Defend Truth


Formal vs. informal economy: Bridging the gap


Jay Naidoo is founding General Secretary of Cosatu, former minister in the Nelson Mandela government and former chair of Gain, a global foundation fighting malnutrition in the world.

There is a deep and growing anger in the world. The ferment bursts onto our TV screens daily. They explode the myth that we have a “good story” to tell. From the Marikana massacre in South Africa to the Rana Square tragedy in Bangladesh, from the murder of trade unionists in Guatemala to the Soma mine disaster in Turkey, there is no “good story” to talk about. In fact, people feel abandoned by their governments. With few exceptions, world leaders and international institutions are pursuing an economic agenda that has created greater inequality and devastating unemployment, undermining democracies everywhere and bringing the planet to the environmental precipice.

Last week, I chaired a panel on the Informal Economy at the ITUC Congress in Berlin. It was the first time that grassroots voices and activists from the informal sector shared a global stage. I was inspired by the stories of hardship, perseverance and the struggle for human dignity that washed over me during the course of the discussions.

Listening to Shabnam, a garment worker in Gujarat state of India, a member of the two million-strong SEWA Union (Self Employed Women’s Association), I heard an incredible story. She was militant, confident and spoke in Gujarati through an interpreter. “I did piece work for a contractor who paid me so little for the work I did. I had no self-respect. I worked hard every day, from morning to night. Yet I did not even have money to buy food for my children. We had to cut a roti (flatbread) in pieces. I fed the children first. I often went to bed without eating. I was exploited, in the home and in the community. I felt alone and powerless.”

Shabnam is part of a growing informal sector that today accounts for close to 40% of the global economy. In the desperation to secure higher profits, transnational companies are hunting locations where cheap goods can be mass-produced in sweatshops. It is a direct attack on worker and human rights, and often only possible thanks to the collusion of unscrupulous politicians and state officials.

“I heard about SEWA,” Shabnam continued. “I went to their offices. I found other women. I found solidarity. I learnt about my rights. I discovered my identity. I was a woman. I was a human being. I took off my burqa. I learnt that my daughters should be educated. They had rights. Unlike me, who never went out of the home. I give them the freedom to go out and mix with other people. If you cut my hand or that of any other person, the blood you see is red. It does not matter whether you are man or woman, what your colour or your caste or your religion is. We are all human beings.”

Following this incredible story, I turned to the president of SEWA, Kapilaben Vankar, and asked how SEWA has helped women in India. “We are not afraid anymore,” she said. “We have our identity now. I am a woman and no one can take away my human rights. I contribute by working to my family, my community and my country.”

As I watched them articulate their position, I noted the outpouring of courage and couldn’t help but be inspired. It made me think of the past, and I recalled the slow, steady building of workers’ power in South Africa. It was women like Shabnam and Kapilaben who were the backbone. Doubly oppressed because they faced gender and political discrimination under Apartheid, many women had related to me how they faced beatings even from their own husbands for attending union meetings at night and weekends. But they remained defiant and determined.

Suddenly, I was seeing that same courage over again. As Kapilaben articulated, “We are the majority. Nine out of 10 jobs in India are informal. It is work. We are workers. We want our legal rights recognised so that we can also benefit from social protection and other entitlements that workers in the formal economy have. We want economic freedom. But we are invisible to government and also to the formal unions. Our issues are the same. We want legal contracts. We want social protection. We want to be paid a fair wage and have pensions and compensation. Otherwise the contractors and bosses treat us like modern-day slaves.”

These women articulated not just the woes of workers in India, but across the world—from waste pickers and street traders to subsistence farmers and the fisher communities. The formal economy is in-formalising.

Jorge Ramada, another panelist, was from the Uruguay Waste Pickers Union. He is a salt-of-the-earth comrade—long-haired, tea flask slung around his neck. He conjures up the image of the president of his country, José Mujica, who drives a Volkswagen Beetle, lives in his own modest house, donates 90% of his salary to social projects and is the poorest president in the world.

“Our freedom and accountability came from organising the progressive forces. We built a united front, understanding our struggle was political. Waste pickers were seen as the dregs of society. Our first fight was for human rights and our identity. Now we have our humanity restored,” said Jorge.

Waste pickers are the forefront troops of the environmental struggle. Often ignored by organised civil society groups, even though climate change is high on the global agenda, they refuse to be cast aside. According to a Women in Informal Employment: Globalising & Organising (Wiego) report, “In cities across the world, millions of people sustain themselves and their families by reclaiming what is reusable and recyclable. They are frequently ignored within public policy processes and harassed and persecuted by authorities.”

As Jorge noted, “We are the ones protecting the environment every day. We want to be recognised as workers. Local governments should listen to us. We know how to make the waste disposal systems more efficient.”

I recalled Uruguayan President Mujica condemning the “blind obsession” with achieving economic growth through consumption. It is this “hyper-consumption that is destroying the environment. The cause is the model of civilisation that we have created. And the thing we have to re-examine is our way of life,” he said. He insists that all government policies promote the use of renewable energy and recycling. Uruguay has set an ambitious goal of producing 90% of its energy through renewable sources in the next decade. But he grudgingly accepts he must focus on jobs and growth that improve the lives of his people.

It’s activists like Jorge who are his key allies. It is organisations like the ITUC who must make this the single-minded focus of strategy in the next decade; bridging the divide between the informal and formal economy; organising and building workers’ power and fighting for a floor of social protection rights across the world for all workers.

That is the only way we are able to defeat the modern-day slavery that faces 20 million workers in the world, mainly children and women. That is the only way we can advance a sustainable world that does not mortgage our children’s future because human greed is causing irreversible climate change that threatens the future of food security, access to water, land, grazing and economic security in the world.

As Sharan Burrow, the ITUC General Secretary, declared: “Our priority is ‘jobs, jobs, jobs’. But there are no jobs on a dead planet. We need to be greening the global economy and we need to tame corporate power. Unemployment, wages and inequality are the major issues for working people all over the world.”

Organised labour, grassroots social movements and progressive NGOs, the workers on the shop floor, the informal workers in our streets, farms and villages, the youth, women and intelligentsia are the best hope of a world that is built on justice, human dignity, social solidarity and inclusive growth. I would love to see a united front that has a compelling narrative of people-centered democracy, all of which aims to realise an old American First Nations’ proverb: “We did not inherit our world from our ancestors; we borrow it from our children.” DM

Read more: