This new crisis underscores old injustices in the global economy

Hero Image
Accra Street Vendor at Night
Published Date

In Italy, we are approaching one full month of lockdown. Grim reports of overwhelmed health systems from here and other parts of Europe, as well as North America, have dominated COVID-19 coverage in much of the world’s influential news media. But the focus has begun to shift to an equally devastating story from the Global South. That story is one of longstanding structural deficits in a global economy that limits the ability of people to cope under crisis conditions.

For 23 years, the WIEGO Network and its allies have been calling attention to the precarious position of informal workers whose contributions to economy and society are critically important yet woefully undervalued. Now COVID-19 is not just highlighting existing problems — it is magnifying them.  

COVID-19 and numbers

From the outset, the COVID-19 story has been dominated by numbers: the number of infected, the number who have recovered, the number who have succumbed to this terrible disease—globally and locally.

More recently, financial figures have also started to appear in headlines. National governments, primarily in affluent countries in the Global North, have been announcing emergency relief packages with bold, clearly articulated price tags. Encouragingly, some include policy interventions that recognize the realities of today’s employment structure, with self-employed and gig economy workers counted in — although through limited measures

Global union federations are playing a lead role in ensuring workers are not forgotten. The International Trade Union Confederation (ITUC), for example, has analyzed relief packages — which include emergency income replacement, paid leave (often for both the sick and those with care responsibilities), and mortgage or other loan relief — and published “Putting people first: 12 governments show the world how to protect lives, jobs and incomes”.

With some exceptions, few countries in the Global South are providing comprehensive support to those without formal jobs. Cash grant programmes that existed before the crisis tend to target the very poorest — those who fall outside the labour market, excluding informal workers. Emergency cash grant programmes being developed now also are not reaching informal workers, for a variety of reasons.

Fully 61% of the world’s workers work in the informal economy; in developing countries, that number totals 90% overall and 79% in urban areas.

That’s significant, because there are other numbers that are equally relevant in this crisis. Fully 61% of the world’s workers work in the informal economy; in developing countries, that number totals 90% overall and 79% in urban areas. Around two-thirds of all workers in developing countries are self-employed. Most are own account workers and contributing family workers, and on average, they are poor. 

Membership-based organizations of informal workers are sounding a clear warning. To survive this massive disruption, poor workers need to be seen and heard by those making both financial and health policies.

Street vendors face a new irony

Street vendors (traders) earn a livelihood in public, often crowded spaces. Recent research shows that many have inadequate access to water, sanitation, and hygiene, so telling them to wash their hands is futile unless municipal authorities provide the means to do it. Also, in cities, across the world, street vendors have long faced onerous regulations and punitive measures—including arrests and confiscation of goods—that severely impede their ability to earn a living.

The irony is that informal vendors are a vital part of food supply chains, providing affordable nutrition to those who can only afford to buy life’s necessities in very small quantities and can’t afford even discount supermarket prices.

Now, a terrible new irony: the imposition of local and national lockdowns to contain the spread of disease is threatening not just the livelihoods but the very survival of informal vendors. As Rosheda Muller, President of South African Informal Traders Alliance (SAITA), said in an open letter to South Africa’s government days before the country forced a nationwide lockdown:

Our sector arguably will be the hardest hit. Any halt or suspension of trade would be catastrophic to the livelihoods of thousands upon thousands of informal workers and their families. Unlike the public and private sector, there is no safety net for us. We will literally be left out to dry, unless government intervenes and provides some form of assistance.   

Home-based workers: Disconnected from global supply chains

On the opposite end of the visibility spectrum, home-based workers who have long known isolation are now also experiencing the brunt of COVID-19. HomeNet South Asia (HNSA) reports that women homeworkers, who produce for global supply chains, stopped receiving orders a month ago. In its appeal to the government in India (where 93.7% of workers are informal), the Self-Employed Women’s Association (SEWA, a trade union and member of HNSA) said:

Millions of home-based workers are involved in finishing or value addition such as embellishments on garments, doing embroidery, etc. Since much of the work is from shops or even from foreign orders, work is completely stopped. For example, more than 4 lakh [400,000] Chikan embroidery workers in Lucknow are out of work since the first week of March, due to fear of infection from their hands.

The fact that these women lost their income (and so their ability to meet their basic household needs) before either the virus or the lockdowns arrived reveals a structural problem in the global economy. They produce for national and international brands, earn just a tiny fraction of the retail price for the things they make, and have no lifeline when orders dry up.

Waste pickers: A need for better protection

Waste pickers have always provided essential sanitation and solid waste management services that benefit economies, public health and the environment. Yet in most of the world, their contributions are not recognized.  

The concerns waste picker organizations are raising in this pandemic are no different than the issues they have battled for many years. The first is the health risk. As always, waste pickers are at risk of contracting disease because the material that they collect and sort may be contaminated. Yet even where waste pickers have been integrated into formal systems and are paid as service providers they now must fight to get the protective gear to reduce their risks.

Why continue to work during COVID-19, then? First, waste pickers cannot survive without earnings. And second, there is the pervasive threat of privatization. If they do not continue to provide the service that municipalities count on, they risk losing their business to big corporations that want access to lucrative waste material. So, they gamble: preferring to work even if they risk infection, in order to protect what access they have to recyclable materials.

Domestic workers: Vulnerable on the frontlines

Domestic workers are frontline care workers, and like waste pickers, face the risks of exposure to the virus and need protective gear if they are expected to continue to provide important hygiene services. They also historically lack labour and social protections, including few minimum wage protections and no paid sick time. 

The International Domestic Workers’ Federation issued a statement demanding governments do more to protect these workers. Their affiliates are making similar demands around the globe, while also requesting that individual households continue to provide compensation to domestic workers if they are asked to be, or must be, absent from work.

Urgent measures needed

These brief examples from across the Global South demonstrate the urgent need for action by governments at all levels now, regardless of the level of infection or mobility restrictions currently happening. Informal workers, who have for too long borne the brunt of structural inequalities, are vital parts of economies and urban systems. Without support, those already precarious systems will collapse.  

WIEGO’s Social Protection and Focal Cities teams have undertaken a rapid assessment study across our network. Information and stories about the terrible toll the COVID-19 crisis is taking, and the remarkable work being done by our members, will be presented in the days and weeks ahead on the COVID-19 section of our website.

Para leer este artículo en español, haga click aquí.

Pour lire cet article en français, cliquez ici.

Informal Economy Theme