Pro­tect­ing the in­for­mal sec­tor

Enterprise - - Trade watch -

In de­vel­op­ing coun­tries, the in­for­mal em­ploy­ment sec­tor gen­er­ally suffers from var­i­ous in­se­cu­ri­ties. Orig­i­nally, the con­cept of ‘in­for­mal sec­tor’ was pro­duced by a Bri­tish econ­o­mist, Keith Hart. It came to be re­placed by ‘in­for­mal econ­omy’ due to the in­crease in eco­nomic ac­tiv­i­ties by work­ers and eco­nomic units. In­for­mal eco­nomic ac­tiv­i­ties are con­ducted with­out fol­low­ing the pro­ce­dures and rules es­tab­lished by the of­fi­cial legal frame­work, but it does not per­tain to white col­lar crime.

Around the world, the work­ing class goes through var­ied lev­els of in­for­mal­ity de­pend­ing on lev­els of pro­tec­tion and in­come dis­tri­bu­tion. Typ­i­cal in­for­mal ac­tiv­i­ties are ob­served in un­reg­is­tered busi­nesses and self-em­ployed man­u­fac­tur­ers and by tem­po­rary street ven­dors and ca­sual re­tail­ers.

In­for­mal em­ploy­ment com­prises one-half to three-quar­ters of non-agri­cul­tural em­ploy­ment in the de­vel­op­ing coun­tries, i.e. 48 per­cent in North Africa, 51 per­cent in Latin Amer­ica, 65 per­cent in Asia and 72 per­cent in sub-Sa­ha­ran Africa. A sur­vey re­port cov­er­ing the eco­nomic sit­u­a­tion of scav­engers, street ven­dors and other in­for­mal work­ers from all these coun­tries re­veals a with­held eco­nomic re­cov­ery of this sec­tor.

The re­bound of the 2008 fi­nan­cial cri­sis has not been able to ben­e­fit the in­for­mal sec­tor. On the one hand, the cri­sis de­prived work­ers of de­cent jobs while the in­for­mal sec­tor has no in­surance for oc­cu­pa­tional haz­ards, con­trib­u­tory health schemes or so­cial se­cu­rity pen­sions. The work­ers also face ris­ing competition due to the hordes of new work­ing poor cre­ated by per­sis­tent un­em­ploy­ment. The sec­tor in­cludes waste pick­ers, street ven­dors, con­struc­tion work­ers and house­maids, as well as home-based work­ers who make clothes and other low-cost prod­ucts for global brands.

There is an over­all de­te­ri­o­rat­ing im­pact ob­served on the well-be­ing of em­ploy­ees in the in­for­mal sec­tor. As re­vealed by the sur­vey, they trim their food in­take to cut costs, with­draw one or more chil­dren from school and re­duce their so­cial in­ter­ac­tions to avoid any pos­si­bil­ity of ex­penses.

More­over, there is an­other im­por­tant cat­e­gory of mi­grant work­ers, who face a spe­cific set of prob­lems. Work­ers in the Gulf states, UK, US, Malaysia and Sin­ga­pore are a source of prof­itable re­mit­tances back to their home coun­tries. How­ever, as the build­ing boom of multi-mil­lion dol­lar con­struc­tion projects has slowed, con­struc­tion work­ers are not be­ing paid their full salaries.

Mi­grant work­ers in the in­for­mal sec­tor thus be­come part of a vi­cious cy­cle, as they do not have knowl­edge of the terms and con­di­tions of their work con­tract along with their debt and suf­fer at the hands of bro­kers. Ex­perts of mi­gra­tion poli­cies term the ex­ploita­tion of mi­grant work­ers as inex­cus­able and say there should not be any op­por­tu­nity for the re­cruiter to change the con­tract un­law­fully. The labourer should go to work in an­other coun­try un­der a fair and trans­par­ent con­tract.

The in­for­mal econ­omy is also a large source of em­ploy­ment for women in the de­vel­op­ing world. More than 60 per­cent of such women work­ers have in­for­mal em­ploy­ment, with a ma­jor con­cen­tra­tion be­ing in the do­mes­tic sec­tor.

The In­ter­na­tional Labour Or­gan­i­sa­tion (ILO) signed a land­mark treaty in Geneva to safe­guard the rights of work­ers in the do­mes­tic sec­tor. The Di­rec­tor Gen­eral ILO said, “Do­mes­tic work­ers are work­ers, they are nei­ther ser­vants nor mem­bers of the fam­ily.” The con­ven­tion states that do­mes­tic work is still un­der­val­ued and in­vis­i­ble and is per­formed mainly by women and girls, who are of­ten im­mi­grants or mem­bers of dis­ad­van­taged com­mu­ni­ties and are par­tic­u­larly vul­ner­a­ble to dis­crim­i­na­tion with re­spect to con­di­tions of em­ploy­ment and work, and to other hu­man rights abuses.”

The mem­ber coun­tries of ILO that rat­ify the con­ven­tion will be re­quired to re­spect do­mes­tic work­ers’ rights to free­dom of as­so­ci­a­tion and col­lec­tive bar­gain­ing, and will have to take ef­fec­tive mea­sures to elim­i­nate all forms of forced labour, dis­crim­i­na­tion and child labour.

As a fresh per­spec­tive added to in­for­mal em­ploy­ment, there is an in­creas­ingly large num­ber of young peo­ple around the world who are cre­at­ing jobs for them­selves which would other­wise not be avail­able dur­ing an eco­nomic down­turn. Young peo­ple have been badly hit by the re­cent po­lit­i­cal and eco­nomic un­rest, par­tic­u­larly in the Mid­dle East and North Africa. In 2010, ILO said 13 per­cent of youth un­der 24 were out of work.

It is com­monly seen that many tech­nol­ogy grad­u­ates are set­ting up tech-re­lated start-up out­fits with am­bi­tions of global suc­cess, there has also been a rise in smaller busi­nesses, such as cafes, hand­i­craft com­pa­nies and small re­tail shops. These smaller shops are build­ing in­fra­struc­ture for more cot­tage in­dus­tries to re­tain crafts­man­ship and fol­low a unique phi­los­o­phy of prod­uct designing. In this man­ner, these young peo­ple are defin­ing their busi­nesses as an ex­ten­sion of their per­sonal iden­tity.

One rep­re­sen­ta­tive from a youth-fo­cused con­sul­tancy, China Youthol­ogy, says, “The new gen­er­a­tion is more ed­u­cated, they are aware of their op­tions and they want to get more out of life. There are also women who are very cre­ative, and this is why they are be­com­ing en­trepreneurs as they feel that they have a lot to give and they want to pro­duce some­thing.” Thus, the idea of staying so­cially ben­e­fi­cial and mak­ing money too, reigns over the young en­tre­pre­neur­ial minds.

Ide­ally, gov­ern­ments should pro­vide so­cial se­cu­rity by reg­u­lat­ing a min­i­mum in­come or rather a so­cial se­cu­rity grant for in­for­mal work­ers. But these ad­di­tional grants re­main un­af­ford­able for de­vel­op­ing economies. Plan­ning ahead to build pro­tec­tion for in­for­mal work­ers, gov­ern­ments need to put more ef­fort in di­ver­si­fy­ing the labour force. This may pre­vent the in­for­mal sec­tor from suf­fer­ing heav­ily in times of eco­nomic cri­sis

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