Why is an accurate assessment of economic activity so important for development, and for women’s interests?

It can affect:

• agricultural policies (who does what, has what expertise/knowledge);
• policy making with regard to the informal sector [i.e., how to support it], and
• the different adjustment and stabilization policies designed at times of economic crisis.
• Likewise, it can be useful for the study of savings and consumption patterns, the analysis of household dynamics, and regional and comparative studies of men’s and women’s participation in production;
• time poverty: can better inform studies of people’s ‘time budgets’
• Policy benefits: More accurate data can be useful to design appropriate policies regarding employment, income distribution, social security provisions, pay equity and others

What sectors of the economy most affect women?

• Subsistence-we’ve talked a bit about this one … growing household food, for instance
• Domestic-labor within the household, unpaid
• Volunteer-women in many parts of the world regularly engage in ‘rotating labor associations’ (RoLAs) and ‘rotating savings and credit associations’ (RoSCAs)–in terms of economic activity, think of the difference between volunteering for a charity and making a financial donation.
• Informal

The Informal labor sector

The same jobs can be done, for instance cooking, sewing, cleaning:

• for pay in the formal sector,
• irregularly in the informal sector for pay, and
• in the domestic sector for no pay.

But how we count them as economic activity differs drastically. Shifts in domestic labor from inside to outside the household can make the economy look bigger or smaller, when in fact same amount of work is being done. For instance, in Mexico, well over half of women are categorized as ‘economically inactive.’ This obviously has to do with different ways of measuring economic activity than with women’s reality in the country.

What is the informal sector?

• Unregistered with tax authorities (don’t pay taxes)
• Lots of self-employment (but not all . .. sex work or the drug trade, for instance, usually isn’t autonomous)
• ease of entry (no messy paperwork!
• small-scale production
• mostly labor-intensive work
• lack of access to organized markets, and
• lack of access to traditional (bank) forms of credit

The informal sector is portable, it’s fugitive, and individuals’ participation is ephemeral (meaning it comes and goes). But the sector never disappears–in the aggregate there are always people entering and leaving.

Is the informal sector a stage in the development process, or a symptom of underdevelopment? Do we have an informal sector here in the US (if you know of one, the IRS would like to talk to you), or do you have one in your own country, and what does it ‘look’ like?

What niches are filled in the informal labor sector?

Problems in the informal sector

• It’s growing (think about urban migration, spillover from the formal sector), but knowledge of how it functions, how people access it, how it benefits them, is limited–how might this affect economic policy, gender bias?
• Manufacturing sector hasn’t absorbed the surplus. In other words, the theory that suggests that surplus agricultural labor is freed by technological advance, the surplus drives other industrial development in the country, and the surplus laborers provide a ready pool of workers, hasn’t panned out so well in the developing world. Why? Perhaps partly because the foreign revenue generated by things like cash cropping depends on the markets, which can fluctuate quite a bit from year to year, season to season. Much of the foreign capital invested leaves the country, rather than being re-invested in the economy. And there has been resistance to adoption of farming technology, commercial crop production, among groups that still produce their own food. Keep in mind, the traditional mindset of farmers isn’t maximizing their income, but minimizing their risks–drought resistant food crops seem the safer bet.

Changes in women’s productive activities

• Technology changes–mostly these have negatively affected women, in ways we’ve discussed (men have often been the recipients of new technologies, creating a ‘technology gap,’ leaving women as unpaid laborers or at least using the most labor-intensive technologies to perform their work–initiatives to develop drudgery-reducing technologies and make them available to women haven’t exactly taken off–why not?
• Rural-urban migration–living in the city changes almost everything, including division of labor
• Industrialization has tended to decrease women in the workforce. Or at least decrease their proportions (in other words, more men get hired). There is much ‘sex-labeling’ that goes on–for instance, women are ‘nimble-fingered’ and often work the sewing machines in garment factories, but may not be considered for advancement to other jobs that open. However, the garment industries have been large employers for women in many countries.

Informal sector in Mexico City (from Arizpe)

Role of education

There are essentially two classes: one, an educated, middle class. For some in this class, working represents a loss of prestige–women at a certain level shouldn’t have to work. What work is performed is either professional, or done at home.

Then there is a poorly educated, working class. These women perform domestic work in others’ houses–the middle and upper class. They also work on the street, engaging in petty commerce, as well as sex work and the drug trade (often when they can’t find more legitimate work).

Role of age

• These are often younger women
• Much of the work is on the streets – portability, flexibility are important
• perks (benefits) include room and board, place for children (in the case of domestic workers)
• As for middle-aged women:
  • they tend to do more petty commerce (bigger investment of time that younger women with smaller children have difficulty making)
  • Usually food-related, often preparing and selling street food. Arizpe makes the point that these women often aren’t filling any kind of demand, but rather creating demand by offering products at highly competitive prices (and thus at low return for themselves)
  • Where? Near markets, taxi stations, where people tend to congregate, and may spend hours, days, weeks, waiting for that taxi to fill (an example from Dakar, Senegal).
  • Why the informal sector? Women of low education, income can’t afford to engage in the formal market. There are too many barriers–one needs a certain literacy, numeracy, knowledge of how the system works.
  • Begging–this takes place, somewhat more so in Moslem cultures because one of the five pillars of the Moslem faith is to give alms.
• According to Arizpe, age discrimination works against older women in the formal economic sector, and they are thus are thus more likely to show up in the informal sector.
• marital status–in addition, divorced, widowed, or separated women tend to be more dependent on the informal sector. They’re less likely to have the resources or support, or the time, to participate in the formal labor market.

Role of ethnicity

Arizpe discusses the ethnic immigrants (especially of Indigenous ancestry) who often end up taking lower-paying positions. This sort of dynamic operates in many countries, including the U.S. The least-desirable jobs are taken by the most desperate, the most likely to be discriminated against, or those with the least power or connections.

So why is the informal sector important?

• It serves as a safety valve, a cushion from unemployment–the pushes and pulls that lead to migration usually bring many more people to urban areas than there are jobs waiting for them. Ideally, the informal sector would serve as a sort of transitional phase for people working their way up the socioeconomic ladder;
• It makes up a significant amount of many low-income countries’ economic activity–statistics that attempt to represent this activity need to find ways to measure that of the informal sector–how much activity, who is participating, etc. The informal sector in some countries comprises up to half of economic activity.
• It is unregulated, often precarious and unstable–workers have few protections, there are often risks that accompany working in this sector. For instance, in many smaller towns with open sewers on the sides of streets, you’ll find people selling street food on earthen bridges over the sewers–public health risks about for buyers and sellers. Crime can be a problem–sellers may have their earnings taken, and often people in this sector will try to work adjacently, giving them more protection.

Arizpe, L. 1997. Women in the informal-labour sector: The case of Mexico City. Pp 230-38 in Visvanathan, N, Duggan, L, Nisonoff, L and N. Wiegersma (editors). 1997. The women, gender and development reader. London: Zed Books Ltd.