Geography Reference
In-Depth Information
dating from 1985 saw reductions in protection for
workers and an elimination of wage indexation,
leaving salaries to be bargained within individual
firms (Jenkins 1997: p. 113). While such practices
may be more frequent now than in the past, they
were by no means absent in large firms prior to
the onset of crisis and restructuring. As Roberts
(1991 p. 118) notes with reference to Mexico,
'“implicit deregulation” …antedates by many
years the present policy of explicit deregulation'
(see also Standing 1989; 1991).
Aside from a rising incidence of short-term
contracts, easier hiring and firing policies and the
restriction of trade union activities, formal sector
employers have also sought to reduce their
operating costs by subcontracting production to
enterprises and workers outside the factories (see
Eviota 1992; Pineda-Ofreneo 1988). In Bolivia,
for example, Jenkins (1997: p. 119) notes that the
1980s gave rise to an increasing concentration of
manufacturing in small-scale factories and
workshops and a doubling of the percentage of
operatives working 49 hours per week or more.
In Mexico, too, the crisis of the 1980s forced
footwear firms in the city of León to farm out
increasing amounts of production to small-scale
home-based workshops and individual
outworkers. This not only helped to cut labour
costs but also facilitated greater flexibility in the
face of uncertain demand (Chant 1991a).
informal activities rose from 16.9 to 19.3 per cent
between 1970 and 1980 (Tokman 1989: p. 1067).
From 1980 onwards, levels of informal
employment have grown further, especially in
cities. Informal workers in Latin America's urban
labour force, for example, rose from an overall
average of 25.6 per cent to 30 per cent between
1980 and 1990, vastly outstripping growth in the
formal sector (Gilbert 1995b). Over a similar
period (1980-1988), disguised (and open)
unemployment in sub-Saharan Africa grew by
one-sixth, a rate four times higher than in the
previous decade (Vandemoortele 1991: p. 84). By
1985, 60 per cent of the urban workforce in the
region was informally employed
(ibid.)
. In Asian
countries such as Thailand, 50 per cent of the
urban workforce was in informal occupations in
1987 (Poapongsakorn 1991: p. 113), and for
developing countries more generally, micro-
enterprises have come to employ between 36 and
60 per cent of the labour force, even if they
contribute only 20 to 40 per cent of GDP
(Chickering and Salahdine 1991b: p. 3).
While the growth of informal employment
could conceivably indicate economic health in the
sector (Salahdine 1991: p. 37), increases during the
1960s and 1970s have usually been attributed to
labour surpluses in cities arising from rural-urban
migration (Portes and Schauffler 1993). In the
1980s, informal sector growth has been more
closely linked with the corollaries of recession and
restructuring. Important factors here include
cutbacks in public employment, the closure of
formal sector firms due to increased competition
provoked by lowered tariff barriers, and declining
labour demand in the formal sector (see, for
example, Alba 1989: pp. 18-21; Gilbert 1995a: p.
327). Another significant tendency has been for
some smaller firms to join the ranks of the
informal sector as a result of declining ability to
pay registration, tax and labour overheads (Escobar
Latapí 1988; Roberts 1991: p. 129).The latter bears
out the argument that 'informality for the self-
employed is basically a household survival strategy
in the face of unemployment and declining real
wages' (Roberts 1995: p. 124; see also below). As
Thomas (1996: p. 99) summarises, the 'top-down'
PERSPECTIVES ON THE EVOLUTION
OF THE INFORMAL SECTOR
Time-series data on informal sector activity need
to be treated with extreme caution, not only on
account of the irregular and/or clandestine nature
of informal work but also because of shifting
classificatory schemata by different governments
and regional organisations (Salahdine 1991;
Thomas 1995). Bearing in mind that this also
makes international comparisons difficult, it
would appear that in most parts of the world the
informal sector has increased in recent decades. In
Latin America, for example, one set of estimates
suggests that the share of the workforce in
