Hope Lies in Informal Economy, But …

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By Wezi Tjaronda WINDHOEK A just released study of the Informal Economy in Namibia opposes the long held perception that the sector is a temporary phenomenon, recommending that the sector be given support to transform and contribute to employment creation. Due to the high rate of unemployment and a sluggish economic growth, which does not translate into formal job creation and which leads to retrenchments, the informal sector in Namibia has experienced tremendous growth. While 50 percent of the sample size had been previously employed, with the majority in the private sector, 19 percent left because of low pay, 13 percent after contracts expired, while 10 percent left after being retrenched. “The notion that the informal economy is a temporal phenomenon is unfounded as many people end up remaining in the informal sector for long periods,” said Ntwala Mwilima, Labour Resource and Research Institute (LaRRI) lead researcher, yesterday. Namibia has about 132 607 operators and workers in the informal sector with the majority (53 percent) being women. The average wages range from N$375 for workers and N$1 450 for operators, but in some cases workers earn less than N$100. The survey, carried out by LaRRI, revealed that young people within the 19 – 20 years age group dominate the informal economy, which plays an important role in employment in most developing countries, especially Africa. Presenting the key findings of the study entitled, “Namibia’s Informal Economy: Possibilities for Trade Union Intervention” yesterday, Mwilima said most people operating in the sector do not have proper operating structures and are concentrated in the retail and wholesale businesses, because these businesses do not require start-up capital. In addition to this, many were found to have no knowledge of and access to credit facilities, explaining why they use their own savings as start-up capital. The sector, said Mwilima, is also characterized by a lack of employment contracts, a lack of benefits such as maternity leave and medical aid, and long working hours. The most benefits provided are accommodation, food rations, transport and annual leave, due to the fact that the employees are normally relatives of the employers. Workers and operators in the sector face problems such as low incomes, lack of operating premises, lack of access to formal financial institutions and unfavorable municipal legislation. The survey also found that because the unions do not organise in the informal sector, the majority of the people in the sector have little knowledge about the trade unions yet the majority indicated they would be willing to join trade unions and welcomed the union’s intervention in the informal economy. For instance, the study found that 90 percent did not belong to any informal economy association. But for those that do, the majority belong to the Okutumbatumba Hawkers Association (33 percent) followed by 14 percent for the Kaman Kavango Association. Labour and Social Welfare Minister, Alpheus !Naruseb, concurred with the study, saying there has been a rapid growth of informal activities all over the country and over a period of time, but during which workers have been deprived of protection of their rights and now still remain economically vulnerable. Although the ministry conducted a similar survey in 2001, the LaRRI study, said !Naruseb, provides critical information that could have been collected by the ministerial survey. He said the findings of the study would be used to design and evaluate the overall government policies aimed at addressing poverty alleviation and eradication. The survey was aimed at examining the possibilities of trade union intervention in the informal economy. It also aimed at identifying the working conditions and main problems experienced by informal economy workers and operators, assess their access to social security, and examine their access to support services and employment relationships. LaRRI spoke to 488 operators and workers, trade unionists and informal economy associations in the Khomas, Oshana, Ohangwena, Oshikoto, Karas and Omusati regions, where there is a concentration of informal activities. Amongst the workers the study interviewed were carpenters, sales persons, bartenders, drivers, cooks, cleaners, mechanics, debt collectors, welders, general labourers, car washers, receptionists, gardeners, plumbers, brick makers, cell phone repairs, manufacturers, bookkeepers and seamstresses, among many others.