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Locked down, then locked out: Informal workers face a stark recovery

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Over 60% of the world’s employed population works in the informal economy. A proportion not yet calculated of them were forced out of work during lockdowns in cities around the globe, and are now facing the reality of debt traps they entered to survive the COVID-19 pandemic.

The extent of the crisis faced by informal workers worldwide, such as street vendors, domestic workers and waste pickers, is revealed in the latest study from WIEGO (Women in Informal Employment: Globalizing and Organizing, an international non-governmental organization), COVID-19 Crisis and the Informal Economy Study. The initial findings, synthesized in the blog Informal Workers See a Long Road to Recovery Ahead — Unless Governments Act shows how the first wave of lockdowns devastated earnings and that these workers received little to no governmental support. Many had no option but to take up exploitative loans.

WIEGO’s International Coordinator, Dr. Sally Roever, says the disruption to their earnings was sudden and massive. “Our data paints a grim global picture of workers reporting they were completely out of work, with zero earnings at the height of their cities’ lockdowns,” she mentions. “In places like Ahmedabad, India, we see almost 100 percent of certain sectors in the study sample entirely out of work, like domestic workers, home-based workers, street vendors and waste pickers. In Bangkok, Thailand, massage workers were completely out of work as social distancing measures came into force.”

WIEGO and its local partners interviewed over 2200 workers in informal employment in 12 cities across the globe. Dr. Michael Rogan, Urban Policies Programme Director says almost 70 percent of all respondents reported zero earnings during the lockdown period. “Given that many informal workers earn day-to-day in order to put food on the table, this disruption in earnings had severe consequences for workers and their households,” he declares.“Several people in the study told us how the lost earnings impacted their physical and mental health, and how ultimately it manifested in hunger. In Pleven, Lima, Durban and Tiruppur, well over half the sample told us household members had gone hungry.”

The study also reveals the main ways informal workers coped with the financial fallout of the pandemic, particularly in the absence of adequate government support and relief measures.

Dr. Roever states many were using similar strategies to get by — digging into their savings, borrowing money, and pawning off assets: “What we are seeing with these coping strategies is a perfect storm. When you earn on a day-to-day basis, accumulating assets and savings is really difficult - so when we hear street vendors are drawing down savings to make ends meet, we know that means less money to replenish their stock when it’s time to go back to work”.

“Borrowing money leads informal workers even deeper into this vicious cycle. Just over 40% of respondents said they resorted to taking on debt. Not only will this complicate their recovery as they start repaying these newly-acquired debts, but many people may have entered exploitative arrangements they will find tremendously difficult to get out from under”, Dr. Roever mentions, also pointing out that the road to recovery in this unprecedented time needed to be matched by an unprecedented government response to get people back to work.

“Poverty must be addressed through employment. Labour brings not only income but dignity, community, and a sense of purpose. The magnitude of this crisis calls for governments to step up, think outside the box, and start the recovery with informal workers,” she remarks. Study participants added they still needed cash grants and food relief, but the most common perspective was that to actually go beyond survival and be able to rebuild and recover their livelihoods and incomes, they needed to get back to work.

Dr. Roever and Dr. Rogan specify this requires national and local governments to work together with informal workers’ organizations to rebuild trade lines, get workplaces up and running again, and help workers get access to markets. While national governments can extend relief measures to tackle immediate hardship and debt, local governments can collaborate with worker organizations to support employment and public health simultaneously.

For interviews, please contact Nicole Pryor on nicole.pryor@wiego.org or +64 27 239 2575 (NZT), Kendra Hughes on kendra.hughes@wiego.org (EST), or Graciela Mora on graciela.mora@wiego.org.

Editor’s Notes

COVID-19 Crisis and the Informal Economy is a WIEGO-led 12-city longitudinal study that assesses the impact of the COVID-19 crisis on specific groups of informal workers and their households. Using a survey questionnaire and in-depth interviews, Round 1 assessed the impact of the crisis at two points -- peak lockdowns (April 2020) and easing of lockdowns (May/June) -- in comparison to pre-COVID-19 (February 2020). Round 2 will assess continuing impacts versus signs of recovery in March-April 2021 compared to pre-COVID-19 and Round 1. This report presents the summary findings of Round 1 of the study. Researchers surveyed and interviewed home-based workers, street vendors, canners, waste pickers, domestic workers, motorcycle taxi drivers, masseuses. (The research provides a demographic profile of this workforce, documents their working conditions and the impacts of COVID-19)

The COVID-19 Crisis and the Informal Economy Study is a collaboration between Women in Informal Employment: Globalizing and Organizing and partner organizations representing informal workers in 12 cities: Accra, Ghana; Ahmedabad, India; Bangkok, Thailand; Dakar, Senegal; Dar es Salaam, Tanzania; Delhi, India; Durban, South Africa; Lima, Peru; Mexico City, Mexico; Pleven, Bulgaria; New York City, USA; and Tiruppur, India, with support from the International Development Research Center, Canada. The mixed methods, longitudinal study encompasses phone questionnaires of informal workers and semi-structured interviews conducted with informal worker leaders and other key informants. Round 2 will be conducted in March and April 2021.