Most informal jobs are a form of concealed unemployment, cautions the National Labour and Economic Development Institute (Naledi). These jobs do not raise sufficient income to support a family, promote the acquisition of skills or increase productivity.
”Yet [these] are the only options available to millions of unemployed,” Naledi notes in its draft South Africa country report for the Global Poverty Network Development Study.
The government is planning to create one million jobs through its Extended Public Works Programme (EPWP), but it is only a short-term solution. Because the EPWP will offer mostly six-month contracts, these jobs will not change much. Rather they will add ”slightly to the skills profile of these informal sector workers, who will return to the informal sector once the initiative is complete”.
Informal sector wages, a clear poverty indicator, at best match the lowest minimum formal sector wage.
”Thus the informal sector cannot provide an effective alternative … Jobs created in the informal sector are not through the expansion of economic opportunity, but the expansion of survivalist strategies.”
Naledi researcher Wolfe Braude says informal sector workers are frequently a ”deferred burden on the state” as they cannot provide for their own pensions, health care or post-matric education for dependents.
In its draft report, Naledi argues that the increase in informal sector jobs between September 2001 and 2002 was largely due to a change in definition by Statistics South Africa. It now records the generation of even the most survivalist income as informal sector employment. The expanded definition of unemployment includes all those who have not actively sought a job in the previous month.
Within this official definition of unemployment, the economic policy think-tank points to ”sobering” unemployment statistics.
Of the 5,25 million unemployed, around 59% have never worked and 41% have looked for jobs for more than three years. Three-quarters of the unemployed aged 15 to 30 have never worked.
The figures show that ”many workers are available, but unable to find anything and so have given up looking”, a result of, among other causes, the jobless economic growth in recent years and the decline of labour-intensive production processes.
Naledi estimates around 30% of all workers are engaged in the informal sector, including subsistence farming and domestic labour.
The bulk of such jobs are in the wholesale and retail sector (50%); construction, manufacturing and services accounted for 33% during 2001. The majority — 85% — of informal workers are black or coloured, while whites represent the largest percentage of formal sector employees.
But there appears to be some confusion among many workers as to which category they belong to, formal or informal. Naledi cites as one reason the increasing use of part-time, casual or outsourced labour.
While many such workers regard themselves as part of the formal sector, ”in most cases the activities do not include any benefits such as medical aid, pension or retrenchment”.
Instead there is a level of intertwining: around 44% of all formal sector workers do not receive benefits, while 9% of casual workers do.
A survey of non-VAT-registered businesses, widely regarded as part of the informal sector, in 2001 showed that only 9,5% provided regular paid leave, 3,3% full medical expenses and 9,2% paid sick leave.
Naledi pinpoints a direct link among employment, income and education. Its research shows a third of informal sector workers have only attained primary education; 10% have none at all.
Yet the sectoral education and training authorities (Setas) have not been active in the informal sector, frequently citing lack of profitability, low literacy levels and inaccessibility of informal sector workers.