Informal Women Workers in the Global South

Policies and Practices for the Formalisation of Women's Employment in Developing Economies

Jayati Ghosh, Jayati Ghosh

• Editore: Routledge
• Anno: 2021
• ISBN:
  9781000297010
• Edizione: 1
• Argomento: Economics
• Categoria: Development Economics

Formalising employment is a desirable policy goal, but how it is done matters greatly, especially for women workers. Indeed, formalisation policies that do not recognise gendered realities and prevailing socio-economic conditions may be less effective and even counterproductive.

This book examines the varying trajectories of formalisation and their impact on women workers in five developing countries in Asia and Africa: India, Thailand, South Africa, Ghana and Morocco. They range from low- to middle-income countries, which are integrated into global financial and goods markets to differing degrees and have varying labour market and macroeconomic conditions.

The case studies, using macro and survey data as well as in-depth analysis of particular sectors, provide interesting and sometimes surprising insights. Despite some limited successes in providing social protection benefits to some informal workers, most formalisation policies have not really improved the working conditions of women workers. In many cases, that is because the policies are gender-blind and insensitive to the specific needs of women workers.

The impact of formalisation policies on women in developing countries is relatively under-researched. This book provides new evidence that will be applicable across a wide range of developing country contexts and will be of interest to policymakers, feminist economists and students of economics, labour, gender and development studies, public policy, politics and sociology.

1
INTRODUCTION

The gender implications of formalising informal activities

Jayati Ghosh

I The global incidence of informality

According to the International Labour Organization (ILO), around 60 per cent of all employment in the world is informal, and most of this is in informal sector enterprises that rarely if ever get the benefit of any government subsidies or protection even in periods of crisis.¹ This is much more of a problem in the developing world, where informal workers account for as much as 70 per cent of all employment—meaning that at least two out of every three workers are informal.

FIGURE 1.1 Share of informal employment in total employment, by gender

Source: Women and Men in the Informal Economy: A Statistical Picture, Geneva: ILO, 2018.

There is a widespread perception that women are more likely to be in informal employment than men, but the aggregate data suggest otherwise. Figure 1.2 actually suggests the opposite; men are marginally more likely to be informal workers than women, possibly because several public services that provide formal employment tend to hire more women (albeit in lower paid positions on average).

FIGURE 1.2 Men and women workers face similar extent of informality

The other common perception is that informality is higher in developing countries because of the greater significance of agricultural employment. But this is dispelled by Figure 1.3, which show that even in non-agricultural activities, informal workers predominate in the Global South, to the extent of making up more than 60 per cent of all such workers.

FIGURE 1.3 Informality is high even in non-agricultural activities

Within the developing world, there are significant variations across regions, as Figure 1.4 indicates. The highest incidence of informal employment for both men and women is to be found in Africa, but it is also true that some countries in other regions have particularly high rates of informality. For example, in India, nine out of ten workers are informal, higher than the average for Africa, even though the ratio is much lower for the Asia-Pacific region as a whole.

FIGURE 1.4 Rates of informality vary across the developing world

It is this combination of the widespread prevalence of informality of employment contracts, combined with the ever-increasing evidence, that informal workers are disproportionately adversely affected in period of crisis and economic slowdown or contraction, which has made formalisation a desirable goal for both governments and civil society. However, the specific goal of formalisation can vary, and there is quite a difference between formalising employment and formalising enterprises. Trade unions and civil society organisations have been much more concerned with formalisation of employment, to protect and enlarge workers’ rights. In its barest form, informality is essentially the absence of worker protection, and so it is not surprising that those interested in the empowerment of workers (whether men or women) should strive for greater formalisation of work.² Formalisation enables workers’ associations to form and assists workers in fighting for their rights by providing a legal and regulatory framework within which their struggles can occur. By contrast, informal workers typically cannot or dare not try to organise and have little or nothing in the form of legal cover in their struggles. However, governments are usually much more focussed on the formalisation of enterprises, rather than on the contracts of workers. They see the proliferation of informal enterprises as undesirable because it enables greater evasion of taxes, and because such enterprises are harder to regulate in other ways, so bringing them into the ambit of regulatory structures is seen desirable and moving towards a “modern” economy.

Even in terms of their stated objectives, goals and good intentions are never sufficient to ensure the success of formalisation policies. The legal and institutional processes whereby formalisation is sought to be achieved, and the macroeconomic, social and labour market conditions under which such policies are undertaken also matter greatly. If policies aimed at formalisation do not recognise the broader socio-economic and cultural contexts, they may end up worsening the employment and livelihood conditions of the very workers who are sought to be protected.

This is obviously true in general, but it is particularly true for women workers in informal activities, who tend to be disadvantaged in ways that are not recognised by public policy because of the gender construction of societies.³ Typically, women informal workers have both different initial conditions and different constraints when compared to men informal workers. As self-employed workers or those running small or micro enterprises, they tend to lack assets and titles to property; this in turn reduces access to other facilities and enabling features such as bank credit and government programmes; they are more likely to face social restrictions on the types of activities they can engage in; they have greater difficulty in dealing with patriarchal officialdom and bureaucracy. As workers, women typically operate in more adverse labour market conditions, with lower wages; they also usually have on average lower educational attainment; they tend to be more vulnerable to harassment of various sorts within employment situations in both formal and informal enterprises; they are called upon to perform much more unpaid labour on a regular basis within the household and extended families; they are more likely to face patriarchal constraints upon their mobility and the types of employment they can seek to engage in. The responsibilities of unpaid work within households continue to weigh much more severely on women, requiring greater amounts of their time and effort, and thereby affecting their patterns of labour market participation. All of these features obviously affect the possibilities and nature of formal employment, but they also determine the contours of engagement in informal employment as well. Essentially, the crucial features of relational inequality and power imbalance are strong determinants of both women’s employment patterns and the official policies designed to change them. As a result, formalisation policies that do not take into account these very different conditions and constraints may not be effective or may even be counterproductive for the concerned women workers. That is why a gender perspective is essential when considering processes of formalisation.

This argument is developed in more detail in this volume, which examines the processes of formalisation and their implications with a gender lens, through a comparative assessment of five developing countries in Asia and Africa: India, Thailand, South Africa, Ghana and Morocco. These studies assess the gendered impact of formalisation policies, with a special focus on women workers, in different developing countries with varying economic characteristics. They also use a mix of methods to assess both the conditions of informal workers and the effect of formalisation policies. While the countries considered here have very different economic and labour market conditions, all the studies find that the impact of formalisation policies tends to be much more complex than is generally perceived, and that the effect on informal women workers in particular can even be the opposite of what may be intended. At one level this appears to be surprising, given the unequal conditions for women’s employment described above, since formalisation and coverage under laws and regulations could counter many disadvantages of women workers. While this is true to a limited extent, the studies find that the positive impacts on women workers tend to be much lower than anticipated; there are often negative impacts that were not expected. Several factors contribute to such outcomes: overall macroeconomic conditions and the state of demand for labour; the existing structure of labour markets and the extent of informality; the social and cultural forces affecting women’s involvement with paid employment of different sorts; the nature of existing legal and other institutions; the extent to which government regulations can be enforced; the ability of informal women workers to organise and engage in collective action in their own interests; the perverse incentives that may arise from particular policies and regulations; and much else.

What emerges as common across all these experiences is the lack of appropriate gender perspectives in the formulation and implementation of such policies. Some of this occurs because of the all-too common gender-blindness of official strategies. But even when they seek to recognise gender differences, and sometimes even when they are specifically directed at women workers, they may inadvertently result in unanticipated or undesired outcomes. This means that the gendered implications of formalisation policies must be considered in a holistic way, in the wider political economy and socio-cultural context. The studies in this volume seek to do this. While they cover only five countries in Asia and Africa, because they are quite different, they allow for more general conclusions to emerge that may have some relevance to other developing countries as well.

II Defining the informal economy, informal work and informal workers

It is necessary, at first, to define formality, informality and formalisation and to consider some of the conceptual underpinnings of these definitions as they are used in official statistics, in government policies and in public perception. These concepts have evolved over time as the ideas of informal economy and informal employment have become both sharper and more sophisticated; Chen (2012) provides a succinct historical overview of these different approaches and perceptions.

In its most basic form, the informal economy is the diversified set of economic activities, enterprises, jobs and workers that are not regulated or protected by the state. The concept originally applied to self-employment in small unregistered enterprises and was thereafter expanded to include wage employment in unprotected jobs. However, there is wide variation in definitions of the unorganised or informal sector, which mostly attempt to draw boundaries between organised and unorganised and formal and informal by differentially focusing on differences in features such as technology, employment size, legal status and organisational form. Sometimes this is simply based on size—such as enterprises employing less than say five or ten workers are seen as being “unorganised.” Other definitions are usually based on legal status—such that those enterprises that are registered with the relevant authorities are seen as part of the formal sector.

Informal employment is a large and possibly even more heterogeneous category. Many different types of employment belong under the broad umbrella “informal.” This includes employment in informal enterprises as well as outside informal enterprises—in households or in formal enterprises. It also includes the self-employed and the wage employed and within these broad categories, the sub-categories according to status in employment, and covers a wide range of different occupations that also encompass very different income groups.

Following ILO (2013) and Chen (2012), informal employment can be described as consisting of the following types:

1. Persons employed in the informal sector (including those who are formally employed in the informal sector):
   • Employers in informal enterprises.
   • Employees in informal enterprises.
   • Own-account (self-employed) workers in their own informal enterprises.
   • Contributing family workers working in informal enterprises.
   • Members of informal producers’ cooperatives, that is those that are not formally established as legal entities.
2. Persons in informal employment outside the informal sector, specifically:
   • Employees in formal enterprises not covered by social protection through their work, including contract workers, temporary and part-time workers, unregistered or undeclared workers, home-based workers, sub-contracted or out-workers.
   • Paid domestic workers not covered by social protection through their work.
   • Contributing family workers working in formal enterprises.

Workers are considered to have informal jobs if their employment relationship is, in law or in practice, not subject to national labour legislation, income taxation, social protection or entitlement to certain employment benefits (advance notice of dismissal, severance pay, paid annual or sick leave, etc.). The reasons may be the following: non-declaration of the jobs or the employees; casual jobs or jobs of a limited short duration; jobs with hours of work or wages below a specified threshold (e.g. for social security contributions); employment by unincorporated enterprises or by persons in households; jobs where the employee’s place of work is outside the premises of the employer’s enterprise (e.g. outworkers without employment contract); or jobs, for which labour regulations are not applied, not enforced, or not complied with for any other reason. Certain types of wage work are more likely than others to be informal. These include employees of informal enterprises, casual or day labourers, temporary or part-time workers, paid domestic workers, contract workers, unregistered or undeclared workers and home-based workers who are part of industrial outsourcing chains.

Figure 1.5 provides a matrix that indicates the relationship between informality of enterprises and of employment. This is useful because it brings out the complexity of the relationship. Thus, informal employment contains the following kinds of jobs: (1) own-account workers employed in their own informal sector enterprises (cell 3); (2) employers employed in their own informal sector enterprises (cell 4); (3) contributing family workers, irrespective of whether they work in formal or informal sector enterprises (cells 1 and 5); (4) members of informal producers” cooperatives (cell 8); (5) employees holding informal jobs in formal sector enterprises, informal sector enterprises, or as paid domestic workers employed by households (cells 2, 6 and 10); (6) own-account workers engaged in the production of goods exclusively for own final use by their household (cell 9). Employees holding formal jobs in informal sector enterprises (cell 7) should be excluded from informal employment.

FIGURE 1.5 Informal employment by type of production unit Note: Cells shaded in dark grey refer to jobs, which, by definition, do not exist in the type of production unit in question. Cells shaded in light grey refer to formal jobs. Unshaded cells represent the various types of informal jobs. Informal employment: Cells 1–6 and 8–10. Employment in the informal sector: Cells 3–8. Informal employment outside the informal sector: Cells 1, 2, 9 and 10.

Source: Report of 15th International Conference of Labour Statisticians

III Approaches to formalisation

Increasing formalisation of employment was earlier seen as an inevitable and desirable attribute of the development process—but the experience of different countries over the past half century shows that development trajectories may be much more complex and less linear. The earlier, rather simplistic approach to formalisation that assumed that the shift to more formal economic activity would be a necessary concomitant of the development process has been jettisoned for some time now in the wider development literature. It is now clear that there can be many different paths, not all of which are necessarily socially desirable. Four broad trajectories of formalisation can be identified, each of which has quite different implications for the well-being of workers and the conditions of work:

1. The classical or Kuznets-Lewis trajectory, whereby the processes of economic growth and development automatically generate more formal activity and formal work as part of broader structural transformation. This occurred in several now-developed countries in the past but is much rarer today.
2. A process of false “formalisation,” whereby (some) informal activities get subsumed by formal enterprises as part of their accumulation strategies. This implies that the formal sector relies on such dualism and continued informality to keep its own costs low through outsourcing, and so there is no real incentive to reduce the extent of informality.
3. A reverse trajectory, whereby formal activities become more informal, whether to avoid taxes or regulation, or because of external competitive pressure.
4. A desirable process of formalisation brought about by policies and processes that ensure the economic and financial viability of small-scale activities and improve the wages and working conditions of hitherto informal workers.

In general, formalisation of informal work is seen to be inherently desirable by almost all stakeholders, but often for completely varying reasons. Increasingly, governments in the developing world see this as an end in itself, and in this, they are generally supported by trade unionists, activists and other civil society organisations—as well as those actually involved in informal work. However, it should be noted that the shift from informal to formal employment can occur in several different ways, and this depends on which of the following approaches is given importance by the government: (1) to regulate informal enterprises; (2) to regulate informal employment; (3) to provide social protection to informal workers; (4) to create more jobs in formal sectors and activities; and (5) to increase the viability of informal enterprises and productivity and incomes of informal workers.

Obviously, the third, fourth and fifth approaches are the most desirable in terms of progressive and sustainable formalisation of work over the process of economic development. But these are much more difficult and medium term or long term in nature...

Indice dei contenuti

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Contents
• List of figures
• List of tables
• List of contributors
• 1 Introduction: The gender implications of formalising informal activities
• 2 Insecurity of women workers and the chimera of formality in India
• 3 Growing informality and women’s work in South Africa
• 4 Does formalisation improve women’s work conditions? A review of the regulatory regime for contract farming and domestic trade in Ghana
• 5 Striving for formalisation: Gender and youth aspects of informal employment in Morocco
• 6 The socio-economic complexities of formalisation of women’s employment in Thailand
• Index