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Informal Economies  

Ernest Aryeetey

The expressions, “informal economy,” “informal sector,” and “informal employment” reflect statistical terms and definitions used to describe various aspects of informality. They are the result of several decades of work to develop a framework that adequately represents the multifaceted nature of informality as it applies not only to developing countries, but also to other transition and developed economies. The informal sector is generally viewed as the set of activities of small unregistered enterprises, while informal employment refers to employment within the formal or informal sector that lacks any form of protection, whether legal or social.1 The informal economy is a broader concept that encompasses all of these elements in their different forms, including their outputs and outcomes. The many different views about the drivers and composition of the informal economy in Africa have influenced various prescriptions and policy responses. On the one hand, some have viewed informality as being inimical to investment and growth, given that the activities undertaken usually fall outside of official regulation and control. The policy response has, therefore, often been to clamp down on or formalize the activities and relationships within the informal economy. On the other hand, informality is sometimes viewed as critical for growth and poverty reduction, given that the informal economy is inextricably linked to the formal economy while also serving as an important source of livelihood for millions of people. As a result of this, some effort has recently gone into providing a more supportive environment to enhance productivity within the informal economy and minimize its inherent vulnerabilities in the last decade. In the face of increasing globalization and access to new technologies that will drive the future of work, there is concern about the future of informal economic activities. Whether new technologies lead to a decline or upscaling of the informal economy in Africa will depend on several elements. Technology will not only shape how informality in Africa is viewed, but will influence the kind of activities undertaken, its links with the formal economy, and ultimately, the public policy response, which will itself be shaped by advances in technology.

Article

Beyond Formal-Informal Dichotomies  

Alan Smart and Martijn Koster

Debates on informality have been mainly structured along dichotomous formal-informal, regular-irregular, or legal-illegal lines, where government and the law equate to formality. Ethnographic studies, however, have often demonstrated that formality and informality coexist. An increasing number of scholars have emphasized that the formal and the informal are always and everywhere intertwined. Domains that seem very formal contain informal practices and vice versa. We critically discuss five prevalent binary approaches to formality-informality: economic-non-economic, legal-illegal, institutionalized-informal politics, temporal dichotomies, and the division between form and “formlessness.” Countering these approaches, we outline anthropological insights on how formal and informal are better seen not as a dualism (binaries) but as a duality (a spectrum) of modes of interaction and performance, where each is entangled with, and inseparable from, the other and invariably invokes the other mode when one is performed.

Article

Latin American Labor Regulation in the 21st Century  

Matthew E. Carnes

The labor market of the 21st century is evolving at a rapid pace, making traditional manufacturing and agricultural jobs increasingly precarious and generating significant pressure for turnover, retraining, and adaptation by workers. Latin America’s labor regulation, adopted in the middle of the 20th century to foster industrial development and incorporate urban workers, has been slow to adapt to these conditions. Its restrictive and costly hiring and firing rules offer stronger protections than in many other parts of the world, but they often apply to a diminishing minority of laborers. Despite a few exceptions, once-strong unions have been hollowed out in the region, and workers have become increasingly atomized in their job seeking. The region’s educational systems are plagued by underinvestment, and they struggle to provide the needed technical skills that could galvanize investment that would provide higher-wage employment. Large segments of the workforce—a majority in most countries—find themselves in the informal sector, in jobs that are not registered with the state and that do not make contributions to pensions and social security systems. Why has Latin America—a region endowed with a variety of natural resources and a resilient entrepreneurial spirit—exhibited these patterns in its labor market regulation? The answer lies in an overlapping nexus of economic and political influences in the region. In this complex mix, one strand of scholarship has documented the lasting and recurrent alliance between organized labor and political parties on the left. Another strand has highlighted the concentrated power of business interests—both local and transnational—that have had the power to shape policies. And a third body of research concentrates on the electoral dynamics that have given rise to a growing set of politically motivated policies that seek to support informal sector workers, but may incentivize their remaining in that status. Finally, considerable attention has been given to the under-resourced state agencies that are not adequately monitoring labor regulations, allowing for widespread evasion of required payroll taxes. A change-resistant cycle has predominated in the region, in which protected insiders in the unionized sectors seek to preserve a set of protections that apply to a shrinking few, while politicians court support among outsiders with direct benefits that address immediate needs but have not yet achieved long-term or intergenerational change. Business interests have largely benefited from the status quo of labor law evasion and social security avoidance, so they have been slow to invest in upgrading the workforce or changing technology that would inspire additional investment in education. Addressing this situation will require efforts at both the political and economic levels, perhaps loosening the partisan ties that lock in preferential policies, as well as increasing the skill levels that would attract higher-tech industries and higher-paying jobs.

Article

Money and Currency in African History  

Jane I. Guyer and Karin Pallaver

African peoples have managed multiple currencies, for all the classic four functions of money, for at least a thousand years: within each society’s own circuits, in regional exchange, and across the continent’s borders with the rest of the world. Given the materials of some of these currencies, and the general absence of formalized denominations until the colonial period, some early European accounts defined certain transactions as barter. The management of multiplicity is traced through four eras: a) the precolonial period, with some monies locally produced and acquired, and others imported through intercontinental trades, such as the Atlantic slave trade, and eventually under the expansion of capitalism to Africa; b) the colonial period, when precolonial monies, in some places, still circulated with official monies; c) postcolonial national monies for the new African states; and d) the most recent phase of multiplicity in use, due to migration and sales across borders as well as to the use of new technologies, such as mobile money. The management of multiplicity thereby has a long history and continues to be an inventive frontier. History and ethnography meet on common ground to address these dynamics through empirical study of money in practice, and broader scholarship has drawn on a large variety of original sources.

Article

Labor History of East Africa  

Bill Freund

This paper concerns the long-term evolution of labor in East Africa up to the twenty-first century. While it considers the classic themes of labor history, trade unions, strikes and politics, it is concerned with the broader question of how people relate to their environment, how their work is organized and what the economic consequences are. Taking 1500 as a bottom line, it proceeds to look at changes before and with the coming of imperialism and colonialism and the contradictions of colonial labor policy. It also considers how labor conditions have altered since independence. Mau Mau in Kenya and the institution of villagization in Tanzania, which both shed a light on labor conditions, receive particular attention. Since the majority of the population even in the twenty-first century are rural dwellers, there is much concern with agricultural and pastoral activities. If the greatest concentration is on Tanzania and Kenya, East Africa is defined broadly in part for purposes of comparison.