COVID-19 and the Informal Economy - EmbraceAbility
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COVID-19 and the Informal Economy

COVID-19 and the Informal Economy

With the World Health Organisation (WHO) recently reporting a record increase in global COVID-19 cases, it is clear that the pandemic is not showing signs of slowing down. Every country on the planet has been impacted, both socially and economically, by measures used to slow the spread of the virus. In the Euro area unemployment levels have risen to 7.8%, as job retention schemes begin coming to an end and European leaders attempt to re-start wide-scale economic activity. In many developing countries, where workers in the informal economy – defined broadly as economic activity which exists outside of government regulation and taxation – makeup as much as much as 85.8% of the workforce, the situation is more dire still; it is estimated that 1.6 billion workers have suffered massive damage to their ability to earn a living

Informal workers made up a huge 62% of all those working in 2020, representing over 2-billion people globally. In response to the pandemic and the subsequent labour crisis the International Labour Organization (ILO) released a brief in May outlining some of the policy challenges and immediate responses needed to mitigate the impact on informal workers along the following lines of action:

  • Reducing the exposure of workers and their families to the virus and the risks of contagion;
  • Ensuring those infected have access to health care; 
  • Providing income and food support to individuals and their families, to compensate the loss of, or reduction in, economic activity; 
  • Reducing and preventing the damage to the economic fabric and preserving employment.

Whilst these points are relevant to all informal workers (and all members of society generally), certain people with health conditions or impairments – along with their families and/or carers – are among those most in need of immediate support. As noted by UN Secretary-General, Antonio Guterres, disabled people are among the hardest hit by COVID-19. They face numerous additional challenges in coping with the pandemic, from accessing health care and other essential services to social protection and income security. In many developing countries this is also compounded with poverty, where disabled people are already twice as likely to live in poverty than non-disabled people

Loss of Income:

Those disabled people living in developing countries often rely on family members working in the informal economy for financial support. With an estimated drop of 60% in the income of informal workers globally in April, it is highly likely that disabled people and their carers will be disproportionally affected. Considering that many households including a disabled person typically face extra costs related to disability already, it is evident that more governmental support is needed. However, governments in developing countries often lack the necessary funds and resources to implement job retention schemes, and even when there is additional support from the state, due to high levels of employment in the informal economy workers are less likely to be eligible. In India for example, 50% of workers do not have access to any social security benefit. Although direct cash transfers have provided some relief to many of the poorest in society, informal workers often miss out due to exclusion errors. 

Access to Healthcare:

As global healthcare strategies remain focussed on COVID-19, many of those with underlying health conditions have faced reduced access to vital treatments, services, and interventions. The United Nations Development Fund (UNDF) recently conducted a rapid assessment of the socio-economic impact of COVID-19 on persons with disabilities in neighbouring Viet Nam. In a survey of 928 people conducted over a 2-week period, 70% of respondents expressed difficulties in accessing medical care. 25% also faced problems in acquiring personal protective equipment and hand sanitiser. The UN has noted that disruption to essential services can prove more detrimental than the pandemic itself, and that maintaining these should be a key tenet of the global response.  A further policy brief assessing the impact of COVID-19 on the region of South-East Asia specifically noted that two million children below the age of two might not be protected from preventable diseases this year, due to the cessation of crucial vaccination campaigns and international aid programmes. There is real concern that many of the gains made in recent years concerning healthcare delivery in the region will be reversed.

COVID-19 Through the Gender & Disability Lens:

Although data suggests men are more likely to get severely ill and die from COVID-19, it is women who are  most likely to bear the brunt of the social and economic consequences of the pandemic. Women – especially those from migrant backgrounds – are much more likely to be employed in the informal economy, representing over two-thirds of female employment in developing countries. As the informal economy offers fewer social protections, with women overrepresented in single-parent households, their capacity to shield themselves from economic shocks is less than men. When viewing COVID-19 through the gender and disability lens, it is evident women and girls face systemic barriers to equality and inclusion. According to an analysis by the UN’s Department of Economic and Social Affairs, in comparison with men without disabilities: women with disabilities are three times more likely to have unmet needs for health care; three times more likely to be illiterate; two times less likely to be employed; and two times less likely to use the internet. 

An Inclusive Approach:

An inclusive approach centred around community engagement, which recognises the specific challenges of various disadvantaged groups, should be at the forefront of the response to the COVID-19 pandemic. Recognising the contribution of informal workers, by extending existing social protection programmes to include them, will go a long way in ensuring their survival during an unprecedented global crisis. As women are overrepresented in the informal economy, more must be done to ensure the small gains made in global gender equality remain intact. In this time of reflection, essential services must also be strengthened to allow everyone to participate with dignity in our societies.