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Many occupations in the informal economy are not only important in their contribution to the GDP but also in their potential to build meaningful livelihoods that can shape the well-being of locals and cities alike. In the last part of the series, Sharyn Sassen explores the significance of informal economy occupations in creating better future cities.
On Cape Town’s hip and happening Bree Street there is a hub of economic activity, designer stores, trendy coffee shops and bars lending themselves to young professionals, cool kids and well-to-do city dwellers alike. And yet, just 2 blocks away there is a very different kind of buzz. The markets, streets and sidewalks of downtown Cape Town are teaming with informal economic activity. Here’s why citizens should be interested in the informal economic activity that might be happening on their block:
A little bit of research on the topic will reveal the important role of the informal economy in pro-poor economic development. You may already know that the informal sector contributes significantly to the national GDP. Although difficult to measure, some estimate the informal economy’s value at 28% of South Africa’s GDP. You may have even guessed that the informal economy acts as a buffer between employment and unemployment, providing a means of survival and the opportunity to create livelihoods that sustain entire households. What we don’t yet know is how informal economy occupations affect individuals lived experiences beyond the scope for economic development, and the implications of these occupations for their well-being.
Through the study of human occupation, occupational therapists and occupational scientists have learned how work supports productivity and participation, which have been identified as fundamental for well being (Larson, 2005). Evidence supports that work can contribute to an individual’s identity and self-esteem (Christiansen and Matushka, 2004) and can influence ill-being. For example, individuals excluded from work activities experience occupational marginalization, meaning they’re sidelined from engaging in work, subsequently losing access to some of the necessary resources for sustaining their livelihoods (Stone, 2003; Jakobsen, 2004). In addition, we’ve learned that those experiencing overemployment, underemployment or unemployment are at risk of ill-being (Townsend and Wilcock, 2004). The relationship between people’s work and their well-being is underpinned by occupational rights. That is, every individual has the right to experience work as enriching and meaningful, to develop through working, to exert choice and control through their work and to experience the benefits of work occupations despite social exclusion (Townsend and Wilcock, 2004). From this standpoint, informal economy occupations have the potential to contribute not only to economically viable livelihoods, they contribute to meaningful livelihoods and well-being for society’s most marginalized individuals.
The informal economy includes over 1 million people engaged in trade of goods and services and is comprised of an eclectic mixture of businesses that represent the diverse people groups of our cities. Businesses such as waste collection, home-based care work, car guarding, hair salons and street trade are important to healthy local communities and cities in two ways. Firstly, they provide affordable and convenient goods and services to locals. Secondly, these businesses serve as creative options for self-employment, providing entrepreneurial opportunities with low barrier to entry for those struggling to earn a living in a formal capacity. In her presentation at the 2013 Informal Trading Summit, Caroline Skinner explained that in comparison to formal businesses, informal business profits sustain a larger number of dependants in households located in poorer parts of our cities and towns. The example of women street traders in Cape Town can better illustrate the importance of these activities in the lives of those they sustain and serve, and to the well-being of our cities,. The following is based on personal research carried out through The University of Cape Town’s faculty of Occupational Therapy.
What makes women street traders important?:
Like much of the informal sector, marginalized and historically disadvantaged groups are well represented among street traders. Likewise, the role of women in street trade is significant not only for the prevailing number of women engaging in street trade but because of their noteworthy economic contributions and position as a vulnerable group. Women are also a designated group for economic empowerment in South Africa (South African Department of Labour, 1998). The gender-related development discourse of the early 1980s praised women’s work in the informal sector for contributing significantly to the economies of developing countries (Moser, 1989).
Street trade provides income for women and their households, in some cases where these women are the sole breadwinners. My study with a group of women street traders in Cape Town revealed that street trading was not only a way for them to survive, but to actively pursue positive outcomes for their lives in the face of difficult conditions. One woman trading in the central city explained it like this,
“I did this because there was no way for me to get by and I thought, let me find a way.”
For many women, informal trade offers a way to escape deeper forms of poverty and other difficult situations. All the women I spoke to described how street trading was a means for work that enabled their participation in other essential and important occupations. You see, women street traders face the unique difficulty of juggling multiple roles. These include working as the sole breadwinner, heading up their households as primary caregivers and community involvement. The demands on women street traders’ time and resources are numerous and varied, often requiring a flexible lifestyle that is poorly suited to formal employment. Low risk, flexible economic activity such as informal trade is an accessible source of self-employment that accommodates the other important every day occupations of local women. In addition, this type of work has low barrier to entry, meaning that women with low levels of education or limited work experience in retail can still enter the industry, growing their businesses from scratch and learning as they grow. Unfortunately, low risk and flexible economic activity is usually tied to lower income generation.
So, street trading is a significant livelihood opportunity for historically disadvantaged, socially marginalized or under-resourced (i.e. limited education, work experience or material resources) women, but, this opportunity comes at some or other cost.
So much more than income generation:
One of the key findings of my study was that the value of street trading went beyond income generation. The women described a number of advantages to participating in street trade, which included but also transcended economic gain. Their stories depicted how they developed a positive self-identity by seizing opportunities, tackling difficulties and fulfilling multiple roles. Street trading also served as an opportunity for the women to exercise their creativity and develop business skills through experiential learning. In addition, the findings uncovered social connectedness as a highly meaningful part of street trading. This connectedness fostered belonging, learning and assisting, which was mutually beneficial to the women and surrounding others. In fact, the women in the study often incurred personal and business costs in favour of maintaining this ‘connectedness’ to others around them, revealing the high value placed on these social connections. This is unsurprising against the backdrop of research indicating 1) that occupations afford opportunity to connect with others in a way that creates meaning beyond the occupation itself and, 2) that the greatest life satisfaction is derived from social interaction that shapes identities, values and goals. In this way, while life was certainly not always rosey, the street traders found meaning and satisfaction through their work in both the good and the difficult times.
What hinders potential of street trade for healthy cities?
That being said, difficult times are a-plenty. Street traders and certainly others surviving through informal economy work, face a number of barriers daily. Bearing in mind the above description of how informal trade relates to individuals’ well-being, we begin to see just how some of the social, structural, political and economic barriers can affect street traders’ livelihoods and their contribution to better future cities.
Many informal traders are working despite a variety of personal barriers such as limited material, financial and human resources. On top of various personal barriers (such as limited material resources, education and training), street traders face a number of external forces stifling their ability to flourish through their work. As long as these businesses face overwhelming barriers, our cities will miss out on key opportunities for historically disadvantaged and marginalized groups to secure meaningful and sustainable livelihoods, and overall well-being.
In Cape Town, street traders are working against political, social, economic and structural restrictions. They are socially excluded through others’ negative perceptions of them, often experiencing criminalization of their work and mistreatment by law enforcement officials. Political barriers experienced by street traders include lack of government contribution to their street trading endeavours, no security of tenure, restrictive legislation, limited government communication and lack of participation in decision-making affecting street trade. Some of the prominent economic barriers include poor growth in the informal sector, high levels of competition with both larger, formal businesses and with other traders selling similar things in a saturated informal market, as well as limited access to financial support systems. This host of barriers hinders informal traders’ abilities to grow their businesses, support their families and exert choice and control over their lives.
Here are some examples of the lived experiences of these contextual barriers to street trading:
Permits are expensive and not readily available due to a limited number of bays in the central city. Cape Town has fewer inner city traders and public space traders than any other South African city. Consider Alicia* for example, who recounted how she was unable to get a permit to trade in the city. Trading without a permit led to difficult encounters with law enforcement. Alicia explained how law enforcement would either confiscate or damage her limited stock, or fine her. Either way, the consequences were dire and extremely costly to recover from. At the 2013 Informal Trading Summit in Cape Town, research was presented that revealed the devastating livelihood impacts of stock confiscation, seriously regressing traders’ business activities or destroying them altogether. Alicia would spend several months slowly collecting stock again when she could afford it. Other traders mentioned they were unable to sell some of the goods they knew would move quickly because their permits didn’t allow it. Some of them would sell these goods anyway (for example selling cosmetic products when their permit stipulated textiles), risking the consequences in order to make the money needed to survive. Another well-known and respected trader, Pricilla* explained that when the city relocated street traders from various sites to the station deck in 2010, PRASA didn’t consult the traders regarding the layout, design and allocation of the stalls on the newly revamped station deck. With Pricilla’s new stall positioned on the outskirts of the foot traffic towards the taxi rank, business had seriously declined. To make things worse, a few traders selling on the stations deck describe how their stalls were ill suited to Cape Town’s weather conditions, with winter rains blowing directly into some containers, drenching traders and ruining their stock. In summer, the station deck offers minimal shade with a harsh glare reflecting off the numerous white containers and stark concrete. In fact, traders are seldom involved in most of the decisions affecting their occupation and livelihoods, with little to no say in what, where and when they trade and, poor knowledge of the by-laws and their rights. In efforts to improve the participatory process between government and informal traders, the City of Cape Town recently held an open day at City Hall where traders were invited to view and comment on new informal trading bylaws. The bylaws proposed several new bays in the city centre. The day was well attended and information about the bylaw well disseminated at the event with city officials present and engaging in with the traders, ready to answer questions. However, Pricilla says her and other members of her coalition would prefer the opportunity to sit down and discuss potential changes, collaborating with the city in creating and amending informal trading bylaws. She feels there is no guarantee that the comments she placed in the box will be seriously considered, and that there is no means for accountability around what the traders were recommending.
What does this mean for global city?
Are informal traders (and other informal economy workers) important to global cities? I’ve described how vulnerable groups are often represented in informal street trade and how this work provides an important means for vulnerable and/or marginalized groups to buffer against deeper vulnerability. Furthermore, my research with women street traders found that not only were they able to survive through street trading, they were able to thrive and experience meaning and well-being in street trading despite the difficult circumstances they faced. Street trading, as a meaningful and productive human occupation, is a means to enhance the well-being of citizens, in particular the most sidelined and vulnerable locals in our cities. As in the previous two articles on the topic, I continue to argue that the well-being of all citizens should be acknowledged as a key component of cities achieving a global status.
If that’s too much to chew in one bite, consider the comments made by The Mayor as well as Caroline Skinner (Senior Researcher at UCT’s African Centre for Cities and Programme and publishing director at WIEGO). Skinner explains that informal traders play a very important role in the daily routine of communities and are a significant part of local economic activity South Africa. They are distributors of more affordable-and in some instances research indicates better quality- goods and services) than formal retailers. Street traders provide real and accessible goods to commuters and locals within cities. Likewise, at the Summit for Informal Trading, the mayor discussed the importance of the informal sector, describing it as a “vital, and dynamic component of our economic eco-systems” and explaining how it unfolds as part of city life alongside the formal sector. She acknowledged the City needs to find balance between the “need for economic activity against the needs of the general public to use and enjoy open spaces” and to ensure that the public space and informal sector work can complement each other. The Mayor stated that “a vibrant city is one filled with the kind of activity generated by informal trading – it adds a distinctive character to the Cape Town brand”.
I believe we can safely say that the occupations comprising the informal sector (like street trading), have significant potential to affect the well-being of citizens and cities. And yet, as I learned from the findings of my own as well as other research, individuals working in this sector continue to face near-insurmountable barriers. In addition, there is scant evidence that government’s support programmes are benefiting the informal sector or affecting unemployment rates. Most of the street traders I engaged with echoed Skinner’s point at the Summit for Informal Trading: The City needs to plan ‘with’ and not ‘for’ the informal sector. Or, as one trader put it, “Nothing for us without us”. If we truly want to be on the map as a global city, how can Cape Town start to ensure best practice in enhancing and enabling the informal sector occupations like street trading to reach its potential as a key contributors in shaping healthy citizens and cities?
*Pseudonyms have been used to uphold confidentiality agreements with traders.
There are 2 comments
This is a really excellent article. We have regulations (mostly by-laws, relatively easy to change) that are totally out of sync with our economic reality – we talk about job creation, and then regulate people out of the informal economy, which for many people is the only/easiest entry point to a sustainable income. I’m glad you also addressed the issue of perceptions – too many perceive informality with disdain and fear – yet if you travel east Africa, informality is everywhere and it goes hand in hand with much lower crime and rates than we have here.
Good article. I would like to know how the issue of land is dealt with. Does the City of Cape Town make available specific land for the use of informal traders? Who owns the land? Would the owner of the land have a lease contract with the City? Sorry for all the questions. There is clearly a need for more land to be made available for informal traders, which cater for their needs.
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