Reaching the 'missing middle': Social protection for informal workers in COVID-19

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Reaching the Missing Middle: Social Protection for Informal Workers in COVID-19
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Cyrus Afshar, Annie Devenish

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The COVID-19 pandemic represents a huge challenge to governments around the globe, not only as a health emergency, but also as a deep economic crisis, affecting both supply and demand. Millions of workers have had their livelihoods and security affected. With formal workers buffered to some extent by the protection provided through their formalized work relations, and the poorest of the poor able to cling to their pre-existing lifeline of governmental social assistance, it was the ‘missing middle’, often uncovered by any protection programmes, that governments had to scramble to reach. Many of the ‘missing middle’ are informal economy workers. As a result, the crisis has brought the needs of informal workers to the fore, making them visible in a way they had not been before.

WIEGO has tracked the responses of governments to the pandemic, documenting 63 country responses, 21 subnational responses and 22 responses from workers’ organizations to date.  By far the most common government intervention has been the implementation of emergency cash-grant programmes. No less than 51 of the 63 countries monitored, or 80 per cent of the total, have rolled out some sort of policy to protect workers’ income and livelihoods. It therefore made sense for us to start a series of social protection responses briefs focusing on this topic.

In our first brief we analyzed government grants and cash transfers to informal workers. Two important insights emerged as this research progressed. The first was that governments that already had systems in place for the delivery of such grants, like Brazil and Cape Verde, were able to respond more effectively and speedily. With cash transfers and grants fast response is crucial – every day that passes makes a difference. In both Brazil and Cape Verde, critical to the ability to move quickly were the large databases where many informal workers are registered under the social system. Brazil’s emergency cash-grant programme represented something unprecedented in scale, aiming to reach 60 million people, much larger than the 13 million household beneficiaries of the Bolsa Família. This brings us to the second insight – that governments can deliver wide-scale support when they put their minds to it.

With many informal workers remaining outside the formal banking system, the delivery of cash grants and transfers raised another important problem: alternative ways to reach informal workers, the topic for our second COVID responses brief.

Delivering support through the channels created by a pre-existing relationship between industry and workers offers one such alternative, providing an important complement to state assistance. With governments, size and bureaucracy can slow things down, whereas industry has more flexibility and can reach informal workers more easily. This means that it can respond much faster and deliver to those on the fringes of the society and economy.

Here we again turned to the example of Brazil, where the industry association of the personal hygiene, perfume and cosmetics industry sector (ABIHPEC) initiated an emergency grant to support waste pickers during lockdown. This was built on the back of a 15-year relationship between waste-pickers and industry tied to a legal framework – the government’s Extended Producer Responsibility (EPR) policy, which is part of the Brazilian National Solid waste policy. This case offers an example of how to build solidarity and the redistribution of economic resources into social protection systems.

One of the main instruments governments used to reach and deliver benefits to informal workers was digital transfers, the topic of our fifth brief. The constraints brought by the pandemic encouraged governments to use tools that existed but had not been much used.  Using a variety of technology approaches, governments have managed to deliver benefits to millions of workers in a matter of months. Countries including Namibia, Colombia, Guatemala and Thailand used mobile phone technology in grant application, registration and verification processes. Namibia also used mobile phones to deliver its emergency income grant via e-vouchers, by-passing the need for a bank account. But digital technology can just as easily create new kinds of barriers and exclusions, as not everyone has the resources to access it, or the skills to use it effectively.

On the ground, country experience has demonstrated that there is no one silver bullet solution to reaching informal workers, but what works best is when countries adopt a mix of strategies to ensure maximum reach. Digital technologies can play an important role in this mix, but it is essential that such technology is integrated into and works with existing systems. In Bangladesh, for example, efforts to link the delivery of grants to mobile numbers hindered programme effectiveness as the telephone databases were not up to date. In the case of Colombia’s Ingreso Solidario, many informal workers had difficulty accessing the payment because of a lack of internet access, mobile devices and challenges related to technology literacy.

Many of these shortcomings could be addressed by better governance channels with informal workers, so that policy-makers understand the specificities and needs of these groups of workers. We focused our third brief on the dialogue spaces between state and informal workers that were created or improved in response to the pandemic.

While these institutional spaces are important, they were not the only way informal workers engaged and mobilized to make their voices heard and demands met. Many informal-worker organizations issued their platform of demands, which were often “multi-dimensional” in that they expressed the need for policy interventions in many aspects of their lives affected by the pandemic, beyond their work income. This reality motivated the fourth brief of the series. We analyzed countries such as Argentina, Burkina Faso and Indonesia, which have undertaken multiple interventions not only to provide a source of income (i.e. emergency cash-grant) but also implemented policies around needs such as food security and health care.

The analysis of the social protection responses to the COVID-19 pandemic has brought to light two key lessons: the first is the need for an approach flexible enough to recognize the multiple needs and dimensions of informal workers’ lives. The second is the importance of having systems, institutions and spaces of social dialogue in place that are not only robust enough to support current beneficiaries, but to step up to the plate when unforeseen shocks occur.

Feature Photo Credit: Julian Luckham (COMARP office in Belo Horizonte, Brazil).

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Informal Economy Theme