A study on the workers of the Informal

sectors in Dhaka city

Md. Nazmul Alam TuhinSenior M&E Officer

HIV and AIDS Programme

ICDDR,B

What is Informal Sector?What is Informal Sector?

Informal sector is a very important economical area for any developing country. This is a growing occupational sector for the less skilled people that ensures considerable amounts of employment.

Kith Hart’s (1973) classic paper, introduces the terminology “informal sector”, based on a research in a low-income neighborhood in Ghana;

“Informal sector provided a wide range of low cost, labor intensive, competitive goods and services and recommended that the Kenyan government should promote the informal sector (223-32:1973) government should promote the informal sector (223-32:1973)

Kabra (1995), stated thirty terms including the survival sector, non-structured sector, and transitional activities have been and/or are currently used to describe the informal sector.

Amin (2002), compiled several terms which has been used to represent informal sector/economy by different authors to make a viable definition of informal sector, such as Non Formal sector (ILO-SAAT & UNDP :1998), Urban subsistence sector (Cole & Sanders :1985), Non-westernized sector (Hackenberg: 1980), Lower-circuit of urban economy (Santos:1979)

Formal Vs. Informal SectorFormal Vs. Informal Sector

Informal economic unit is a different one then the Formal economic unit::

Informal Sector Formal Sector

Ease entry Difficult entry

Adopted technology Imported technology

Labour intensive Capital Intensive

Unregulated & competitive market Protective market

Linkage of Informal sector (IS) with Formal sector (FS):

Forward Linkage: FS uses goods from IS as their production input

Backward Linkage: IS uses the services from FS (i.e. African informal sector)

Technological linkage: Transfer of technological knowledge & skill

Consumption Linkage: Interrelation between consumers of this two sectors

Credit Linkage: FS invest on IS

Unregulated & competitive market Protective market

Traditional & indigenous inputs predominates Overseas inputs predominates

Characteristics of Informal sector

Two characteristics mostly signify to the informal activities (Roberts, 1976).

They are labor intensive

They avoid formal state supervision and regulation.

People engaged in IS Activities in IS Land & housing in IS

1. Absence of official protection & recognition

2. Non coverage by minimum

1. Unregulated & competitive market

2. Reliance of locally available

1. Unauthorized use of vacant public or private land

2. Illegal subdivision or rental of 2. Non coverage by minimum wage legislation & social security system

3. Absence of trade union

4. Low income & wages

5. Little / No job security

2. Reliance of locally available resources

3. Labour intensive & adapted technology

4. Absence of institutional credit or other supports & protection

5. Ease of entry

2. Illegal subdivision or rental of land

3. Unauthorized construction of structures & buildings

Methodology of the study

Multiple data collection tools and purposive random sampling have been used in this study. Target population for this study were selected based on some criteria:

Age of the worker and the entering age in the job.

Workers who works in various workstations, which are mainly unregulated, family owned, unregistered and unaware of their rights.

workers who are vulnerable and do not have any kind of facilities such as workers who are vulnerable and do not have any kind of facilities such as job security, training, hazards insurance, retirement pension etc

Workers who lack formal\institutional skill and knowledge\education to be able to enter in a formal job market.

Socio-economic background of the Workers (lack of education, low social and economical status).

Methodology of the study

…..contd ….. Data collection tools ;

Questionnaire In-depth Interview Case study

A total of 154 samples were drawn from six different areas of Dhaka city, these samples were drawn from six different types of occupation sector

Close EndOpen End

Semi structured

Areas: Mohammadpur, Shamoly, Rayerbazar, Hazaribag, Dhanmondi, Tejgaon

Informal industries: Car workshop, Battery recycling workshop, Footwear industry, Street vender, Scavenger, Transport labour

workers of the Informal Sector

The study found 35 % the workers belongs in 6-13 years of age group.

56 % reported they have entered the job at the age between 6-9 years (8 & 9 is the most frequent job entering age for the IS workers). And only 6% entered at / after at the age of 18.

Almost 40% do not have any institutional education, 28% attended the primary and Almost 40% do not have any institutional education, 28% attended the primary and only 6% went to secondary school.

35% leave school just to support their family financial condition another 22%parents did not showed interest in sending them to school, because they need to earn.

Reason for not entering in Formal sector is Lack of educational requirements (26%)Contd…….

30% joined in the job at that early age in order to support their family income. 18%did not had any primary earner and another 21% says, they have served the family interest

The average income of the workers in the informal sector is 2639 taka and average monthly savings are 165 taka only. And with an average 5 member family , 39%reported of borrowing money from relatives quite often.

The study found in most cases they have to work 10+ hours (58.4%) each and The study found in most cases they have to work 10+ hours (58.4%) each and every day, 46 percent has reported, they work almost 30 days a week. Their opportunities of having governmental holidays, depends on the nature of the employee or the owner

The apprenticeship period in the informal sector is very important, in order to gain skill and experience.82% claimed they were trained as apprentice, This study found, most workers have to spend 5-7 years as an apprentice (34%). The minimum period of apprenticeship is 2-3 years

Job appointment system is not official. . There is no formal contract system, all contracts are based on verbal (informal) or kinship based. Also advance payment of money sometime becomes the medium of an ensured job. Due to informal contract system informal sector is an easy entry for the young and underage workers.

the reason for employing children and 47 % answered they are obedient workers and work for less or no money. 23 %are obedient workers and work for less or no money. 23 %reported they employ young child because parents make request..

As for the future plan 74% wants to go abroad for a better living standards and another 14% wants to start their new business.

Child workers in a ternary factory in Kamrangir char, Dhaka

7 85

14

7

1

11

63

14 15

4

12

19

3 3

19

1 2

0

5

10

15

20

Low (0-23) Medium (24-35) High ( 35+)

Car workshop Engineer workshop Welding

Scavenging Transport helper Street vender

Footware Industry Battery recycle workshop

The Living Standard Index (LSI)[1] shows the hardships of the workers The Living Standard Index (LSI)[1] shows the hardships of the workers day to day life. The study found, only 9 % respondent has the high living standard. Among the rest of the worker 48% & 42% have medium and low level of living standards. During the study it was found the young workers are in the lowest stages of Living Standards Index. Because they are the most easy to be exploited.

1] LSI indicates the quality of living standards of the people. It measures the livening standards. LSI is based on several indicators; education, income, savings, groceries purchasing facilities, frequency of meal taking, food satisfaction, medical treatment facilities, necessary facilities and utensils. For the construction of the index, fixed values have been assigned for each of these indicators.

A girl at the battery recycling workshop in Hazaribag

46.1

72.7

38.3

57.8

46.1

90.9

31.8

24.7

27.9

22.7

36.4

7.1

16.2

2.6

22.7

13.6

14.3

1.9

5.8

11

5.8

3.24

Labour market

security

Employment

security

Income security

Work security

Skill generation

security

Legal security

High

Medium

Low

Very low

Informal sector workers do not have any decent work[1]. This study follows the seven dimensions of indicators for the measurement of decent work[2] and the seven dimensions of indicators for the measurement of decent work[2] and the study found, 54 % respondents have low level of decent work dimension score. Only 5 % respondents have high level of decent work indicators. These decent work indicators are not only necessary for the adult workers; it is applicable for young and child workers too. However, the study found that child workers are in the lowest segment with lowest level of decent work index.

[1] The concept of “Decent Work” was defined in terms of four major pillars: Basic labour rights, Employment rights, Social protection and Social dialogue. (Director-General’s Report: ILO, 1999).

[2] Anker, R, I Chernyshev, P Egger, F Mehran and J Ritter (2002): “Measuring Decent Work with Statistical Indicators”, International Labour Office, Geneva

78 % Interviewed respondents experienced occupational hazards, This types of phenomenon, is also responsible brining up the concept of child labour, 39%respondents agreed they were forced to enter in the labour force because the primary earner had an accidents.

For medical treatment 24 % responded reported of going to local dispensary\compounder, 18 % goes to charity hospitals and 16 percent attend government hospital. Shockingly, almost 35 % attend hokum\ kabiraji\ footpath doctors.

About accommodation pattern, 68 % reported to live in rented house among them About accommodation pattern, 68 % reported to live in rented house among them 55 % are semi paka (Walls are made of brick, roof is tin shade). 22 % lives in sublet, among which 51 % live in tin shaded (roof and walls) house. Only 2 respondents reported that they live in their own home.

Conclusion

Data from the study clearly depicts the condition of the respondents, this can be told that, they lack all the opportunities and facilities a better life can offer. Informal economy\sector is the life line for the urban poor and those with less or no skill, they are living their life with the help of informal sector and condition the workers work in is not very comfortable.

In work they are abused, exploited, in life they are burdened, they have no pension scheme, no retirement policy, no accident insurance, not even a simple formal contract. With the verbal, informal contract and massive supply of labour, there is contract. With the verbal, informal contract and massive supply of labour, there is always a chance of loosing the precious job.

They lack many of their fundamental labour rights. The informal economy embraces a multitude of dispersed operational units and activities.

Key differences between the formal and informal economy can be traced form the angle of letter of appointment, working hours, wage rate and availability of legal provisions.

Proper state regulation and protection scheme should be introduced to help the informal sector.