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Global Economic Recovery Provides Little Relief to Informal Workers

While it has been reported that the developing world is driving a global economic recovery, recent research shows that those employed in the informal economy are continuing to struggle with the lasting effects of the global economic crisis.

Coping with Crises: Lingering Recession, Rising Inflation, and the Informal Workforce” released by Women in Informal Employment: Globalizing and Organizing (WIEGO) and partners in the Inclusive Cities Project is the second study in a series examining the impact of the Global Economic Crisis on informal workers. Coping with Crises research was carried out in 9 developing countries with home-based producers, street vendors and waste pickers.

Focus group in India. Courtesy of KKPKP.

The importance of studying the impact of economic crisis and recovery in the informal economy cannot be underestimated. In developing countries, 60 to 90 per cent of all workers are informally employed. And the numbers are growing. With the notable exception of a small entrepreneurial class, most of those who work in the informal economy are poor – trying to survive on 2 US dollars per day or less.

Results of the study suggest that in spite of some positive developments, informal workers are lagging behind in the recovery. Persistent unemployment and underemployment in the formal economy continues to drive new entrants into informal employment. Some respondents report stronger demand for their goods and services over the previous year, but many continue to face low levels of sales or orders.

Incomes have risen for some workers in absolute terms to mid-2009 levels, but not to pre-crisis levels and in fact more than 50 per cent of respondents reported that their income fell between mid 2009 and 2010.  Persistently high inflation – affecting food and fuel prices in particular – have intensified pressure on family budgets. Respondents continue to restrict their families’ diets. School withdrawals, not common in the first round of study, were reported by 16% of respondents.

As part of the study, interviewees were asked to identify and prioritize inter­ventions that would support their livelihoods. Short-term emergency measures were not priorities; rather, respon­dents opted for access to financial services, skills training and market analysis and access. Wage protection, workplace improvements and a range of social protection measures were also identified as priority interventions.

Coping with Crises argues for a new stance that places informal workers at the centre of employment schemes and social protection measures, including them in economic policies and urban planning. Without an inclusive approach to economic and social policy that integrates informal workers, poverty, vulnerability, and inequality will persist.

Coping with Crises: Lingering Recession, Rising Inflation, and the Informal Workforce by Zoe Elena Horn is available from Inclusive Cities and WIEGO.

About Demetria Tsoutouras

Demetria Tsoutouras
Demetria Tsoutouras is Communications Officer for Women in Informal Employment: Globalizing and Organizing (WIEGO) - a global research-policy network that seeks to improve the status of the working poor, especially women, in the informal economy.

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