chapter  3
20 Pages

Subcontracting and homework in the value chain

There is much that distinguishes the formal from informal activity/enterprise. Normally formal sector activity is characterised by capitalist enterprise, the informal by family ownership; barriers to entry as against ease of entry; capital intensity as against labour-intensive technology; formal training as opposed to skills being acquired outside of formal education; within the ambit of government policy as against being outside government control; often unionised versus normally being non-unionised; regulated markets versus highly unregulated markets for labour, capital and products (Lund and Srinivas, 2000). But in many industries, it is subcontracting that provides the link in the chain between the formal and the informal parts of the production process (Horn, 2004). Homeworkers form a significant part of the informal sector in most developing economies, but are often linked to the formal economy through a value chain.