Global Economic Crisis on the Informal Economy

Assessing the Impact of the Global Economic Crisis on the Informal Economy

“Recession has hit the entire world. Wherever we go, everybody is talking about it, and each and every trade is affected by it. Recession is like a disease, how then can these workers remain unaffected by it?” Manali Shah, Self Employed Women’s Association, India

The start of the Inclusive Cities Project coincided with the onset of the global economic crisis. Analysis of the impact of the crisis on the informal economy was glaringly absent. Many claimed that the informal economy was acting as a safety net or “cushion” for those who lost their jobs in the formal economy, but with no empirical evidence to back up these claims. A rapid assessment of the impact of the crisis on the informal economy was identified by Inclusive Cities’ partners as an immediate research priority. Working with these partners, WIEGO was able to swiftly co-ordinate a multi-country study in which workers’ realties and concerns were articulated not only in their own countries, but also regionally and internationally. This built on and complemented work done by the Self Employed Women’s Association assessing the impact of the crisis on their members.

During May, June and July 2009, individual and focus group interviews were conducted with home-based workers, street traders and waste pickers in 10 developing cities. In early 2010, interviewers went back to the same participants and asked them about what changes they had experienced.

This first round of research found that informal workers and informal enterprises were affected by decreased demand, increased competition, and fluctuating prices, and that informal workers were being forced to overwork, take on additional risks, cut back on expenditure (including food and health care), and still see their incomes decline. Drawing on suggestions from workers themselves, the report makes a series of policy recommendations. Results from the first round were collated into a detailed report, a summary report and a fact sheet:

Horn, Zoe. 2009. No Cushion to Fall Back On: The Global Economic Crisis and Informal WorkersGlobal Economic Crisis Monitoring Study: No Cushion to Fall Back On

Executive Summary Fact Sheet

 

 

This report was cited in United Nations General Secretary’s report “Voices of the Vulnerable: The Economic Crisis from the Ground Up.”

In spite of some positive developments, the second round of research suggested a lag in recovery for the informal workers. Many respondents continued to face low levels of sales or orders. Incomes rose for some workers in absolute terms to mid-2009 levels, but not to pre-crisis levels and not at the rate of rising living costs. The results were again collated into a detailed report, a summary report and a fact sheet:

Global Economic Crisis Study II: Coping with the CrisisHorn, Zoe. 2010. Coping with Crises: Lingering Recession, Rising Inflation, and the Informal Workforce

Executive Summary Fact Sheet

 

 

These reports have been widely cited and presented in local, national and international policy forums.