LIVELIHOODS & URBAN FORM:MUMBAI IN A COMPARATIVE PERSPECTIVE

SESSION 4: FEBRUARY 18POLICY DEBATES ON THE

INFORMAL ECONOMY MARTY CHEN

LECTURER IN PUBLIC POLICY, HARVARD KENNEDY SCHOOLAFFILIATED PROFESSOR, HARVARD GRADUATE SCHOOL OF DESIGN

INTERNATIONAL COORDINATOR, WIEGO NETWORK

TAKE-AWAYS FROMLAST SESSION

Different Forms of Vending different degrees of “squatting” different forms of insertion into city space & buildings

Different Concepts of City World City – focus on power (Peter Hall et al) Mega City – focus on human beings (World Bank et al)

population growth & carrying capacity of cities Global City – focus on capital (Saskia Sassen et al)

shining high rises in Shanghai downtown = manifestation of capital World Class City – hybrid of the above

pandering to middle class aspirations for efficiency & stability pandering to global investors

Alternative Concept = Inclusive Cities recognize, integrate and support the urban poor and

their informal settlements & informal livelihoods

TODAY’S CLASS

Policy Debates on the Informal Economy formalization debate policy responses to street vendors (Bromley 2000)

Class Discussion: What Benefits of Formalization do Specific Groups of Urban Informal Workers Want?

Planning Practices & Their Effect on Informal Livelihoods people’s activities & the city (Simone 2004) space, people & the state (Scott 1995)

Book-Ends to Today’s Class: recent events

“A Tale of Two Cities” – housing & livelihoods

A Declaration, A Legal Victory – demands of informal workers

“A TALE OF TWO CITIES:

HOUSING & LIVELIHOODS”

February 6 in Delhi

CHAWLS & LIVELIHOOODS

Chawl = type of building in urban India 3-4 stories 10-20 “tenements” on each floor

Chawls in Mumbai most built in the early 1900s most tenements = 2 rooms (multi-purpose + kitchen) with balcony migrant laborers + lower middle class some women workers = home-based (e.g. caterers)

Chawl in Delhi – visited on February 6, 2015 built in 2014 3 floors, 14 tenements per floor each tenement = single room with no balcony or window migrant laborers only all women workers = domestic workers (for middle class households in nearby colony)

CHAWL IN MUMBAI

Source: http://en.wikipedia.org/wiki/Chawl

CHAWL IN DELHI

Photo by Marty Chen, February 2015

CHAWL IN DELHI

Photo by Marty Chen, February 2015

POLICY DEBATES ON THE INFORMAL ECONOMY:

THE FORMALIZATION DEBATE

FORMALIZING THE INFORMAL ECONOMY

What does formalization of the informal economy mean to you?

FORMALIZATION DEBATE

Formalization is the most common policy responses to the informal economy – but what does it mean?

To some observers, formalization means shifting informal workers into formal jobs

But to many observers, formalization means regulation & taxation of informal firms or enterprises.

Much of the policy debate centers on whether and how to reduce the costs of formalization: e.g. on registration procedures and fees

RETHINKING FORMALIZATION

Formalization narrowly defined: o focuses on informal enterprises/self-employedo focuses on duties + costs

registration taxation compliance with regulations

Formalization broadly definedo focuses on informal wage employment/employment relationships plus

informal enterprises/commercial relationshipso focuses on rights + benefits plus duties + costso sees formalization as an incremental process of extending benefits of

formality, including rights to labor standards, social protection, commercial protections, organization, and government support

o recognizes that many activities, units, workers, employment and commercial relationships fall on a continuum between formal and informal depending on which indicator of formalization is used

RETHINKING FORMALIZATION

“FORMALIZATION” OF INFORMAL ENTERPRISES

registration and taxation:o simplified registration procedureso progressive registration fees

legally-recognized property rights benefits of operating formally:

o access to financial and other marketso access to public infrastructure and serviceso enforceable commercial contractso limited liability + bankruptcy and default ruleso access to government subsidies and services, including procurement

bids + export promotion packageso membership in formal business associationso access to social protection

RETHINKING FORMALIZATION

“FORMALIZATION” OF INFORMAL JOBS

legal recognition and protection as workers rights and benefits of being formally employed:

o freedom from discriminationo minimum wageo worker benefits, such as paid sick leaveo employer contributions to health and pensionso occupational health and safety measureso right to organize and bargain collectivelyo membership in trade unions or trade-specific associationso access to social protection

WHAT BENEFITS OF FORMALIZATIONDO SPECIFIC GROUPS OF

INFORMAL WORKERS WANT?

construction workers home-based workers street vendors waste pickers

POLICY DEBATES ON THE INFORMAL ECONOMY:

THE CASE OF STREET VENDORS

Street vending = “retail or wholesale trading of goods and services in streets and other related public axes such as alleyways, avenues and boulevards” found in all countries more numerous in poorer countries usually concentrated in urban areas

Street vending varies greatly in terms of … Timing: full-time, part-time, seasonally or occasionally Location: fixed, occasionally mobile, almost continuously mobile Scale: one-person, family business, enterprise with hired workers, branch

operation of off-street business Remuneration: subsistence activity, petty capitalism; most low incomes, some

high incomes Products: perishables (fruits, vegetables, cooked food) and non-perishables

(clothing, hardware, souvenirs, groceries, electrical appliances) Services: shoe-shining; hair-cutting; document-typing; repairing of shoes,

bicycles, motorcycles and cars

STREET VENDING & PUBLIC POLICY:A GLOBAL REVIEW (Bromley 2009)

Arguments for Street Vending: integral to the economy: contribute to overall level of economic activity and to

the provision of goods and services basic human right: have right to choose occupation and engage in

entrepreneurial activities source of government tax: actually or potentially contribute – licensing fees,

sales and value-added taxes, taxes on themselves and their dependents (consumption, income or property taxes)

alternative to unemployment: sustain themselves and their dependents laboratory: able to pursue entrepreneurship, family business and social

interaction entrepreneurial opportunity: cannot afford to buy or rent fixed premises or

need flexible hours and levels of activity source of goods and services: sell at convenient locations & low prices; cater

to seasonal, sporadic and special demands (e.g. umbrellas during downpours) vitality & culture: bring life to dull streets,

STREET VENDING & PUBLIC POLICY:A GLOBAL REVIEW (Bromley 2009)

Arguments against Street Vending: congestion: over-concentrated in certain areas of the city traffic congestion and accidents: impede flow of motor, emergency and delivery

vehicles; cause traffic accidents; block exit routes from crowded buildings competition to off-street businesses: lack of regulation and taxation: do not keep accounts, give receipts, pay taxes or

charge sales/VAT taxes to customers ability to cheat: leave or relocate businesses to avoid customers or officials public health problems: those who sell food and drink unfair sales practices: do not give guarantees or exchange defective

merchandise trade in illegal goods or services: some engage in ticket-touting, pimping,

prostitution, sale of narcotics contribute to underground economy: do not document cash transactions, pay

bribes to police and municipal inspectors; epitome of surplus labor and underemployment: dysfunctional to the economy

STREET VENDING & PUBLIC POLICY:A GLOBAL REVIEW (Bromley 2009)

Challenges for City Planners: competing interest groups: off-street businesses & Chamber of Commerce

& transport lobby & general public or middle class spatial segmentation:

Agglomeration in a few locations with high levels of business opportunity – high levels of pedestrian and vehicular traffic: CBD, transport terminals, suburban or neighborhood commercial centers, sports and entertainment centers, tourist attractions\

“conflict zones” (OR “natural markets”)

Challenges for City Government: requires interactions with dozens of local officials and thousands of

vendors requires coordination between inspectors, policy and extension workers regulating street vendors seen as low-status and difficult

STREET VENDING & PUBLIC POLICY:A GLOBAL REVIEW (Bromley 2009)

Complex Coexistence of… Persecution & Regulation

moving them to off-street locations: to public or private markets imposing regulations & taxes on street vending abuse of authority: bribes, confiscations

Tolerance & Promotion financial services + business and public health training reforms of commercial and health codes

Alternative Response: joint management of “natural markets” and/or designated vending zones through Vending Committees (Street Vendor Law of India 2014)

STREET VENDING & PUBLIC POLICY:A GLOBAL REVIEW (Bromley 2009)

PLANNING PRACTICES &

THEIR EFFECT ON

INFORMAL LIVELIHOODS

PEOPLE’S ACTIVITIES/LIVELIHOODSAS SOCIAL INFRASTRUCTURE (Simone 2004)

African cities = characterized as incessantly flexible, mobile and provisional intersections that operate without clearly delineated notions of how the city is to be inhabited and used

Residents of African cities – engage in complex combinations of objects, spaces, persons and practices

These conjunctions – become an infrastructure, a platform for providing livelihoods and reproducing life in the city

Livelihoods of Residents – rely on reciprocal efforts and are radically open, flexible and provisional

STATE SIMPLICATIONS:NATURE, SPACE & PEOPLE (Scott 1995)

Parable of The State & Scientific Forestry: to illustrate… the forms of knowledge and manipulation characteristic of large

institutions with sharply defined interests: notably, the state how these forms of knowledge and control require a narrowing

of vision: tunnel vision & state simplification

Parable applied to The State & Urban Livelihoods = clash between uncentralized networks and patterns – the actual movements of

goods and people along routes not created by administrative fiat planned grid of administrative centralization – to maximize

state access and control

SIMILAR CONCLUSIONSOF SCOTT & SIMONE

“Officials of the modern state are…removed from the society they are charged with governing” (Scott)

“The growing distance between how urban Africans actually live and normative projections of urbanization and public life” (Simone)

“The modern state, through its officials, attempts…to create a population with…standardized characteristics which will be easier to monitor, count, assess and manage.” (Scott)

IMPLIED POLICY & POLICY QUESTIONFROM BOTH READINGS

Is there scope for new, less simplified and standardized, approaches to the complex reality of urban informal livelihoods?

A GLOBAL DECLARATION OF HOME-BASED WORKERS (Feb. 9th.)

& A LEGAL VICTORY FOR STREET VENDORS (Feb. 17th.)

DELHI DECLARATIONOF HOME-BASED WORKERS

H) Provision of essential urban infrastructure services to home-based workers by:

i. Improving access to basic infrastructure services to upgrade the home as a workplace;

ii. Establishing appropriate zoning regulations, allowing for selected commercial activities in residential areas, by residents;

iii. Providing adequate and accessible transport services for home-based workers, especially for women home-based workers and their raw materials and finished goods;

iv. Providing good quality, low-cost housing schemes that target home-based workers.

HIGH COURT OF SOUTH AFRICAKWAZULU-NATAL LOCAL DIVISION, DURBAN

Court Victory for Street Vendor =

Legal Precedent for All Street Vendors compensation to street vendor for the

confiscation goods in the sum of R775 confiscation of street vendor goods

declared “unconstitutional, unlawful and invalid”

THANK YOU!