Self-Employed Women in the Urban Informal Economy: Reducing Their Risks and Constraints

by

by Martha Alter Chen, International Coordinator, WIEGO 

How can women enjoy their fair share of the economic wealth they create?  The answers to this question depend on whether women are self-employed or wage-employed, what sector they work in, and under what conditions.  This note focuses on self-employed women from poor households engaged in the urban informal economy.

Women and Self-Employment

Photo M. Chen.

Here are a few basic facts about women and self-employment.  Self-employment represents a far larger share of total employment in developing countries (33-50%) than in developed countries (around 12%) and is growing in most regions.  A larger share of female workers than male workers is self-employed.  Self-employment is heterogeneous but can be meaningfully disaggregated, measured and understood by status in employment (whether they are employers, own account operators, or unpaid contributing family workers) and by employment class (whether they are entrepreneurial non-poor, mainly employers or working poor.  Most informal employers are non-poor while most own account operators and unpaid family workers are poor.  Women are over-represented among own account operators and unpaid family workers (the working class) and under-represented among employers (the entrepreneurial class).  In other words, there is gender segmentation, by status in employment and economic class, within the informal economy.

Risks and Constraints

For women to enjoy their fair share of the economic wealth they create, we need to reduce the risks and constraints associated with their work.  The research and experience of the global network WIEGO (Women in Informal Employment: Globalizing and Organizing) and its partners around the world suggest that the working poor in the urban informal economy, especially women, face different sets of risks and constraints, including:

  • Macro-Economic
      • Inflation: increases costs of supplies/stock and transport;  reduces ability to accumulate working capital/investment capital; and reduces demand
    • Fluctuations in Demand: low demand and slow sales→lack of sufficient capital→insufficient stock→inability to attract or retain customers→even lower demand
    • Increased Competition: reduces demand, ability to bargain, and ability to set prices
  • Urban Infrastructure
    • Basic Infrastructure Deficits – undermine productivity & result in losses
      • lack of electricity, water and sanitation at home or other workplaces – undermines productivity
      • lack of affordable and/or accessible public transport – increases opportunity costs and direct costs
      • lack of storage place – undermines productivity & results in damaged goods
      • Large Infrastructure Projectsdisrupt economic activity & lead to evictions from homes, other workplaces, natural markets, and waste collection routes/sites
  • Urban Policies and Plans
    • Biased Policies or Regulationsundermine productivity.  For example, insecure housing tenure or evictions/relocations for home-based workers; lack of permits or licenses or secure place to vend for street vendors; and lack of access to waste or ability to bid for solid waste management contracts for waste pickers
    • Lack of Integration in Local Economic Development ­– undermines productivity & limits access to public resources
    • Abuse of Authority by Local Officials – disrupts economic activity.  For example, harassment of street vendors, including bribes, confiscation of goods, and threat of evictions; and harassment of waste pickers, including being banned for accessing waste.
  • Value Chain Dynamics – the precise nature of value chain constraints vary significantly by sector but the following dimensions are common across sectors:
    • Unfair Practices: by suppliers, buyers, competitors, and/or moneylenders
    • Inability to Bargain: due to lack of market knowledge, tied relationships (e.g. supplies sell on credit), increased competition

 

Photo M.Chen.

Most of these risks and constraints are common to all informal self-employed, both women and men, within specific sectors or trades. But some common risks or constraints are more intense for certain groups within sectors and women tend to be over-represented in these groups, including:  own account workers (compared to employers); street vendors who sell perishables (compared to those who sell durables); waste pickers who work at dump sites (compared to those who work in sorting sheds); and waste pickers who recycle cardboard and plastics (compared to those who recycle metal). Other risks or constraints are specific to women as women, including: gender norms (division of labor and norms of female modesty); lack of property rights; and physical and/or sexual harassment of women.

Response

A three-pillar response is needed to reduce the risks and constraints faced by the working poor, especially women, in the urban informal economy:

Pillar I

Sector-Specific Interventions have significant potential for developing whole sectors of informal enterprises of both women and men.  These interventions should include a mix of:

    • financial services, including housing finance
    • business development services
    • backward-and-forward supportive linkages
    • basic infrastructure services
    • public transport services
    • platforms for advocacy & collective bargaining

Pillar II

Systemic Changes in the following areas:

  • Economic Policy Biases:  need to reduce the biases and barriers inherent in many economic policies against informal enterprises & integrate informal enterprises into local economic development
  • Exclusionary City Policies & Practices: need to reduce the biases against the urban informal workforce & integrate informal enterprises into urban planning and design
  • Gender Norms:  need to empower self-employed women to be able to negotiate the gender norms that constrain their time, physical mobility, and bargaining power  (at home and in the marketplace)

Pillar III

Enabling Conditions: key enabling conditions are

  • Voice: organization into member-based associations & representation in policy-making and rule-setting institutions
  • Visibility: through improved labor force and other economic statistics & credible research
  • Validity: legal identity and official recognition as economic agents who contribute to the economy

 

Sources for Facts and Figures

 Available on www.wiego.org

Chen, Martha Alter. 2014. Informal Economy Monitoring Study Sector Report: Home-Based Workers. Cambridge, USA: WIEGO.

Chen, Martha Alter, Joann Vanek, Francie Lund, and James Heintz with Renana Jhabvala and Chris Bonner. 2005. Progress of the World’s Women 2005: Women, Work and Poverty. New York, USA: UNIFEM.

Dias, Sonia and Melanie Samson. 2014. Informal Economy Monitoring Study Sector Report: Waste Pickers. Cambridge, USA: WIEGO.

ILO-WIEGO. 2013. Women and Men in the Informal Economy 2013: A Statistical Picture 2nd Edition. Geneva. Switzerland: ILO.

Roever, Sally. 2014. Informal Economy Monitoring Study Sector Report: Street Vendors. Cambridge, USA: WIEGO.

Roever, Sally and Martha Chen. 2014.  “Making Women’s Self-Employment More Viable”

Background Paper for 2014 Progress of the World’s Women.  New York, USA: UN Women.

Vanek, Joann, Martha Chen, Françoise Carré, James Heintz and Ralf Hussmanns. 2014.

“Statistics on the Informal Economy: Definitions, Regional Estimates and Challenges.” WIEGO Working Paper No. 2. Cambridge, MA, USA: WIEGO.