Designing AI for the informal economy

The informal economy in Southeast Asia houses hundreds of millions of workers who form the backbone of economic activity. Conventional AI discussions often ignore these individuals, who operate outside formal labor markets and institutions. Southeast Asia demonstrates that AI can effectively strengthen the economic resilience and earning power of informal workers, offering solutions that go beyond importing formal-economy assumptions.

AI-driven platforms, like Grab, provide credit opportunities and marketing support to informal workers like bakery owner Mylene Estrella, who scaled her business with a Grab loan and benefited from AI assistance. Grab's AI algorithms assess earnings and activity to determine creditworthiness and grant loans to borrowers who have never accessed formal credit.

The platform's ability to predict demand and match driver partners enhances earnings and reduces unpaid time gaps. However, realizing AI's full potential for informal workers requires investments in skills development, as workers must build AI literacy independently without formal employers. Platforms such as Grab's Merchant AI Assistant support marketing, menu management, and operations, boosting sales by 15 percent.

Policymakers must focus on building new skills, redefining success metrics, and unifying regional AI governance for the informal economy, rather than forcing formal employment assumptions onto the region.