You are on page 1of 11

Proposal for Funding

National Symposium on Women in Informal Workforce:

"Prospects & Challenges."

14-15th December, 2014



Concept Note: Women in Informal Workforce - Prospects and Challenges

Over the past two decades, employment in the informal sector has risen rapidly in all regions in
the world. The contribution of the informal sector not only its size - is quite large. The
contribution of informal sector income to total household income is significant in many regions:
for example, in several African countries, informal sector income accounts nearly for 30 percent
of total income and over 40 percent of total urban income. The contribution of the informal
sector to gross domestic product (GDP) is probably also significant. For those countries where
estimates exist, the share of the informal sector in non-agricultural GDP is between 45 to 60
Estimates of the size, contribution, and composition of the informal sector vary widely,
according to what size of enterprises are included, whether agriculture is included, and how
much of womens informal work is included. Like others who have worked closely with women
in the informal sector, I would argue that the informal sector is even larger than official statistics
suggest. Our argument is based on the fact that much of women's paid work - not just their
unpaid housework - is not counted in official statistics. If the magnitude of women's invisible
paid work, particularly home-based remunerative work, were to be fully counted, both the share
of women and the share of informal workers in the work force would increase. Recognizing and,
more importantly, counting women's invisible remunerative work would challenge our empirical
understanding not only of the informal sector but also of the economy as a whole.


Size and Composition Women are over-represented in the informal sector worldwide. This basic fact has several
dimensions. Firstly, the informal sector is the primary source of employment for women in most
developing countries. Existing data suggest that the majority of economically active women in
developing countries are engaged in the informal sector. In some countries of sub-Sahara regions
of Africa, virtually all of the female non-agricultural labor force is in the informal sector: for

example, the informal sector accounts for over 95 percent of women workers outside agriculture
in Benin, Chad, and Mali. In India and in Indonesia, the informal sector accounts for nine out of
every ten women working outside agriculture. In ten Latin American and four East Asian
countries, for which data are available, half or more the female non-agricultural workforce is in
the informal sector.
Secondly, the informal sector is a larger source of employment for women than for men (UN
2000 Report). The proportion of women workers in the informal sector exceeds that of men in
most countries. Thirdly, womens share in the total informal workforce outside agricultural
vocationis higher than that of mens share in about 9 of the 21 developing countries for which
datas are available (Ibid.).
Major Segments The vast majority of women in the informal sector are home-based workers or street vendors.
Home-Based Workers: As used here, the term home-based workers refers to three types of
workers who carry out remunerative work with their homes dependent subcontract workers,
independent own account producers, and unpaid workers in family businesses whereas the term
homeworkers refers to the first category only. Despite the limitations to existing official
statistics, available evidence suggests that home-based work is an important source of
employment, especially for women, throughout the world: over 85 percent of home-based
workers in most countries are women.
Despite working from their homes, many home-based workers are linked to the global economy
through global subcontracting chains, also called global value chains. A key dimension of global
integration of the economy is a restructuring of production and distribution into global value
chains. In these global assembly lines, lead firms place orders or outsource to suppliers who
put out work to sub-contractors who operate small production units or, in turn, put out production
to home-workers (Carr et al 2000).
Street Vendors: In all countries where data is available, informal traders mainly street vendors represent a very high proportion (73-99%) of employment in trade and a significant share (5090%) of trade gross domestic product (GDP). Considered another way, street vendors constitute
a significant share of total employment in the informal sector and street vending units constitute

a significant share of total enterprises in the informal sector. Women account for more than 50
percent - and up to 90 percent - of informal employment in trade, except in those countries (such
as Tunisia and India) where social norms restrict womens mobility outside the home. Consider
the case of Benin: a 1992 survey of 10 major cities in that country found that street vendors
constitute around 80 percent of all economic units amongst which women constitute 75 percent
of all street vendors, and women street vendors constitute 26 percent of urban informal labor
force and 24 percent of the total urban labor force.
Since its discovery in the early 1970s, the informal economy and its role in economic
development have been hotly debated. Some observers view the informal economy in positive
terms, as a pool of entrepreneurial talent or a cushion during economic crises. Others view it
more problematically, arguing that informal entrepreneurs deliberately avoid regulation and
taxation. Still others see the informal economy as a source of livelihood for the working poor.
Each of these perspectives is right in regard to specific domain of understandings or aspects of
the informal economy. Contrary to early predictions, the informal economy has continued to
grow and has appeared in new forms. Today, it represents a significant share of the global
economy and workforce.
Historical Perspective
1950s 1960s:
It was widely assumed during the 1950s and 1960s that, with the right mix of economic policies
and resources,the poor or the traditional economies could be transformed into dynamic, modern
economies. In the process, the traditional sector comprised of petty traders, small producers and
a range of casual jobs would be absorbed into the modern capitalist economy, the formal
economy, and, thereby, disappear. This assumption was reinforced by the successful rebuilding
of Europe and Japan, and the industrial expansion in Europe and North America in the decades
following the Second World War. By the middle of the 1960s, however, the optimism about the
prospects for economic growth in developing countries began to give way to concerns about
persistent,widespread unemployment. Reflecting this concern, the International Labour
Organization (ILO) mounted a series of large, multi-disciplinary employment missions to
various developing countries.

The first ILO World Employment Mission was to Kenya in 1972. As detailed in their official
report, the mission team found that the traditional sector had not just persisted, but had expanded
to include profitable and efficient enterprises as well as marginal activities (ILO 1972). To
highlight this, the team chose to use the phrase informal sector rather than traditional sector
for the range of small-scale and unregistered economic activities. This phrase had been coined
the year before by a British anthropologist, Keith Hart, during his 1971 study of economic
activities among rural migrants in Accra, Ghana (Hart 1973).
Although both Hart and the Kenya mission noted the efficiency, creativity and resilience of the
informal sector, the concept got a mixed reception in development circles. Many observers held
that the informal sector in developing countries was marginal or peripheral and not linked to the
formal sector or to modern capitalist development, and that it would disappear once these
countries achieved sufficient levels of economic growth or modern industrial development. Other
observers argued that industrial development might take a different pattern in developing
countries than it had in developed countries, including the expansion of informal economic
1980s 1990s
By the 1980s, the terms of the debate about the informal sector expanded to include changes that
were occurring in advanced capitalist economies, where production was being reorganized into
small, decentralized and more flexible economic units. Mass production was giving way to
flexible specialization or, in some cases, reverting to sweatshop production (Piore and Sabel
1984). These changes were (and are still) associated with the in formalization of employment.
Standard jobs were being turned into non-standard or atypical jobs, with hourly wages and few
benefits or on piece rate with no benefits; production was being contracted to small, informal
units and industrial outworkers. In the process, the informal economy became a permanent, albeit
subordinate and dependent, feature of capitalist development (Portes, Castells and Benton 1989).
Meanwhile, the Latin American economic crisis in the 1980s highlighted another feature of the
informal sector: namely, that employment in the informal sector tends to grow during periods of
economic crisis (Tokman 1992). This was repeated in the Asian economic crisis of the 1990s,

when millions of people who lost formal jobs tried to find jobs or create work in the informal
economy (Lee 1998). Meanwhile, structural adjustment in Africa and economic transition in the
former Soviet Union and in Central and Eastern Europe also were associated with an expansion
of employment in the informal economy. Why does employment in the informal economy tend to
expand during periods of economic instability or uncertainty? When enterprises got shrunk or
shut downed, the workers who are laid off may find that the informal economy as the only
alternative to being employed and for the generation of their means of survival. besides, in such
times, high inflation often means that households need to supplement formal-sector incomes with
informal earnings as with the increased prices of all the commodities in the economy it is nearly
impossible to budget down with the status-quo income and hence informal economy emerges as
the only savior .
During the 1990s, globalization of the economy contributed to the in formalization of the
workforce in many industries and countries (Standing 1999). Whereas globalization can generate
new jobs and open new markets, many of the jobs are unattractive and many of the new markets
are inaccessible to disadvantaged producers. This is because, in response to global competition,
formal firms tend to hire most workers under informal arrangements or to contract the production
of goods and services to other countries (Rodrik 1997), and because global integration reduces
the competitiveness of many informal firms or self-employed producers vis--vis imported goods
in domestic markets and vis--vis larger, more formal firms in export markets.
Recent Years
At present, there is renewed interest in the informal economy worldwide. In part, this stems from
the fact that, contrary to the predictions of many economists, the sector has not only grown, but
also emerged in new guises and in unexpected places. It represents a significant, but largely overlooked, share of the global economy and workforce, a fact that has become more apparent in the
recent global downturn (Horn 2009). That renewed interest also stems from the recognition of
the links between informality, growth, poverty and inequality. There is increased recognition that
the informal economy is linked to the formal economy and contributes to the overall economy,
and that supporting the working poor in the informal economy is important for reducing poverty
and inequality, just as supporting the female working poor in the informal economy is important
for reducing gender inequality.

In sum, although interest in the informal economy has waxed and waned since the early 1970s,
the concept has continued to be useful to many policymakers, activists and researchers. This is
because of the significance of the reality that it seeks to capture, the large share of the global
workforce and production that remains outside the world of full-time, stable and protected
Now, the informal economy is a field of study in its own right, involving those from other
disciplines such as economics, industrial relations, gender studies, political science, sociology
and urban planning. Much of the recent scholarship focuses on the size and composition of the
informal economy, what drives or causes informality, what are the consequences of informality
in terms of welfare or productivity, and the linkages among informality and formality, growth,
poverty and inequality. This resurgence of interest in the informal economy has generated
significant rethinking of the concept and improvement in official measurement of the
Dominant Schools of Thoughts:
Since its discovery in the early 1970s, the informal economy and its role in economic
development have been hotly debated. Some observers view the informal economy in positive
terms, as a pool of entrepreneurial talent , a cushion or a punching bag during economic crises.
Others view it more problematically, arguing that informal entrepreneurs deliberately avoid
registration and taxation. Still others see the informal economy as a source of livelihood for the
working poor. Underlying these varying perspectives are four schools of thought regarding the
informal economy in developing countries. The dualist school sees the informal sector of the
economy as comprised of marginal activities that are distinct from and not related to the formal
sector and that provide income for the poor and a safety net in times of crisis (Hart 1973; ILO
1972;Sethuraman 1976; Tokman 1978).
The structuralist school sees the informal economy as subordinated economic units (microenterprises) and workers that serve to reduce input and labour costs and, thereby, increase the










The legalist school sees the informal sector as comprised of plucky micro-entrepreneurs who
choose to operate informally in order to avoid the unnecessary and burdensome costs, time and

effort of formal registration and who need legal rights to convert their assets into formal property
(de Soto 1989, 2000).
The voluntarist school sees the informal sector as comprised of micro-entrepreneurs who choose
to operate informally in order to avoid taxation, commercial regulations, electricity and rental
fees, and other costs of operating formally (e.g. Maloney 2004). In yet another approach, often
focussed on transitional and developed countries, the informal sector is seen as activity that is
illegal, or is hidden or underground. The System of National Accounts (SNA) (1993)
defines illegal production as production activities which are forbidden by law or which become
illegal when carried out by unauthorized producers; and underground production as production
activities which are legal when performed in compliance with regulations, but which are hidden,
deliberately concealed from authorities. Any type of production unit (formal sector enterprise,
informal sector enterprise or household) can be engaged in any type of activity: legal but not
underground; legal and underground; illegal. Nevertheless, it is widely known that most informal
sector activities in developing and transitional countries are not underground or illegal, but
instead are a survival strategy for the people involved in them and their households and,
therefore, can be captured in surveys of the informal sector in these countries (Hussmanns 2004).
Each school of thought subscribes to a different causal theory of what gives rise to the informal
economy. The dualists argue that informal operators are excluded from modern economic
opportunities due to a) imbalances between the growth rates of the population and of modern
industrial employment; and b) a mismatch between peoples skills and the structure of modern
economic opportunities.
The structuralists argue that informality is due to the nature of capitalism/capitalist growth:
specifically, the attempts by formal firms to reduce labour costs and increase competitiveness;
the reaction of formal firms to the power of organized labour, state regulation of the economy
(notably, taxes and social legislation) and global competition; and the process of industrialization
(notably, off-shore industries, sub-contracting chains, and flexible specialization).
The legalists argue that a hostile legal system leads to informal activities and informal, extralegal
norms. The voluntarists argue that informal operators choose to operate informally after
weighing the costs-benefits of informality relative to formality.

Poverty & Growth Linkages:

The relationship between informality, poverty, and growth are complex and not well understood.
This section of the website explores what is known about these relationships.

Links with Poverty

Not all informal workers are poor, nor are all working poor engaged in the informal economy.
However, there is significant overlap between working in the informal economy and being poor.
This is because the quantity and quality of employment available to women, men, and
households significantly affect whether they are poor. This sub-section details what is known
about the relationship between working in the informal economy and being poor. It does so by
summarizing findings of several recent studies that used different measurement approaches. The
statistical evidence from various analyses of national data suggest a hierarchy of earnings and
poverty risk across the various segments of the labour force, both formal and informal, and
within the informal economy by employment status. It also reveals a gender gap: average
earnings are lower and the risk of poverty is higher among women workers, compared to men
workers, in the informal economy.

Links with Growth

Although the informal economy is often associated with low productivity, it makes an overall
contribution to economic growthone that is increasingly significant for high-income, as well as
low-income countries. In many contexts, informal enterprises and workers are less productive
than formal ones. But if we want to improve individual earnings, household incomes, and overall
growth, there is a need to explore what productivity and productive growth mean in the
informal economy, and to rethink the definitions and measures of productivity. This sub-section
explores the two-way linkages between informality and growth: the impact of the informal
economy on economic growth, and the impact of economic growth on the informal economy.
How much and in what ways does the informal economy contribute to economic growth? Or
does the informal economy account for low productivity and low growth? Does the size of the
informal economy shrink during economic growth and swells during economic slumps or
downturns? That is, in other words, counter-cyclical or pro-cyclical?

Links with Crises

The informal economy is thought to provide a cushion during crises to those who lose jobs.
Little attention has been paid to how firm this cushion is for new entrants to the informal
economy, and what happens to those already working in the informal economy. This section
summarizes findings from two rounds of a study in 2009 and 2010 on the impact of the
global recession on three categories of urban informal workers in 10 countries: home-based
producers, street vendors, and waste pickers.
Broad themes for discussion will be:

The Informal Economy: An Insight

Women and Informality: The Global Picture
Poverty, Growth and Women in Informal Sector
The Challenges of Organizing Women in Informal Sector
Rethinking Informal Economy: Linking Formal-Informal Setup
Women Entrepreneurship in India
Building visibility and Voice in Informal Sector: Presentation of Case Studies
IIPA in collaboration with ICSSR proposes a two day National Symposium on Women

in Informal Workforce: Prospects and Challenges to be held on 14-15 Dec 2014, which will
focus on the above mentioned issues. The symposium will bring together practitioners, policy
advisors, academics, professionals, activists and media, to discuss their significant experiences
and practices in addressing the issues related to women employment
The proceedings of the symposium will be developed as a joint policy paper and will be
report along with recommendations for possible future action.

For approx 40 participants
S.No Particulars
1. Boarding charges for Outstation Chairs (5 * 3 Days)

Amount (Rs. In Lac)


2. TA/DA for Resource Persons


3. Lunch, Tea/Coffee/Snacks/Mineral Water etc


4. Banners, Bouquets and Mementos


5. Seminar Kit (reading

material, stationery items, 20,000
photography etc)
6. Recording Transcription/ Verbatim Charges
7. Editing/Printing and Publication of Proceedings


8. Research Assistance


9. Misc./Contingency


10. Overhead Charges



Sum in words: Two lac Fifty Two Thousand Five Hundred Only