Harsh times for informal workers
Retrenchments cause havoc among poor
September 4, 2009
By SAMANTHA ENSLIN-PAYNE
Workers in the informal economy are experiencing greater hardship as retrenchments have swelled the ranks of informal workers, intensifying competition among waste pickers and street vendors, a sector which is already in survivalist mode.
Caroline Skinner, an academic who did the South African field work for a global study on informal workers, said: "If people have been retrenched they have no choice but to enter the informal economy, so competition increases while demand drops."
In South Africa 475 000 people lost their jobs in the first six months of the year. In the second quarter 105 000 jobs were shed in private households, pointing to job losses among home-based businesses.
The International Labour Organisation estimates that the number of formally unemployed people worldwide will have risen by 51 million between 2007 and 2009.
Skinner said given the pressure on the informal economy and the job losses in the formal economy, it was especially concerning that there were plans to replace the Early Morning Market in Durban, where 2 000 traders earn a living, with a shopping mall. The mall would affect a further 6 000 traders in the Warwick area, she said.
Research done between January and June this year in 10 countries by the Wiego, a global policy research network based at Harvard, shows that, like in the formal sector, informal workers and enterprises are experiencing decreasing demand for goods and services and rising input costs.
The main findings of the research are that:
Waste pickers, who recycle paper and metals for local and international markets, had experienced the sharpest drop in demand and selling prices;
Home-based workers, who make products for sale in local markets or for multinational firms, experienced a sharp decline in orders and have had to cut prices to remain viable;
Street vendors have also been hit by falling demand. It is in this sector that the greatest number of recently retrenched formal workers have turned for a possible source of income.
The reports says: "Contrary to conventional wisdom, expanding employment in the informal sector does not mean informal workers are thriving during the recession."
The developing world is home to the majority of the global poor. Where the informal economy constitutes between 60 percent and 90 percent of the workforce, the consequences of the crisis could be especially severe, given their slim margins for survival in the best of times.
Many informal workers make less than $1.25 (R9.85) a day and the recession is putting this meagre income under pressure. About 62 percent of the survey respondents said informal work was their main source of income. The International Monetary Fund has forecast that the volume of world trade will slip 12.2 percent this year compared with last year.
Skinner said: "A lot of informal workers are wired into the international economy."
Waste pickers in Latin America have reported the prices of cardboard, paper, plastic, iron and aluminium falling between 25 percent and 50 percent.
Waste salvage is a recognised practice in many parts of the world. But according to environmental justice group groundWork, waste pickers live a precarious existence in South Africa, where they find it difficult to access municipal landfill sites.
Those in the informal sector say governments need to respond quickly with food support, such as soup kitchens, legal aid and protection of informal workers and a moratorium on evictions.
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