ABSTRACT
In the informal economy literature, regulation by the state is perhaps the most important criterion used to differentiate the formal and informal economy. Consequently, the term “informal economy” is frequently used for economic activities and employment relations which are not regulated by the state. There is also a perception in some policy circles that regulation of the informal economy may result in the transition to, or creation of formal employment. In this study, we examine the potential of regulation for the formalisation of employment by focusing on two sectors of the Ghanaian economy with high participation of women, namely, contract farming and trading. Our findings show that non-state actors with links to the Ghanaian state are heavily involved in regulation of these two sectors. However, regulation has very little impact on the formalisation of employment. In the case of contract farming, regulation involves agro-processing companies which supply farmers with inputs in return for agricultural produce at the end of the farming season. While these companies create employment in rural communities, the majority of those they employ (particularly the women) are engaged as casual labour. Furthermore, agro-processing companies fail to pay attention to the labour conditions of household members and the hired labour who work for contract farmers. The only practice with some semblance of formalisation relates to restrictions on the use of children and pregnant women as labour. However, such practices, which are primarily driven by global certification initiatives, are prominent mainly among export-oriented firms. In contrast, the regulation of trade is primarily undertaken by local governments. However, these institutions prioritise regulation of women’s economic activities over issues of labour conditions and employment relationships. While a large share of local government revenue is generated from taxes on trading activities, traders often complain about sub-standard infrastructure and services in the markets. Critically, due to current approaches and poor implementation of social policy by the state, many traders, as well as farmers, are left without benefits such as medical care and social security.
