Policy neglect and under investment in the informal economy is a gender issue’.
Anonymous. Critically appraise this statement.
According to Chen (2001), the percentage of women working in the informal sector is more
significant than that of the men in developing countries and most of them are either self-
employed or contributing family workers. A reason may be because the traditional role of
women as home keepers which limits their participation in formal jobs that would require
sacrificing that role, so they would rather work informally when necessary. Excessive and
unmonitored regulation can influence the gender composition of informal sector
participation, as women are more vulnerable to the incidence of informality (Chen, 2014).
Women are disproportionately overrepresented in the informal economy in more than 90
percent of countries in sub-Saharan Africa. Women’s average share of informal employment
in the region’s non-agricultural sector is 83 percent, whereas for men the share is 72 percent.
When the agricultural sector is included, these shares rise to 94 percent and 89 percent,
respectively (International Labour Organization [ILO] 2018).
Informal employment is often characterized by job instability, a lack of social protection,
lower earnings, and higher gender gaps. UN Women (2016) finds that the gender wage gap in
sub-Saharan Africa is 28 percent for the informal sector, far higher than the 6 percent gap for
the formal sector. Although some of the wage gap can be explained by observable
differences, such as job characteristics, number of hours worked, and skills required for the
job, gender wage gaps can also reflect gender discrimination a wage premium for male
workers that cannot be explained after controlling for observable individual and job
characteristics.
Lower levels of education, traditional gender roles, and gender-biased laws may curtail
women’s possibilities of working in the formal sector. Although informal jobs may offer
certain appealing features, such as employment closer to home and greater flexibility, the
informal sector can be a poverty trap for women. Female workers may remain in activities
requiring fewer skills and providing lower earnings, which can lead to fewer incentives to
invest in young girls’ education, creating perpetual gaps between men and women.
The most immediate consequence of informal employment is the near-total absence of legal
protections. Formal workers, in most countries, are entitled to minimum wage enforcement,
occupational health and safety standards, paid leave, social security contributions, and
protection against arbitrary dismissal. Workers in the informal economy and particularly
women have access to almost none of these.
UN Women notes that working in the informal economy leaves women without any
protection of labour laws, social benefits such as pensions, health insurance, or paid sick
leave. They routinely work for lower wages and in unsafe conditions, including a persistent
risk of sexual harassment. Because these women have no formal employment contracts, they
have no legal standing to challenge abusive employers, contest wage theft, or claim
compensation for workplace injuries.
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Domestic workers illustrate this exclusion most sharply. They work inside private homes –
spaces that most countries’ labour laws treat as beyond regulatory reach. WIEGO’s Law
Programme documents how informal workers globally are often regulated in punitive
ways while simultaneously being excluded from protective legislation. In other words, a
domestic worker can be fined or evicted from a home for non-compliance with certain rules
yet cannot invoke employment law when she is underpaid or harassed. This legal double
standard reflects a deeper structural problem: labour frameworks were built around the formal
employer-employee relationship and were never designed to include the feminized work that
happens in private, domestic, or agricultural spaces.
Several laws in sub-Saharan Africa still restrict women’s economic possibilities and
competitiveness. In many countries in the region, women cannot get a job without their
husband’s permission, make decisions for the household, travel outside the country the same
way as men, administer marital property, perform the same jobs as men, or open a bank
account. Furthermore, in more than half of the countries in sub-Saharan Africa, women’s
access to finance is not protected by law, and in several, inheritance and property rights are
not the same as men’s (World Bank 2018).
Governments have a role to play in diminishing these inequalities and ensuring men and
women can compete equally in the labor market. Policymakers may choose to focus on the
Increasing girls’ educational attainment can substantially diminish the probability of
women being employed in the informal sector. More high-quality years of education lead to
higher salaries and thus better living standards for families. Governments should improve the
access to, the quality of, and the effectiveness of their education systems. Costs can be much
lower in countries where the physical infrastructure is in place, but for reasons such as social
stigma, early marriage and childbearing, and discrimination, girls abandon school before
completion of secondary education. Policymakers can provide parents with incentives to
keep their daughters at school, for instance, by making targeted cash transfers to those who
keep their girls home until they complete primary and secondary education. Prohibiting child
marriage and disseminating information on women’s health also helps prevent girls from
dropping out, especially in rural areas.
Changing the legal framework to enshrine gender equality is financially costless.
Governments should expunge these legal differences not only because they violate the basic
principle of equality between individuals before the law but also because, economically, they
create distortions and wrong incentives. Sustainable growth cannot be achieved with half of
the population lacking access to institutions, assets, credit, freedom of mobility, and freedom
of choice. Enforcement of property rights including inheritance rights is particularly relevant,
especially in countries where small agricultural plots are the most common site of economic
activity, and thus where land ownership is highly valuable. Moreover, enforcing women’s
legal rights by combating domestic violence, sexual harassment, and child marriage improves
women’s living standards and breaks the cycle of gender inequality.
Addressing social norms that economically disadvantage women is necessary. Policymakers
should enforce equal rights and opportunities. Social norms have changed in urban areas of
many sub-Saharan African countries, but gender inequalities still prevail in rural areas. In this
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context, policy recommendations include enforcing civil laws where customary laws reduce
women’s freedom and power, combating domestic violence, and promoting and encouraging
a more equal division of labor at home by developing education campaigns and introducing
paternity leave.
Working in this informal, or grey economy, as it’s sometimes called, leaves women often
without any protection of labour laws, social benefits such as pension, health insurance or
paid sick leave. They routinely work for lower wages and in unsafe conditions, including risk
of sexual harassment. The lack of social protections has long-term impact on women. For
example, fewer women receive pensions globally, and as a result, more elderly women are
now living in poverty. Even in developed economies, such as in France, Germany, Greece
and Italy, women’s average pension is more than 30 per cent lower than men’s1
1
UN Women, Progress of the World’s Women 2015-2016. Chapter 2, p. 71.
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