Nearly 3-million South Africans rely on the informal sector for their daily bread. Until now, the general consensus has been that this is a good thing: the informal sector represents the self-starters — those self-reliant and enterprising members of society SA so desperately needs. But the coronavirus has shown us that there has been a tremendous and cruel gap in our thinking about employment. And, in some ways, the war rhetoric that has come to dominate this time of crisis provides a good basis for understanding why.
UN secretary-general António Guterres has been one of many leaders to compare the crisis unleashed by the Covid-19 pandemic to a war, arguing that the disease "represents a threat to everybody in the world and ... an economic impact that will bring a recession that probably has no parallel in the recent past".
"The combination of the two facts and the risk that it contributes to enhanced instability, enhanced unrest and enhanced conflict are things that make us believe that this is the most challenging crisis we have faced since World War 2," he said.
The battle against Covid-19, however, has generated something quite different from the traditional war economy.
Writing in Foreign Policy magazine, Nicholas Mulder notes: "Governments have almost universally shut down rather than ramped up production. As one financial analyst pointed out, ‘lockdown economics’ is in many ways the exact opposite of the wartime economics of total mobilisation."
Where both world wars saw the unprecedented enrolment of workers in mass production, he argues, the coronavirus has instead disrupted supply chains. This, together with social distancing, is "currently putting millions of employees in the manufacturing and service sectors out of work".
What has been interesting is observing the exclusionary nature of the government’s large relief measures for workers and businesses taken out of work — entirely incongruent with the sacrifices everyone has been asked to make.
Interestingly, while the relief measures resemble something of the "post-war consensus" — that is, a wide welfare state — it’s clear that those in the informal sector are being left out.
Take construction, for example. While the sector employs more than 1.3-million people, by Stats SA estimates, informal activity accounts for 16%-17% of total construction.
This type of construction remains "outside work". And so, while those who are part of "viable businesses" and formal employment will benefit from government’s relief package, those who have until now been regarded as skilled, self-reliant and even "artisans" will be out of work and vulnerable, finding it hard to get permits to work under current regulations.
The warnings were there, but we somehow romanticised the self-employed in the informal sector.
Writing on The Conversation Africa website, Mike Rogan and Caroline Skinner argue that while the informal sector creates jobs, "working conditions are often difficult, with few protections against shocks. This points to the importance of tackling decent work and social protection deficits in the informal sector."
It is the government’s failure to have done so that has become so clear during this economic shock. And its response to the crisis itself — to offer assistance through measures that protect only those workers in the formal economy — will further marginalise the informal sector.
It’s not just SA. The World Bank has said this about Sub-Saharan Africa: "The region has a particularly large informal sector that is distinct from other developing regions in size and composition. The informal sector accounts for almost 90% of total employment, especially in the agriculture sector. It comprises both small and large firms."
But the issue is magnified in SA as a result of migration. Shutting down the informal sector has thus left millions within our borders vulnerable.
Until now, the consensus has been that technology would disrupt work and create major vulnerability in the labour force. However, it seems we slept on the idea that other shocks waited in the wings.
The question now is how to think about organising our world — both during and in the wake of this crisis.
Finance minister Tito Mboweni observed during a recent press briefing that the new economy will involve the protection of local workers from immigrants. That seems wholly inadequate as a diagnosis of what the future economy will be about.
If it’s to be sustainable, the new economy will have to be based on serious reflection about the vulnerabilities revealed by the current crisis — including myths about entrepreneurship, our position in global value chains and the protection enjoyed by workers, wherever in the economy they may be.
- Payi is founder of Nascence Advisory & Research
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