ABSTRACT
In the early 1970s, the country missions of the International Labor Organization (ILO) and the ILO World Employment Program’s series of city studies sought to move away from a preoccupation with unemployment to a focus on employment (for a review see Moser 1978). Simultaneously, the popularization of the concept of the “informal sector,” based on Hart’s (1973) research on workers outside the regular waged sector in urbanGhana, produced a vast amount of scholarship on not only how to conceptualize the informal sector but also what policies are needed. This discussion is far from over. Four issues, in particular, are of relevance to contemporary discussions of the informal labor market. First, the evidence points overwhelmingly to the fact that the urban informal economy is not only here to stay but is growing and provides the only livelihood option for a significant proportion of the nonagricultural work force inAsia, Africa and LatinAmerica. Second, concerns relating to the informal economy in the 1970s, such as precarious, low-wage and irregular income, the lack of welfare benefits and poor working environments, remain the same in the twenty-first century. Third, a decline in regular waged work is pushing former salaried employees into the informal economy: in other words, the informal economy is no longer simply a holding ground for those waiting to enter into salaried formal sector jobs. Fourth, changes in employment practices as a result of globalization, especially in new areas of comparative advantage (such as services), are giving rise to contract-based employer-employee relationship with reduced welfare benefits – a process which some have termed “informalization” (Meagher 1995; Sassen 1997; Tabak and Crichlow 2000). The labor market of China has also experienced informalization. Informal
employment increased to more than 50 percent of urban employment by 2004, while the guarantee of welfare benefits has declined. These changes have resulted in less stable and worse paid work as well as poorer labor protection. In order to address these challenges, the state is taking action to address issues of social protection for urban informalworkers (see, for instance, Howell 2002). The intention is to gradually integrate informal workers, mainly rural-urban migrants, into a formal social security system (Lu and Yang 2003; Mi 2004). Simultaneously, a number of organizations representing informal sector workers’ interests are emerging. The forces against informalization now come from both the state and the nongovernment sector. In the past, the state did not encourage nongovernment organizations
(NGOs). However, the rapid increases in rural-urban migration and other forms of informal employment dwarfed the state’s efforts and investment. City governments could hardly cope. Starting from the early 2000s, the state began to acknowledge and work together with NGOs, though not without controls and checks (Zhan and Han 2005). All these changes make the future roles of the state, unions, NGOs, and workers in maintaining “decent” work less clear than when formal work was the single most important source of employment. India offers a good comparison and reference, not only because of the scale
of the labor force and rapid economic growth, but also because of its fairly different employment culture: the dominance of informal employment, less direct intervention from the state, and a tradition of workers’ self-organization. Access to work in India’s nonagricultural sector has been and continues to be provided by the informal economy (about 83 percent). Following the reports of the Task Force on Employment (Government of India 2001) and the Second National Commission on Labor (Government of India 2002), the government is attempting to bring about legislative reforms aimed at workers in the informal economy. Urban informal workers have had a history of seeking to organize in order to gain a more powerful voice and negotiate a range of benefits from the state and employers with varying degrees of success. This chapter seeks to explore the challenges that the urban labor market raises
for the social welfare of its workers in relation to labor market trends, state intervention, and workers’ organizations.
