FINAL - Informal Labour Market and Gender Inequality Flashcards
(22 cards)
Define informal economy and informal employment
informal economy:
> the diversified group of economic activities, enterprises, jobs and workers that are not regulated or protected by the state
informal employment:
> work arrangements that are not regulated by formal legal or institutional frameworks
> Any employment without social protection, both in the formal and informal sector
> Includes self-employed and wage-employed
> Outside the purview of labour law and regulations (like minimum wages, income tax) and workers are not entitled to employment benefits
List the jobs that informal employment includes
- own-account workers employed in their own informal sector enterprises
- employers employed in their own informal sector enterprises
- contributing family workers, both in the formal or informal sector enterprises
- members of informal producers cooperatives
- employees holding informal jobs in formal sector enterprises, informal sector enterprises, or as paid domestic workers
- employed by households
- own-account workers engaged in the production of goods exclusively for own final use by their household
employees holding formal jobs in informal sector should be ______ from informal employment
excluded
the ______ the income level of the country, the higher than share of informal employment, for both sexes
lower
Explain the concentration of the different types of informal work for men and women
- Women are disproportionately
represented in household-based
informal employment, reflecting
gendered divisions of labor and
the feminization of informal care
and domestic work
> women more likely to especially be in household-based jobs and vulnerable self-employment - Men’s informal employment is
more concentrated in sectors
outside of households
(agriculture, informal enterprises)
> Informal employment is more
prevalent among men across all
income groups except for low-income countries
Are informal jobs just in unregistered enterprises?
NO > They also exist in formal businesses
(without contracts or benefits)
What is the main difference between informal work statistics of men and women between low-income and high-income countries
- Lower-income countries tend to have a higher prevalence of informal enterprises
>especially in Africa, Asia, and Latin America
> informality is linked to weak institutional systems and insufficient investment in capabilities of women and men - Women-led enterprises in low-income countries show an even higher percentage (95.5%) compared to men-led enterprises (92.1%)
> in the global south, women in informal work tend to be unpaid family workers, rather than informal employees, employers and own account workers > more vulnerable employment
> women’s average labour income from informal labour is likely to be lower compared to men - In contrast, high-income countries have significantly lower informal economic units overall, with women-led enterprises still slightly more prevalent than men- led ones.
What are the 3 key theories for explaining informality?
- Structuralist Perspective : *says that informal jobs increase when formal jobs decrease (a countercyclical pattern)
- Informal work happens in low productivity jobs.
- The informal work produces for the domestic market rather than for high productivity export-
oriented sectors - This school of thought gave rise to concept of informal sector - activities that fall outside the formal
sector and provides income and safety for the poor, especially during time of economic crises.
- Dualist or Procyclical perspective: *Informal work grows along with formal jobs (a procyclical relationship)
- Globalization and technological innovations have facilitated offshoring and outsourcing of production. Companies reduce costs by shifting work to informal wage employment such as sub-contracting or small factories
- The formal and informal sectors are connected, not separate - Legalist Perspective
- People choose to work informally because laws and regulations are too complex or hostile
- Many small entrepreneurs avoid the formal system because it’s too expensive or bureaucratic
Relationship between economic growth and informality?
Economic growth has an ambiguous effect:
* Can reduce informality with proper regulation
* Can sustain and increase informality without strong regulations and reforms.
* In Brazil, some policies help to promote formalization of employment. Like tax incentives for domestic workers, pension reform for rural workers, and tax exemption for micro enterprises with low annual income
- informal jobs often mean low wages and low productivity which means informality can slow economic growth
Relationship between economic crises and informality?
- Economic crises = job losses in the formal sector
- Without safety nets like unemployment insurance, informal work become the fallback
- 2008–09 crisis: More women moved to informal jobs
Relationship between informality and inequality?
- In countries with weak institutions, poor law enforcement, and unstable rules, informality is more common.
- Because informal work is often not taxed, governments collect less revenue, reducing the quality of public services, which worsens inequality
What are the 5 common reasons for women being in informal jobs?
- Barriers to formal employment
* Discrimination, education gaps, legal and cultural constraints. - Educational and Labor Market Segregation
* Women need more education to access same jobs
* Job segregation - Women are pushed into undervalued sectors like hairdressing, catering.
* Glass ceiling effects. - Care responsibilities
* limited public services to support women’s care responsibilities thereby forcing women into jobs with flexible hours. - Gender norms restricting women’s mobility
* This leads them to informal own-account work (cooking, sewing, vending). - Income needs during economic crises.
What are the positive and negative impacts of informal employment from a feminist perspective?
Positive:
- Economic and social empowerment through
access to own income and to the public sphere
- It may ease the “double burden” of paid and
unpaid work, through more flexible work
schedules
Negative:
- negatively affects the living conditions of
(informal) workers and their access to
fundamental rights, during working life and in
retirement
- Higher gender gaps in informal employment
than in formal employment
>men: own-account workers, employers;
>women: unpaid family workers, paid domestic
workers
What is formalization and what does it include?
Formalization means bringing informal jobs
and businesses into the legal and regulated
system
Includes:
- Registering businesses
- Ensuring workers have contracts
- Providing benefits like healthcare, pensions,
maternity leave
- Enforcing labor laws like minimum wage
What are the four broad trajectories of formalization?
- Classic Model or Kuznets-Lewis trajectory.
* The processes of economic growth and development automatically generate more formal activity and formal work as part of broader structural transformation. - False Formalisation
* Informal activities get subsumed by formal enterprises as part of their accumulation strategies.
* Here, formal businesses use informal workers (outsourcing) to cut costs.
* So jobs look formal, but workers remain unprotected. - Reverse Formalisation
* Some formal jobs become informal to avoid taxes, labor laws and to cut cost.
* This happens under pressure from global competition. - Policy-Driven Formalisation (most desirable)
* Governments take action to support small businesses and improve informal jobs.
* Leads to better pay, security, and working conditions.
What is the way forward with formalization? (8things)
- Combine formalization with support
- Help small businesses grow (credit access, legal aid)
- Invest in public services (like child care, health care)
- Offer gender-sensitive policies
(unpaid care work, ensure maternity protections, and promote women’s economic rights) - Ensure rules are enforced fairly
- Raise awareness among women about their rights
- Protect women from exploitation, violence, and over-regulation
- Formalization is important, but it’s not a one-size-fits-all solution. The approach must be inclusive,
gender-sensitive, and supported by strong public policies. Without that, it can leave women even
more vulnerable instead of empowering them
Why is formalising employment and workers a desirable strategy?
informality is linked to weak institutional systems and insufficient investment in capabilities of women and men
informality can slow economic growth → informal jobs often mean low wages and low productivity, which can slow economic growth in the long run
Informality can increase inequality → countries with weak institutions, poor law enforcement, and unstable rules have greater informality → also because informal work is often not taxed, governments collect less revenue, reducing the quality of public services, which worsens inequality
Informal work is highest in poorer regions
What are the most common formalization strategies and which are most common / most desirable?
- Regulate informal enterprises (registering small businesses)
- Regulate informal employment (labour laws for all workers)
- These two are more commonly implemented by governments because they’re easier and shorter term approaches
- Governments avoid the harder path and seek simply to regulate microenterprises and provide some forms of protection to informal workers
- Governments prioritize registration: enabling monitoring, taxation, regulation
- Provide social protection to informal workers (pensions, health insurance)
- Create more jobs in the formal sector and activities
- Support informal enterprises and increase income of informal workers (credit, training)
- These are most desirable in terms of progressive and sustainable formalization of work
- But they are more difficult and long term in nature, and require macroeconomic and development policies that put first emphasis on good quality job creation rather than GDP growth
- They also require the state to put in more fiscal resources and play a more activist role
What are some of the challenges to formalization?
Cost and Benefit: For small businesses, formalising can be expensive.
Poor Enforcement: Rules exist but are not applied due to weak institutions or corruption.
Low Employment: When jobs are scarce, workers accept poor conditions just to survive.
Women at risk: Because of social norms and weaker economic positions, women are more vulnerable in informal work.
Explain the differences between genders in informal work in the global south
Women have a greater share of informal employment
Women in the informal economy are often found in more vulnerable employment (for instance, they work as unpaid family workers, home-based workers, domestic workers) than their male counterparts
Women’s average labor income from informal work is lower compared to men
How do formalization strategies affect different groups of women differently?
Women-owned businesses:
- women running small-scale businesses (like street vending) often face
- High costs to register and follow rules and regulations
- Discrimination from officials and lenders
- Harassment in public spaces
Women workers:
- Women benefit from formalisation:
- Legal rights and protection
- Social benefits (maternity leave)
- Better wages and safe working conditions
- Right to unionize
- If employers must provide benefits, they may avoid hiring women to save costs
- Women often don’t know their rights, so they are more easily exploited
Why do formalization strategies affect men and women differently?
Because of social norms and weaker economic positions, women are more vulnerable in informal work which can be a challenge to formalization
Women are more in danger of exploitation, violence, and over-regulation
Women are often less aware of their rights so they are more easily exploited
If there aren’t gender-sensitive policies like for unpaid care work, maternity protections, and promoting women’s economic rights than it can leave women even more vulnerable
