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«ANSA Alternatives to Neo-liberalism in Southern Africa The search for Sustainable human development in Southern Africa Editors: Godfrey Kanyenze, ...»

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2.3 Informal economy Over the past two decades, despite predictions to the contrary, employment in the informal economy has risen rapidly within the Southern African region. The informal economy continues to grow as employment opportunities in the formal sector continue to dwindle. There are many factors that have led to the rapid expansion and deepening of the informal economy.

• Some SADC countries have experienced little or no economic growth, while others have pursued capital-intensive growth or what some observers call “jobless growth”. In both such contexts, not enough jobs are created for all those seeking work. Many frustrated formal job seekers find employment or create their own work in the informal economy. For instance, for every 300,000 school leavers produced annually in Zimbabwe, only 10% (30,000) are absorbed into the formal economy.

• Economic restructuring and the economic crisis within many of the Southern African economies have led to the increase of the informal economy. Empirical evidence suggests that during periods of economic adjustment, whether due to economic reforms or economic crises, the informal economy tends to expand. This is because retrenched workers move into the informal economy when public enterprises are closed or the public sector is downsized. In addition, households need to supplement formal sector incomes with informal earnings in response to inflation or cutbacks in public services.

Globalisation has also contributed substantially to the growth of the informal economy. Global trade and investment patterns tend to privilege capital, especially companies that can move quickly and easily across borders, and to disadvantage labour, especially lower-skilled workers that cannot migrate easily or at all (Marilyn Carr 2001). To increase their global competitiveness, more and more investors are moving to countries that have low labour costs or are shifting to informal employment arrangements. Furthermore, there has been a radical restructuring of production and distribution in many key industries characterised by outsourcing or subcontracting through global commodity chains. The net result is that more and more workers are being paid very low wages and many of them have to absorb the non-wage costs of production (Ibid.).

Globalisation also tends to privilege large companies who can capture new markets quickly and easily to the disadvantage of small and micro entrepreneurs who face difficulties gaining knowledge of, much less access to emerging markets.

An ILO/SATEP study (1985) revealed that more than 60% of the people working in the informal economy had joined because they could not find employment in the formal sector. Whereas 67% of the proprietors in the informal economy were women, only 32% were men. This reflects the inability of the formal sector to accommodate women. In South Africa, approximately 57% of the total female labour force is employed in the informal economy, with the majority of these women in informal agricultural and service activities. The liberalisation of trade in South Africa, especially in the clothing and textile sector, has led to increases in retrenchments, particularly of women workers who are predominantly employed by the sector, (Goldman 2002, Orr 2004). In this regard, quite a significant percentage of South African homemakers and informal traders are former employees of the textile and clothing industry. Table 5 shows the employment structure of the South African informal economy.

Table 5. Employment in the South African informal economy

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Despite this significant number of women depending on the informal economy for an income, the informal economy remains a far cry to address women’s problems and providing decent work for women. The sector remains highly unorganised and trade unions have not succeeded satisfactorily in promoting better working conditions in the informal economy.

There is a link between working in the informal economy and being poor.

Average incomes are lower in the informal economy than in the formal sector. As a result, a higher percentage of people working in the informal economy, relative to the formal sector, are poor. However, there is no simple relationship between working in the informal economy and being poor or working in the formal sector and escaping poverty (Charmes 1998a, Sethuraman 1998. Thomas 1995). The relationship between informal employment and poverty appears only when informal workers are classified by employment status and by industry or trade. Informal incomes worldwide tend to decline as one moves across the following types of employment: from employer to self-employed to informal and casual wageworkers to industrial out-worker.

The link between working in the informal economy and being poor is stronger for women than for men. A higher percentage of women than men work in the informal economy. Moreover, there is a gender gap in incomes and wages in the informal economy. This is because women in Southern Africa are under-represented in higher income employment statuses in the informal economy (employer and self-employed) and over represented in the lower income statuses (casual wage worker and industrial outworker). For instance, relatively few women are employers who hire others; and relatively few men are industrial outworkers. Even within the same trade or industry, men and women tend to be involved in different employment statuses. In many countries, for example, men traders tend to have larger scale operations and to deal in non-perishable items while women traders tend to have smaller scale operations and to deal in food items. Table 6 shows the proprietorship of informal businesses by gender for Zimbabwe.

Table 6. Gender of proprietor by Stratum.

Zimbabwe. 1991

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Available evidence suggests that globalisation of the economy tends to reinforce the links between poverty, informality, and gender. This is because global competition tends to encourage formal firms to shift formal wageworkers to informal employment arrangements without minimum wages, assured work or benefits and to encourage informal units to shift workers from semi-permanent contracts without minimum wages or benefits to piece-rate or casual work arrangements without either assured work, minimum wages or benefits. This is also because globalisation often leads to shifts from secure self-employment to more precarious selfemployment, as producers and traders lose their market niche. With these shifts, and as more and more men enter the informal economy, women tend to be pushed to the lowest income end of the informal economy as petty traders or as industrial outworkers, for example.

The information box below provides the alternatives required for creating decent employment opportunities for women. Many of these alternatives have been drawn from consultative processes with national and regional stakeholders.

Creating decent jobs for women in Southern Africa

• Increased access to gender-sensitive education, training and skills development for women, which breaks down the occupational segregation, skills women for new employment opportunities and recognises prior learning. In addition, national budgetary expenditures should continue to provide safety nets and extend social service provision.

• Promoting Southern African countries to implement pro-women labour legislation and reinforce ratified conventions to support women and eliminate gender inequities in employment. Macro-economic policies must be designed in a manner that is gender sensitive, prioritises women’s employment and minimises their job losses.

• There must be an increase in the protection of workers employed in atypical forms of employment. There is a need to also extend labour legislation to "‘inaccessible sectors" such as the informal economy, rural and communal areas. It is also essential that labour laws be gender sensitive and that they incorporate the new global phenomenon of "family friendly" legislation. This would mean a holistic legal framework that recognises the role and responsibilities of women in the household, the community and at work.

• There must be gender focal points within each line ministry, especially the ministry of labour. There must also be strong programmes for employment creations initiated by national gender ministries and departments of equity committees.

• National legislation should be reformed to support women’s ownership and control over assets.

• Technology policies geared towards new forms of technology (technological advancement) should facilitate women employment. There should be adequate training and skills development of female workers to meet the basic new requirements of skills.

3. Neo-liberalism, poverty and gender

Neo-liberalism has dominated Southern African economic policy-making since the inception of structural adjustment policies. The experience of structural adjustment in the region has been associated with negative growth and increasing poverty. There are a number of exceptions to these overall trends; some Southern African countries such as South Africa, Botswana, Namibia and Zambia have experienced positive economic growth rates, though much of this growth is often jobless and/or voiceless and may be largely unsustainable.

Early discussions of structural adjustment were principally concerned with short-term stabilisation and macroeconomic aggregates and beyond with removing distortions and increasing economic efficiency. It was only in 1987, with the publication of UNICEF’s Adjustment with a Human Face (Cornia et al. 1987), that the debate on poverty and adjustment gained some prominence. The Bretton Woods institutions have by and large, tended to disassociate poverty in adjusting countries with adjustment policies, arguing that either pre-adjustment economic crises or government policies (linked to vested interests and lack of political will) are mainly responsible for increases in poverty or the failure to address poverty. Adjustment policies, it is argued, would improve the situation of the poor in the longer term, through labour-intensive growth and providing new opportunities and increased incomes for the poor, especially in rural areas, to the extent that any negative social impact of adjustment would be perceived to be temporary and concentrated in urban areas. In recent years, however, it has become evident that poverty in countries undergoing economic reform in the region is not temporary in nature.

Moreover, there is considerable evidence that adjustment policies themselves have contributed to increasing poverty. Growth has not occurred as fast or as much as had been earlier predicted and where it has been, it has not, in general, been "pro-poor".

In the literature on poverty and adjustment there is still a tendency to ignore gender (and other) aspects of vulnerability and to treat the poor as a homogenous and passive category (Baden 1997). The World Bank’s own poverty assessments have, until recently, paid very little attention to gender issues. Initially, concern with gender issues in relation to economic liberalisation and adjustment, emerged as a subset of the debates on poverty. Poor women were seen to carry the major burden of adjustment through increased demands on their reproductive labour, as well as falling social services provision (Mhone 1999). Gender is a key determinant of vulnerability so that in periods of economic transition, women are likely to be especially vulnerable to increased poverty or insecurity. While job losses may affect men and women, women may find it harder than men to regain employment or become self-employed, due to relative lack of education and skills, lifecycle issues and lack of independent access to capital.

Figure 2 on the following page shows the feminisation of poverty that should be a prerequisite in any regional or national socio-economic policy formulation process.

Poverty Statistics for Southern Africa reveal that women constitute the majority of the poor within the region. More than sixty to seventy percent of the total number of the poor within Southern Africa is women.

Figure 2. Feminisation of poverty Gender-specific processes of social disadvantage related to socio-cultural norms

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Source: ILO; Gender, Poverty and Employment Table 7 on the next page reflects the inequalities between men and women within the Southern African region (through analysing the Genderrelated Development Index).

Table 7 reinforces the fact that women have far less access to social services when compared to their male counterparts. The Gender-related Development Index47 average for the region of 0.5 signifies a substantial difference between men and women in the region in terms of longevity of life, income and education.

The degree of gender inequality is measured by the difference in the HPI and the Genderrelated Development Index (if there was gender equality, the HPI would be equal to the Gender-related Development Index).

Table 7. SADC-specific gender-related development index.


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Empirical evidence reveals that in Southern Africa, female-headed households are much poorer and greater in number as compared to maleheaded households. A surveillance undertaken in Zambia revealed that 50% of female-headed households were classified as "very poor", compared to only 27% of male-headed households. A study completed by the government of Botswana in 1996, revealed that the poorest female headed households in the urban areas earned an average capital income that comprised a mere 46% of those poorest households headed by men.

Thus, if socio-economic processes within Southern Africa are to develop poverty eradication strategies, there is need to recognise the root causes of poverty along gender lines. Often there are misconceptions about how to address poverty, for instance, safety nets tend to see women as targets for social assistance and men as targets for employment, based on a male breadwinner model, with women benefiting from hand to mouth programmes such as nutritional programmes. Although these programmes cannot be undermined, they are not necessarily the right prescription for eradicating poverty. There should be greater emphasis on poverty in policy dialogue and the closer integration of poverty strategies with socioeconomic programmes.

4. Women’s access and control of resources

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