INCLUSIVE CITIES &

THE URBAN INFORMAL WORKFORCE

MARTY CHEN

LECTURER IN PUBLIC POLICY, HARVARD KENNEDY SCHOOL

AFFILIATED PROFESSOR, HARVARD GRADUATE SCHOOL OF DESIGN

INTERNATIONAL COORDINATOR, WIEGO NETWORK

MEXICO CITY CONFERENCE NOVEMBER

24, 2014

PRESENTATION

My presentation will be in 3 parts:

Informal Sector, Informal Employment & Informal Economy

Definitions

Data

Urban Informal Employment

Size & Composition

Driving Forces

Inclusive Cities

Policy Stance

Policy Vision

INFORMAL SECTOR, INFORMAL

EMPLOYMENT, INFORMAL ECONOMY

There are three related official statistical terms and definitions which are often used imprecisely and interchangeably by analysts and observers:

• informal sector refers to the production and employment that takes place in unincorporated enterprises that might also be unregistered or small (1993 ICLS)

• informal employment refers to employment without social protection (i.e. without employer contributions) both inside and outside the informal sector: i.e., for informal enterprises, formal enterprises, or households (2003 ICLS)

• informal economy refers to all units, activities, and workers so defined and the output from them (ILO 2002).

In sum, the informal economy is the diversified set of economic

activities, enterprises and workers that are not regulated or protected by

the state; and the output from them.

INFORMAL EMPLOYMENT:2003 International Conference of Labour Statisticians

Self-Employed in Informal Enterprises (i.e. unincorporated

enterprises that may also be unregistered and/or small)

employers

own account operators

unpaid contributing family workers

members of informal producer cooperatives

Wage Workers in Informal Jobs (i.e. jobs without employment-

linked social protection)

informal employees of informal enterprises

informal employees of formal firms

domestic workers hired by individuals/households without

employer contributions

INFORMAL EMPLOYMENT AS

% OF NON-AGRICULTURAL

EMPLOYMENT 2004-2010

Average & Range by Regions

South Asia: 82%

62% in Sri Lanka to 84% in India

Sub-Saharan Africa: 66%

33% in South Africa to 82% in Mali

East and Southeast Asia: 65%

42% in Thailand to 73% in Indonesia

Latin America: 51%

40% in Uruguay to 75% in Bolivia

Middle East and North Africa: 45%

31% in Turkey to 57% in West Bank & Gaza

Source: Vanek et al. WIEGO Working Paper No. 2, 2014

INFORMAL EMPLOYMENT:

COMPOSITION IN DEVELOPING REGIONS

Informal wage workers outside informal enterprises

(i.e. for formal firms or households)

around15% of non-agricultural employment

Self-employed as % of informal non-ag employment

Employers = 1-4%

Unpaid family workers in family firms = 5-12%

Own account workers = 35-53%

Source: Vanek et al. WIEGO Working Paper No. 2, 2014

Three Key Points:

# 1 - a significant share of informal wage employment is outside informal

enterprises (i.e. for formal firms or households)

# 2 – most informal self-employed do not hire workers

# 3 – labor laws & regulations have limited salience for informal self-

employed – what matters are sector-specific policies (notably urban

policies for urban self-employed)

SPECIFIC GROUPS OF URBAN

INFORMAL WORKERS

Domestic Workers = 6% of employment in Lima and 8% of employment in Buenos Aires; 5% of urban employment in India and 3-9% of employment in African cities where data available

Home-Based Workers = 3% of employment in Buenos Aires; 14% and 6% of urban employment in, respectively, India and South Africa

Street Vendors = 1% of employment in Buenos Aires; 3% of urban employment in Brazil; 4% and 15% of urban employment in, respectively, India & South Africa

Waste Pickers = 1 per cent or less of urban informal employment in cities or countries where data are available

All Four Groups = 23% of urban employment in India

Source: ILO-WIEGO 2013. Women & Men in the Informal Economy:

A Statistical Picture; Chen and Raveendran WIEGO Working Paper No. 7,

2014.

INFORMAL EMPLOYMENT

IN MEXICO

Size: informal employment.

51.8% of national employment.

45.2% of urban employment.

Composition: two types of informal employment as

percentage of urban* employment.

25.4% inside informal enterprises.

19.8% outside informal enterprises.

* Localities ≥ 100 thousand inhabitants.

Employment inside informal enterprises in urban areas amounts to 6.4 m (2.3 m. are women).

56.2 % of the total urban informal employment.

Informal employment outside informal enterprises is about 4.9 m. and a majority of them women (2.6 m.).

43.8% of total urban informal employment.

URBAN INFORMAL EMPLOYMENT

IN MEXICO

There are 6.5 m. informal paid dependent workers (employees).

2.0 m. working for informal enterprises.

4.5 m. working outside informal enterprises.

• 1.1 m. paid domestic workers.

• 3.4 m. working for formal enterprises.

Source: INEGI. ENOE, Third Quarter 2014 (from Rodrigo Negrete).

URBAN INFORMAL EMPLOYMENT

IN MEXICO

EXCLUSIONARY URBAN POLICIES:

THREATS TO URBAN LIVELIHOODS

Urban Livelihoods:

o impacted by municipal policies + regulations + practices – more so than labor law or national policies

o overlooked or undermined by municipal authorities and urban planners + excluded from or destroyed by urban renewal schemes

Key Urban Informal Groups – threats to livelihoods

o home-based producers: lack of basic infrastructure services, especially irregular supply of electricity + single-use zoning regulations + slum relocations

o street vendors: insecure workplace + abuse of authority by local officials and police, especially bribes, confiscation of goods, evictions and relocations

o waste pickers: lack of rights of access to waste + lack of integration into solid waste management system

o all three groups: lack of accessible/affordable transport + lack of integration into local economic planning

INCLUSIONARY URBAN POLICIES:

PROMISING EXAMPLES

Home-Based Workers:

o Ahmedabad, India: in situ upgrading of slums with provision of basic

infrastructure services

Street Vendors

o Lima, Peru – New Metropolitan Street Vending Ordinance to regulate

vending in public space, issued in May 2014

o Ferias Libres in Multiple Cities, Chile: rotating location of markets to reduce

impact on traffic + legal framework to legitimize street markets

Waste Pickers

o Belo Horizonte, Brazil: sheds and other infrastructure for waste picker

cooperatives to sort, bundle, process and store waste

o Bogota, Colombia: integration of waste pickers into solid waste

management,; payment to waste pickers for collecting and sorting waste

INCLUSIVE CITIES:

POLICY RECOMMENDATIONS

Home-Based Workers: quality housing + de facto tenure + basic infrastructure services

Street Vendors: legal access to public space in natural markets

Waste Pickers: inclusion in solid waste management

All: recognition of contributions + representation in planning

INCLUSIVE CITIES:

GUIDING PRINCIPLES

Most developing economies are hybrid economies – mix of both modern-traditional and formal-informal – and should remain so.

The size, composition, and contribution of the informal economy need to be fully counted in official statistics and fully valued by policy makers.

Informal workers, activities, and units should be included in local economic planning.

Informal workers need to have representative voice in rule-setting and policy-making bodies.

INCLUSIVE CITIES:

VISION FOR THE FUTURE

“The challenge is to convince the policy makers to promote and encourage hybrid economies in which micro-businesses can co-exist alongside small, medium, and large businesses: in which the street vendors can co-exist alongside the kiosks, retail shops, and large malls. Just as the policy makers encourage bio diversity, they should encourage economic diversity. Also, they should try to promote a level playing field in which all sizes of businesses and all categories of workers can compete on equal and fair terms.“

Ela Bhatt

Founder, Self-Employed Women’s Association (SEWA), India

Founding Chair, WIEGO

Member, The Elders

FOR MORE DETAILS

Please visit www.wiego.org

THANK YOU!