Transcript Overview of State of Knowledge about the IE in Africa

ITCILO COURSE A106025
Capacity Building for Organizing and
Managing Trade Unions
13 to 24 May 2013
Overview of State of Knowledge about the
Informal Economy in Africa
What is Informal Economy?
Who are Informal Economy Workers?
The Informal Economy
“All economic activities by workers and economic units
that are – in law or in practice- not covered or
insufficiently covered by formal arrangements”(ILO 2002)
Informal Workers
Self-employed workers: own account, family workers,
members of informal cooperatives
Waged workers: in informal businesses or jobs such as
casual, seasonal, domestic, homework, etc.
Streets, Markets & Open Spaces
•Vendors
•Waste collectors
•Sex workers
•Transport workers
Street vending in South Africa
•Construction workers Selling vegetables in Kenya
• Roadside shoe
shiners, hairdressers
•Small scale poultry
farmer
Small scale poultry farming in Togo
Reclaiming waste in South Africa
In Shops, Workshops & Yards
• Embroiderers
• Garment makers
• Waste sorters/recyclers
Sorting recyclable plastic in India
• Metal goods producers
• Shoe makers
• Coffin makers
•Petty traders
Domestic Economy in Africa
At Home and in Households
• Garment workers
• Craft producers
• Electronics assemblers
• Traditional toy makers
Sewing clothes in Bangladesh •Bidi cigarettes makers Cleaning house in Germany
• Domestic workers
• Care givers
Subsistence farming in Ethiopia
Cleaning floors in Pakistan
In Fields, Forests and on Water
• Small farmers
• Agricultural labourers
• Shepherds
A small scale farmer in Liberia
• Forest gatherers
• Fisher folk
• Water transport workers
Ferrying passengers in Zambia
Comparison Between the IE and FE
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Informal Economy (IE)
Ease of entry
Reliance on indigenous
resources
Family ownership
Small-scale of operation
Labour-intensive
Adapted technology
Skills acquired outside formal
school system
Unregulated, competitive
market
Formal Economy (FE)
 Difficult entry
 Reliance on overseas
resources
 Corporate ownership
 Large scale
 Capital-intensive
 Imported technology
 Formally acquired skills
 Protected markets (tariffs,
quotas, trade licenses)
Relative Size of the Informal Economy
 The informal economy worldwide comprised:
78% of non-agricultural employment in Asia;
52% in Latin America; and
56% in Africa.
 60 to 90% of Africa’s active labour force is in the informal
economy, which also accounts for 93% of new jobs in SSA.
 Excluding agriculture, it represents 37.7% of total GDP in SSA,
30.4% in NA, 26.8% in Asia and 25.9% in Latin America.
 Women’s share of worldwide informal employment fluctuates
between 60 and 80%.
 In SSA, 84% of women workers outside agriculture are
informally employed compared to 63% of male.
Informal Economy – Percentage of NonAgricultural Employment
Causes of Informalization
Demand-side Causes (pull-effects):
 Pressure on reducing production costs due to overcompetition and profit-oriented business minds (need for
cheap labour)
 Needs of urban poor for cheap goods and services
 Avoidance of high taxation
 Governments’ avoidance of social protection burdens
 Bribery and cumbersome procedures for formalization
 Less incentives for OSHE investment
 Avoidance of trade unions
 Illegal activities (need to be hidden)
Continues…
Supply-side Causes (push-effects):
 Unemployment and poverty
 Difficulty (or impossibility) to find employment with formal
employers
 Shrinkage of employment and wages in public services
 Fall of the prices of agricultural products
 Population growth and migration
 Lack of education, skill and/or training opportunities
 Mis-match between demand and supply in the LM
 HIV and AIDS
Continues…
Structural Causes:
 Lack of political will (no national policy & commitment)
 Lack of sustainable economic development or system for fair
redistribution of wealth
 Lack of legislation or inadequacies in labour and social laws (no
standards)
 Lack of effective law enforcement agencies, or effective labour
inspection system (no strong institutions for social justice)
 Lack of comprehensive social protection schemes that cater for
everyone
 Inadequacy of primary/secondary education and vocation
training/re-training (no opportunities)
EMPLOYMENT, INFORMALITY, POVERTY
 Employment - the most important way in which the benefits of
growth can be shared.
 Most of the world’s poor – especially in developing countries –
are working.
 Informal rather than formal employment is on the rise.
 The vast majority of the working poor – those who earn less
than US$ 1 per day - earn their living in the informal economy
where:
– Average earnings are low
– Risks are high
Poverty Reduction is Not Possible Without:
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Increasing formal employment opportunities;
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Increasing the assets and earnings and reducing the
risks of those who work in the informal economy.
Major Characteristics of the IE
Positive:
 Theatre for job creation, income generation and production;
 Contributes to GDP;
 Creativity and innovation;
 Array of talents.
Negative:
 Decent work deficits:
Decent employment gap (insecure, low paid and
large-scale underemployment);
Social protection gap (little or no social security and
social protection);
Continues…
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A rights gap (denial of rights at work including FoA & CB);
Social dialogue gap (not part of SD mechanisms);
Large numbers of unprotected working poor;
Precarious working conditions & high degree of
vulnerability;
- No guarantees of minimum & maximum hours of work & paid
holidays;
- Poorly paid, casual, part-time, irregular or seasonal
employment;
- Workers in the IE are poorly organised & represented by
trade unions or other workers organisations, if at all.
Continues…
Bad Practices:
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Child labour (worst forms)
Bonded labour and forced labour
Undeclared work/disguised/triangular employment
Absence of clearly defined employment relationships
Undervaluation of work = low pay and poor conditions of service
Labour exploitation
Unsafe and unhealthy working conditions
More occupational injuries/diseases
Prevalence of all forms harassment and discrimination
Limited or complete absence of labour inspection services
Non respect for laws including labour laws
Vulnerability to the HIV and AIDS epidemic
Unfair competition
Less or no tax income for the States
Less or no social security and social protection coverage
No decent wages for workers (less savings – no capital and less spending – weak
domestic economy
 Waste of human resources – no future
WHAT IS
THE
GOAL?
TO REDUCE
POVERTY
THROUGH
DECENT
WORK FOR
ALL
RIGHTS
EMPLOYMENT
DECENT WORK
SOCIAL
PROTECTION
SOCIAL
DIALOGUE
HOW TO
ACHIEVE
THE
GOAL?
BY MOVING WOMEN AND MEN
UP THE CONTINUUM
TO DECENT WORK
The Labour Exploitation Continuum
DECENT WORK =
Work in Freedom, Equity, Security and Human Dignity
Precariousness:
- Hazardous and unsafe work
- Poor pay
- Casualization
- Irregular employment relationships
- Child labour
- Discrimination
Eradication of Decent Work Deficits
DECENT WORK
WITH WHOM?
ILO WITH:
EMPLOYERS AND
THEIR
ORGANIZATIONS
GOVERNMENTS
WORKERS’
ORGANIZATIONS
OTHER
INTERNATIONAL
ORGANIZATIONS
THEIR ALLIANCES
WITH
CIVIL SOCIETY
WHAT ACTION NEEDS TO
BE TAKEN ON THE INFORMAL
ECONOMY TO REDUCE POVERTY?
ADDRESS
NEEDS IN
THE
INFORMAL
ECONOMY
MOVE
INTO
FORMALITY
PREVENT
A SLIDE
INTO
INFORMALITY
ADDRESSING NEEDS OF THOSE IN
THE INFORMAL ECONOMY
ADDRESS
NEEDS IN
THE
INFORMAL
ECONOMY
BY INCLUDING
EMPLOYMENT COMPONENTS
IN POVERTY REDUCTION
POLICIES
ADDRESS
NEEDS IN
THE
INFORMAL
ECONOMY
BY EXTENDING
REPRESENTATION TO
WORKERS AND
OPERATORS IN THE
INFORMAL ECONOMY
ADDRESS
NEEDS IN
THE
INFORMAL
ECONOMY
WOMEN
MICRO
ENTERPRISES
ETHNIC
GROUPS
BY RECOGNIZING THE
DIVERSITY AND DIFFERENT
NEEDS OF THOSE IN THE
INFORMAL ECONOMY
WORKERS
MEN
PEOPLE WITH
DISABILITIES
ADDRESS
NEEDS IN
THE
INFORMAL
ECONOMY
BY ENSURING MORE AND
HIGHER
INCOMES THROUGH BETTER
COMPETENCIES FOR
EMPLOYABILITY
ADDRESS
NEEDS IN
THE
INFORMAL
ECONOMY
AVOIDING GENDER, RACE,
ETHNIC, HIV/AIDS
DISCRIMINATION
ASSURING BETTER
CONDITIONS
OF WORK BY:
ELIMINATING
CHILD LABOUR
IMPROVING HEALTH
AVOIDING CORRUPTION
AND SAFETY
AND HARASSMENT
In Dar es Salaam (Tanzania)
solid waste management,
through public-private
partnerships, improved urban
conditions and created jobs for
women and men. Waste
enterprises gradually involved
women in leadership
positions. Recycling is done
through community-based
organizations. Although child
labour and safety and health
issues still are of concern,the
situation has been improving.
“Employment Creation in Municipal Services delivery in Eastern
Africa: Improving Living Conditions and providing Jobs for the Poor”
DfID-funded ILO project
MOVE INTO FORMALITY
MOVE
INTO
FORMALITY
CREATING
GOOD INCENTIVES
FOR FORMALITY
EFFECTIVE
SOCIAL PROTECTION,
SAFE WORKING
CONDITIONS
PUBLIC POLICIES
DELIVERING
QUALITY SERVICES
IN RETURN FOR TAXES
MARKET ACCESS LINKED
TO FORMALITY
ADAPTING AND
ENFORCING
REGULATORY FRAMEWORKS
MOVE
INTO
FORMALITY
RIGHTS AND
STANDARDS
HEALTH AND
SAFETY
EFFECTIVE
ENFORCEMENT OF
APPROPRIATE
LAWS
STRENGTHENING
MINISTRIES OF LABOUR
MOVE
INTO
FORMALITY
INSPECTION
LINKS TO
OTHER
MINISTRIES
USE OF SOUND
STATISTICAL
DATA
ENCOURAGING
ENTREPRENEURSHIP
MOVE
INTO
FORMALITY
ACCESS TO
CREDIT
TRAINING
REWARDING
CREATIVITY
MOVE
INTO
FORMALITY
RISE IN
PRODUCTIVITY
AND QUALITY
EQUALITY OF
OPPORTUNITIES
NETWORKING
ACCESS TO
MARKETS
AND TECHNOLOGY
MOVE
INTO
FORMALITY
ENHANCING OF
VOCATIONAL TRAINING
SYSTEMS
ADAPTABILITY
TO LABOUR
MARKET NEEDS
COMPETENCIES
CERTIFICATION FOR WORKERS
IN INFORMAL AND FORMAL
ECONOMY
PREVENT A SLIDE INTO
INFORMALITY
PREVENT
A SLIDE
INTO
INFORMALITY
GROWTH
WITH
EQUITY
STABLE MACRO ECONOMIC
AND SOCIAL
POLICIES
POLICY COHERENCE
CREATING MORE JOB
OPPORTUNITIES
PREVENT
A SLIDE
INTO
INFORMALITY
LABOUR POLICIES ON
THE ECONOMIC
AGENDA
EMPLOYMENT-CENTRED
POVERTY REDUCTION
POLICIES
SOCIAL DIALOGUE
PREVENT
A SLIDE
INTO
INFORMALITY
PROTECTION OF
PROPERTY RIGHTS
SOUND FISCAL
POLICIES
BETTER STATISTICS
GOOD GOVERNANCE
AT THE NATIONAL AND
LOCAL LEVELS
RULE OF LAW AND
RIGHTS
NO CORRUPTION
SOCIAL DIALOGUE
CORPORATE
SOCIAL
RESPONSIBILITY
Different Intervention Strategies
for Different Sectors
Domestic Workers:
Street and Market Vendors:
More potential for integrating
into existing labour policy and legislation
in line with ‘extension of social protection
coverage’
Focus on local government
(not national government) policies
Campaign for ratification and
ensure effective application
of C.189 and R.201
Encourage infrastructural service delivery
to reduce risk and increase productivity
and protect both informal workers
and the public
Waste Workers
Industrial outworkers:
Encourage infrastructural delivery
to private homes
Extend employer/owner-of-capital insurance
to include private homes
Negotiate with municipalities/private
sector for provision of safety equipment
and reduction of hazards at the place of work
Provide access for workers to
local government/private sector
social provision – health services
and health insurance, training courses,
educational bursaries
Conclusions
IS A CONTINUUM WITH PEOPLE MOVING
IN AND OUT
INTERACTS WITH THE FORMAL
ECONOMY
IS DIVERSE: FROM ENTREPRENEURIAL
CREATIVITY TO BARE SUBSISTENCE
IS NOT A CHOICE FOR THE MAJORITY
IS AT THE HEART OF POVERTY BUT NOT
ALL IN THE INFORMAL ECONOMY ARE
POOR
Continues…
IS A GOVERNANCE ISSUE
IS A RIGHTS ISSUE, SINCE ITS
WORKERS AND OPERATORS LACK
SOCIAL PROTECTION AND
REPRESENTATION
SERVES AS A SOURCE OF BUSINESS
START-UPS AND TRAINING
BUT CAN INVOLVE UNFAIR
COMPETITION
Thank you!
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