Hierarchies of Earnings & Poverty Risk

The statistical evidence summarized in the “Links with Poverty” section suggests a hierarchy of earnings and poverty risk across the various segments of the labour force, as illustrated in Figures 1-3 below. While average earnings are higher in formal employment than in informal, there is also a hierarchy of earnings within the informal economy. Employers have the highest average earnings, followed by their employees and other “regular” informal employees, then own account workers, followed by casual wage workers and domestic workers, and finally industrial outworkers. Within this hierarchy, women are disproportionately represented in segments of the informal labour force with low earnings (Figure 1). The fact that women tend to be underrepresented among informal employers and “regular” informal wage workers and overrepresented among industrial outworkers leads to a gender gap in average earnings and in poverty risk within the informal economy. Average earnings are lower and the risk of poverty is higher among all women workers in the informal economy compared to all men workers within the informal economy.

The hierarchy of poverty risk among households depends on whether households have some formal sources of employment income or are solely dependent on informal sources (Figure 2), and also on what type of employment is the primary source of employment income (Figure 3). Figure 2 illustrates that households which rely primarily on informal sources of employment income face higher poverty risk than those that rely on formal sources. Figure 3 illustrates that households which depend on the most precarious forms of informal employment as their primary source of income are likely to have substantially higher poverty risk than those that have access to more stable and better quality employment.

segmentation of informal employ by avg earnings and sex

poverty risks of households by sources of income

poverty risks by primary source income