwan. All the people laid off by this company were "formal (regular) employees" — enjoying labor insurance and various benefits. Some of them searched for new jobs for half a year but couldn't find anything, and in desperation, one of them confided, saying, "If I can't find a job soon, I'll have to become a taxi driver!" If someone becomes a self-employed taxi driver, they would be considered part of the "informal employment" sector.

Fig 1: Formal employees enjoy various benefits

Unexpectedly, in 1986, a news report about a "taxi driver being robbed" prompted a sympathetic yet overly ambitious woman—Linda Din —to step out of her kitchen and say, "I will start a business to solve unemployment." She quickly created 100 job opportunities but realized that addressing structural social issues required "innovative industries." Not long after, she drew up a diagram for a solution:

Fig 2: Invention of "The eStore System" for cashless transactions

She emphascaled that this was a remedy for social problems and called it "The Electronic Store System" (TES), a transaction tool known as the "TranSmart Chip Card" — a "cashless" transaction system that allowed taxi drivers to earn money even if they didn't have cash in their vehicles. She visited major card-issuing institutions (including VISA) and research organizations, but no one could help her. Eventually, she handed her ideas to me directly, and she just needed to hold a whip in her hand and an endless stream of new things came out.

Fig 3: Linda Din explained her invention to VISA

Eleven years later, she hurriedly took the research and development results I made for her and flew to Vancouver in business class to attend APEC 1997. Representatives from each economy paid close attention to her invention which was for social problem-solving solutions, and she bluntly defined the previous generation as the "contact era," she envisioned the future as the "Contactless Era," a concept that was widely acknowledged by experts from various economies.

The so-called "Contactless Era" was sparked by a tiny "TranSmart Chip" — a "contactless semiconductor" — paired with a "Power Chip Module" and its coupler, named as "RF Transmitter." This innovation truly gave rise to numerous emerging high-tech industries, particularly in the fields of ICT, IoT, AI, V2X, cashless transaction, electric vehicles, wearable devices, satellite telecommunication, and drones, across nine key fields. The current market values concerning these technologies and industries as follows (in US dollar):

1. Information and Communication Technology (ICT) products, with a market scale reaching $500 billion.

2. Artificial Intelligence (AI) products, with a market scale reaching $50 billion.

3. Internet of Things (IoT) products, with a market scale reaching $474 billion.

4. Vehicle-to-Everything (V2X) products, with a market scale reaching $6 billion.

5. Cashless Payment products, with a market scale reaching $149 billion.

6. Electric Vehicles (EV) products, with a market scale reaching $260 billion.

7. Wearable Devices products, with a market scale of approximately $84 billion.

8. Satellite Communications products, with a market scale of approximately $31 billion.

9. Drones products, with a market scale of approximately $30 billion.

The total market value of these nine fields amounts to “USD 1.58 trillion.” If we assume a national income of USD 30,000, this would create over “50 million formal employment" opportunities. Over the next ten years, these nine sectors are expected to reach a total market value of USD 5.9 trillion. Assuming a national income of USD 50,000, this would create more than 100 million job opportunities.

At the recently concluded APEC Leaders' Summit in Peru last weekend, the conference highlighted that, out of the global workforce of 3.3 billion people, 2 billion are "informal employment," accounting for 61% of the total. They introduced "the Lima Roadmap," aimed at promoting formal economies and the global economic transformation. This includes efforts to ensure access to public, financial, and digital services, among other factors, in order to improve the inclusivity and sustainability of regional economic growth, with plans for further implementation starting in 2025.

Taking Taipei as an example, in 1998, the city's total population was about 2.6 million, and the employed population was 1.2 million. Among them, the proportion of "informal employment" (such as temporary, part-time, and contract work) was approximately 30%-35%. When we submitted a proposal for the "Electronic Commerce Support Measures – Employment Incubation & Development Program" to the Taipei City Government on May 24, 1999, the Director of the Labor Bureau, Cheng Tsunchi said, "The unemployment rate in the city is about 3.2%, and women seeking secondary employment can hardly find jobs." Therefore, we suggested they quickly issue a contactless "TranSmart Card," initially for use in the Taipei MRT system, with plans to expand to other sectors.

Fig: Proposal for Using TranSmart Chip Card in Taipei

The TranSmart Card was later branded and applied as the "EasyCard" and other similar systems in the city. Consequently, Taiwan has gradually become a global leader in the semiconductor industry—not only in contact silicon-based products but also in contactless arsenic-based products. This dual-track progress has driven development across many industries.

By 2023, Taipei's total population was about 2.59 million, with an employed population of about 1.25 million, and the proportion of “informal employment” had increased to around 35%-40%. Compared to 1998, the employment market in Taipei seems relatively stable, especially when compared to other economies, reflecting a steady trend over the past 20 years.

According to the figures recently released at the APEC (Asia-Pacific Economic Cooperation) meeting in Peru, approximately 2 billion out of the 3.3 billion employed people worldwide are in informal employment. These include freelancers, temporary workers, contract workers, and gig economy workers. To address this issue, APEC has proposed "the Lima Roadmap," which aims to promote the development of the formal economy and support global economic transformation, particularly in the context of digitalization and globalization, to assist workers in informal employment.

To achieve the goals of "the Lima Roadmap" by 2040, Taiwan's "education system and philosophy" should serve as a model for APEC and even WTO (World Trade Organization) members. Taiwan’s "vocational education" is a highly commendable system that deserves to be promoted. Based on years of training experience, the optimal learning period for an individual is between “the ages of 13 and 19.” If one can acquire a skill during this time, it will be unforgettable and beneficial for life.

As born in the early class of the 1950s, we were born at the right time. Many of us entered the workforce right after elementary school. Whether we worked steadily or completed our training after three years, we often chose to abandon leisure and “pursue further education in the evening,” mainly through the vocational education system, advancing to college and even attaining master's or doctoral degrees. Not only did we have solid craftsmanship foundations, but we also gained theoretical knowledge, contributing greatly to the creation of Taiwan’s economic miracle.

"The Lima Roadmap" proposes several key elements, emphasizing the "transformation of economic structure." The main elements include:

1. Ensuring the accessibility of public services: This includes education, healthcare, and social security, ensuring that informal workers can also access basic living protections.

2. Promoting the accessibility of financial services: Advancing inclusive finance so that informal workers can more easily access financial services such as loans, insurance, and savings.

3. Promoting the accessibility of the digital economy: Encouraging countries to build digital infrastructure and provide digital skills training, enabling more workers to enter the new technology-driven economy.

4. Promoting the formalization of the labor market: Supporting the creation of more formal and long-term job opportunities, and offering incentives to encourage businesses to adopt formal employment models.

5. Improving working environments and labor conditions: Strengthening regulatory oversight of businesses to ensure they do not excessively rely on informal labor to cut costs, but instead focus on improving working conditions and wages.

It is mentioned that the application of "Financial Technology" (Fintech) should be strengthened to help informal workers with "electronic payments," fund management, and investment, in order to improve their financial stability. Digital payments and e-wallets, such as PayPal, Venmo, and WeChat Pay, can facilitate global transactions and payments, helping informal workers manage their income more conveniently.

However, during a previous meeting in Singapore, the U.S. representative pointed out, "There are as many as 5 million people in the United States without a bank account." He explained that these individuals once had stable families and were law-abiding employees, but they lost their jobs due to "structural factors." After losing their employment rights, they also lost their property rights. Trying to resolve the difficulties faced by this vulnerable group could pose a significant challenge.

"The Lima Roadmap" aims to promote the development of the formal economy and global economic transformation through innovative tools and policies, particularly in support of "informal jobs." These tools include digital platforms, financial technology, social security reforms, and more, all of which will help improve employees' living conditions, stabilize labor markets, and foster sustainable global economic development. In short, our old tune—solving unemployment and structural issues—has become a focal point of regional and even global economic attention.

In fact, the "Global Channel-TES" proposal, which was invited by the Australian government at the 2003 APEC meeting, already includes all the above tools. The increasing proportion of informal employment can primarily be attributed to "corruption." In this year’s Leaders’ Declaration, Article 17, the leaders particularly emphasized the importance of "anti-corruption": “Recognizing ‘the detrimental impact of corruption’ on economic growth and development, we are committed to preventing and fighting corruption, and denying safe haven to corruption offenders and their illicit assets. We welcome the work this year in this regard.”

Fig: "Global Channel-TES" already included all problem-solving tools

The prosperity of regional economies largely depends on the innovative capacity and vitality brought about by the collaboration of "people, businesses, and governments." In the 1990s, to address structural social issues, we invented innovative industries. From the contact semiconductor industry, we found a new path—"Contactless Semiconductor"—forming a new technology-driven economic system, which was the result of public-private sector cooperation. When the Australian government, the initiator of APEC, sought to find the best practice to address the needs of SME exporters, we were prepared to propose instrumental solution. Unfortunately, the subsequent intense and continuous attacks of corruption prevented us from managing our own inventions, leading to a digital divide, and the number of "informal employment" has continued to increase. Therefore, during the economic transformation period from 2025 to 2040, the most important task remains the “elimination of corruption groups” and the thorough eradication of corruption. Otherwise, all efforts will be in vain.

Peter Lichang Kuo, the author created Taiwan's Precision Industry in his early years. Peter was a representative of the APEC CEO Summit and an expert in the third sector. He advocated "anti-corruption (AC)/cashless/e-commerce (E-Com)/ICT/IPR/IIA-TES / Micro-Business (MB)…and etc." to win the international bills and regulations.