1. ITCILO COURSE A106025 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

2. What is Informal Economy? Who are Informal Economy Workers?

3. 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.

4. Streets, Markets & Open Spaces Vendors Waste collectors Sex workers Transport workers Construction workers Roadside shoe shiners, hairdressers Small scale poultry farmer Street vending in South Africa Small scale poultry farming in Togo Reclaiming waste in South Africa Selling vegetables in Kenya

5. Embroiderers Garment makers Waste sorters/recyclers Metal goods producers Shoe makers Coffin makers Petty traders In Shops, Workshops & Yards Sorting recyclable plastic in India Domestic Economy in Africa

6. At Home and in Households Garment workers Craft producers Electronics assemblers Traditional toy makers Bidi cigarettes makers Domestic workers Care givers Sewing clothes in Bangladesh Subsistence farming in Ethiopia Cleaning house in Germany Cleaning floors in Pakistan

7. In Fields, Forests and on Water Small farmers Agricultural labourers Shepherds Forest gatherers Fisher folk Water transport workers A small scale farmer in Liberia Ferrying passengers in Zambia

8. Comparison Between the IE and FE 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)

9. 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.

10. Informal Economy – Percentage of Non- Agricultural Employment

11. Causes of Informalization Demand-side Causes (pull-effects):  Pressure on reducing production costs due to over- competition 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)

12. 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

13. 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)

14. 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: - Increasing formal employment opportunities; -Increasing the assets and earnings and reducing the risks of those who work in the informal economy.

15. 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);

16. Continues… - 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.

17. Continues… Bad Practices:  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

18. WHAT IS THE GOAL? TO REDUCE POVERTY THROUGH DECENT WORK FOR ALL

19. SOCIAL PROTECTION RIGHTS EMPLOYMENT SOCIAL DIALOGUE DECENT WORK

20. HOW TO ACHIEVE THE GOAL? BY MOVING WOMEN AND MEN UP THE CONTINUUM TO DECENT WORK

21. The Labour Exploitation Continuum DECENT WORK = Work in Freedom, Equity, Security and Human Dignity Precariousness: -Hazardous and unsafe work - Poor pay - Casualization DECENT WORK -Irregular employment relationships - Child labour -Discrimination Eradication of Decent Work Deficits

22. WITH WHOM? ILO WITH : GOVERNMENTS EMPLOYERS AND THEIR ORGANIZATIONS WORKERS’ ORGANIZATIONS THEIR ALLIANCES WITH CIVIL SOCIETY OTHER INTERNATIONAL ORGANIZATIONS

23. 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

24. ADDRESSING NEEDS OF THOSE IN THE INFORMAL ECONOMY

25. BY INCLUDING EMPLOYMENT COMPONENTS IN POVERTY REDUCTION POLICIES ADDRESS NEEDS IN THE INFORMAL ECONOMY

26. ADDRESS NEEDS IN THE INFORMAL ECONOMY BY EXTENDING REPRESENTATION TO WORKERS AND OPERATORS IN THE INFORMAL ECONOMY

27. ADDRESS NEEDS IN THE INFORMAL ECONOMY BY RECOGNIZING THE DIVERSITY AND DIFFERENT NEEDS OF THOSE IN THE INFORMAL ECONOMY WORKERS MICRO ENTERPRISES PEOPLE WITH DISABILITIES MEN ETHNIC GROUPS WOMEN

28. ADDRESS NEEDS IN THE INFORMAL ECONOMY BY ENSURING MORE AND HIGHER INCOMES THROUGH BETTER COMPETENCIES FOR EMPLOYABILITY

29. ADDRESS NEEDS IN THE INFORMAL ECONOMY ASSURING BETTER CONDITIONS OF WORK BY: ELIMINATING CHILD LABOUR AVOIDING CORRUPTION AND HARASSMENT AVOIDING GENDER, RACE, ETHNIC, HIV/AIDS DISCRIMINATION IMPROVING HEALTH AND SAFETY

30. 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

31. MOVE INTO FORMALITY

32. CREATING GOOD INCENTIVES FOR FORMALITY MOVE INTO FORMALITY PUBLIC POLICIES DELIVERING QUALITY SERVICES IN RETURN FOR TAXES EFFECTIVE SOCIAL PROTECTION, SAFE WORKING CONDITIONS MARKET ACCESS LINKED TO FORMALITY

33. ADAPTING AND ENFORCING REGULATORY FRAMEWORKS MOVE INTO FORMALITY HEALTH AND SAFETY RIGHTS AND STANDARDS EFFECTIVE ENFORCEMENT OF APPROPRIATE LAWS

34. STRENGTHENING MINISTRIES OF LABOUR MOVE INTO FORMALITY USE OF SOUND STATISTICAL DATA INSPECTION LINKS TO OTHER MINISTRIES

35. ENCOURAGING ENTREPRENEURSHIP MOVE INTO FORMALITY TRAINING ACCESS TO CREDIT REWARDING CREATIVITY

36. ACCESS TO MARKETS AND TECHNOLOGY MOVE INTO FORMALITY EQUALITY OF OPPORTUNITIES RISE IN PRODUCTIVITY AND QUALITY NETWORKING

37. ENHANCING OF VOCATIONAL TRAINING SYSTEMS MOVE INTO FORMALITY COMPETENCIES CERTIFICATION FOR WORKERS IN INFORMAL AND FORMAL ECONOMY ADAPTABILITY TO LABOUR MARKET NEEDS

38. PREVENT A SLIDE INTO INFORMALITY

39. GROWTH WITH EQUITY PREVENT A SLIDE INTO INFORMALITY POLICY COHERENCE STABLE MACRO ECONOMIC AND SOCIAL POLICIES CREATING MORE JOB OPPORTUNITIES

40. LABOUR POLICIES ON THE ECONOMIC AGENDA PREVENT A SLIDE INTO INFORMALITY SOCIAL DIALOGUE EMPLOYMENT-CENTRED POVERTY REDUCTION POLICIES

41. GOOD GOVERNANCE AT THE NATIONAL AND LOCAL LEVELS PREVENT A SLIDE INTO INFORMALITY NO CORRUPTION RULE OF LAW AND RIGHTS CORPORATE SOCIAL RESPONSIBILITY PROTECTION OF PROPERTY RIGHTS SOUND FISCAL POLICIES BETTER STATISTICS SOCIAL DIALOGUE

42. Different Intervention Strategies for Different Sectors for Different Sectors

43. Street and Market Vendors: Focus on local government (not national government) policies Encourage infrastructural service delivery to reduce risk and increase productivity and protect both informal workers and the public Waste Workers 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 Domestic Workers: More potential for integrating into existing labour policy and legislation in line with ‘extension of social protection coverage’ Campaign for ratification and ensure effective application of C.189 and R.201 Industrial outworkers: Encourage infrastructural delivery to private homes Extend employer/owner-of-capital insurance to include private homes

44. 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

45.  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 Continues…

46. Thank you!