Ume Laila Azhar Poverty and inequality are closely related, and inequality appears to have been on the rise worldwide in recent decades at both national and international levels. More than 80 percent of the worlds population lives in countries where income differentials are widening. The poorest 40 percent of the worlds population account for only 5 percent of the global income. On the other hand, the richest 20 percent account for 75 percent of world income, according to the United Nations Development Programme.Poverty is the principal cause of hunger and under nourishment. According to most recent estimates of the Food and Agriculture Organisation of the United Nations (FAO, 2009), the number of hungry people worldwide has reached 963 million, or roughly 15 percent of the estimated world population. This represents an increase of 142 million over the figure for 1990-92.Poverty essentially consists of two elements: a narrowly-defined income poverty and a broader concept of human poverty (referred to as the poverty of opportunities by late Dr Mahboobul Haq). Income poverty is defined as the lack of necessities for minimum material wellbeing determined by the national poverty line. Human poverty means the denial of choices and opportunities for a tolerable life in all the economic and social aspects. Three poverty measures are commonly used:Head count ratio (HCR); the proportion of population below the national or international poverty line as the case may be.Poverty gap ratio; a measure of poverty obtained by multiplying the head count by the average relative distance at which the poor are from the poverty line.Severity of poverty measure; where the weight given to each poor person is proportional to the square of the income shortfall of the poor from the poverty line.In case of Pakistan, the poverty line is calorie-based. Expenditure on calorie intake of 2,350 calories per adult equivalent per day, along with consumption expenditure on non-food items, is aggregated to construct a poverty line. This poverty line is adjusted at the time of the poverty estimation after accounting for the inflationary impact in the intervening years.Related with poverty is the very important fact of the major contribution from the informal sector, which has added to the country's economy. According to a recent study by Dr Rubina Saigol, out of $160 billion almost $32 billion comes from the informal sector. The major contribution is not only ignored, but also those belonging to the unorganised sector known as the informal sector are completely denied the basic rights. The informal sector constitutes 73 percent of the total labour force survey and involve workers like toymakers, garment producers, tailors, home-based workers (HBW) at home , street vendors, embroider, assemblers, automobile spare parts assembling , packing , and many more .The bitter fact is that 50 percent of the population lives below the poverty line, the rate of inflation exceeds 22 percent, and the interest rate is 17 percent, while half of the population is deprived of the social services.The dilemma of developing countries, and lately increasing in so many industrialised countries, is the vast scale and rate of growth of the informal sector that presents a dilemma and a challenge for governments, social partners and the civil society alike. A dilemma, as the informal sector encompasses employment situations that not only differs from those in the formal sector, but also infringe upon the established rules and laws. A challenge, as it absorbs a large and growing fraction of the labour force and provides a safety net for the poor, finding themselves excluded from formal employment and income opportunities. The growing informalisation of the economy has caused a rise in the number of women, who work - participation rates of women in the informal sector. The selfless back-breaking effort of women home-based workers is not recognised by those who make development plans and policies and allocate resources. We have no law on our statutes that recognises them as workers and we have hardly any surveys that claim to give any reliable statistics about women workers. With no legal identity and no statistical data, hardly any resources would be allocated for them even by the most gender sensitive of planners. The efforts of multinational corporations (MNCs) and governments worldwide, which are undergoing restructuring, have led to the proliferation of irregular forms of employment and increased outsourcing to the informal sector. While MNCs have contributed to this process by quickening the relocation of labour-intensive production processes to low wage sites in developing economies, at the macro level, governments, especially in developing countries, have implemented a drive to deregulate labour markets. This has led to a decrease in the size and proportion of core formal-sector jobs with job security, opportunities to advance, and social security. Besides increasing flexibility in wage jobs, the new form of work organisation includes subcontracting to smaller informal enterprises and home-based producers. These new forms of work opportunities that are created could be a major source of income inequality in developing countries as wage differentials widen between the formal and informal sector workers. Income inequalities arise either due to structural changes in the labour market or access to certain segments of the labour market.The global economic recession is negatively affecting workers everywhere. Media and policymakers have focused on the rising unemployment of formal salaried workers. Less attention, however, has been paid to the impact of the crisis on informal organisations and workers, as well as to the consequences of new entrants into the informal economy. In reality, economic downturns often affect the informal economy in the same ways they affect the formal economy. Like formal firms, informal firms are affected by decreased demand, falling prices, and fluctuations in exchange rates associated with economic crises. Like formal wage workers, informal wage workers face loss of jobs or greater informalisation of their employment contracts. Indeed, during downturns, informal wage workers are often the first to lose their jobs.Informal workers, particularly women, tend to occupy the bottom of the global economic pyramid, with less protection and flexibility than their formal counterparts. Informal firms and wage workers, in times of economic trouble, have no cushion to fall back on and have no option, but to keep operating or working. In addition, as more workers crowd into the informal economy, the net result is more and more firms or individuals competing for smaller and smaller slivers of a shrinking (informal) pie. Unemployment, in this instance, is eclipsed as an issue by increasing impoverishment - the working poor becoming poorer. Pakistan, classified as low-income country, had 84.6 percent of its population earning less than $2 per day. A 2008 UN assessment found vulnerable households spending up to 70 percent of their earnings on food, but remains unable to afford an adequate diet.The manufacturing sector also registered a decline. Particularly large-scale manufacturing went through a negative growth of 7.67 percent during 2008-09 due to power shortage, shrinking demand in the export sector and deteriorating law and order in the country. Shrinking large-scale manufacturing led to a steady cut in the protected (formal) employment and slipping of workers into vulnerable employment. In contrast, the small and medium manufacturing sector maintained its growth at 7.5 percent. Again, this growth resulted in expansion of the informal labour faced with precarious work conditions.The fundamental principles and rights at work are not applicable in the sector. Agricultural workforce is explicitly denied freedom of association, right to collective bargaining, elimination of child labour and non-discrimination in wages. Labour laws do not conform to the spirit of the Constitution embodied in its various Articles, specifically Article 17 (which ensures the right to form association or trade union to every citizen). None of the countrys labour law - either of industrial relations, social protection, minimum wages, or health and safety - applies to the informal workers including agricultural workers. Though Pakistan has ratified all eight ILO core labour standards, it has not brought national legislation in compliance with the ILO Conventions No 87 (freedom of association) and No 98 (right to collective bargaining). The writer is a development manager and freelance journalist. Email: laila.azhar@gmail.com