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Most of the world’s 2 billion ‘informal workers’ missed out on COVID-19 assistance

Informal workers are largely excluded from labor and social protections, often because of historical discrimination. A new initiative aims to help them recover.

Most of the world’s 2 billion ‘informal workers’ missed out on COVID-19 assistance
[Image: StudioM1/iStock]

According to a study conducted across 12 world cities, from Accra, Ghana, to Lima, Peru, almost 70% of informal workers reported zero income during COVID-19 lockdown periods. In just the first month of the pandemic, informal workers living in poverty doubled, from 26% to 59%, and their average earnings were 21% of pre-COVID-19 figures in 11 of the cities.

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Yet, as a huge portion of the 2 billion informal workers around the world lost incomes, in many cases they did not receive recovery assistance that formal workers did; only 42% received governmental food relief, and 41% cash support. That discrepancy is ongoing as governments strategize their economic revivals. “There is a real risk that economic recovery will come at the expense of informal workers,” says Sarita Gupta, director of the Future of Work(ers) program at the Ford Foundation, a philanthropic institution focusing on advancing human welfare.

Today, the Ford Foundation launches a $25 million fund to invest in the global movement to aid the protection of informal workers worldwide. The five-year grant will help fund organizations that do grassroots work on behalf of these workers, so that they can further their advocacy when it’s most needed. The hope is that the grant will allow grassroots efforts to keep pushing policymakers to include informal workers in their long-term economic recovery plans, including reinforcing labor and social protections for a group that’s continually been excluded.

Informal workers is the term given for 25% of the world’s population—and 58% of working women—who are employed as domestic workers, home-based manufacturers, waste pickers, and street vendors. In these roles, many are not formally registered or regulated by the government, and therefore aren’t protected by any labor or social programs that might exist. In the developing world, 90% of people employed are considered informal; even in the U.S., the figure is as high as 20%. “They do not exist in the shadows,” Gupta says. “They’re simply the economy.”

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Due to the lack of protection, they’re susceptible to falling below the poverty line whenever a crisis occurs—even while their work has been critical during lockdowns, in caring for families and supplying and producing affordable food. “These workers have long been living at the margins,” Gupta says, “and COVID drove informal workers to the systemic edge.” Because they aren’t registered by the government, they don’t pay payroll taxes; so, for instance, when U.S. cash relief payments were distributed via the IRS, these workers didn’t receive any funds.

They’re often excluded because of systemic faults or historical discrimination. “There’s an assumption that these are workers skirting a system,” Gupta says, “when a system doesn’t actually exist.” In the U.S., domestic and agriculture workers, often Black, were deliberately cut out from the Fair Labor Standards Act in the 1930s.

Nonprofit organizations around the world are striving to ensure that workers today do get fair protections. The Ford Foundation’s grant will go to WIEGO, a research policy network that aims to empower the working poor, which will then regrant the money to its network partners around the world, including the International Domestic Workers Federation, and Streetnet International, which represents street vendors. Where people actually have received their governmental benefits during the COVID-19 crisis, it’s been due to these organizations. They work to influence policy change for the informal sector, advocating for minimum wage as well as access to paid sick days and other benefits.

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There have been some successes. In New York City, street vendors persuaded the City Council to issue 4,000 more street vendor permits, erasing a cap in place since 1983. In Argentina, informal worker unions demanded to partake in the country’s Emergency Social Committee, securing increased food relief for the most vulnerable. And in Brazil, a direct payment grant, the Auxilio Emergencial, which paid more than four times the poverty line, did reach many informal economy workers among the 66 million total recipients.

The advocacy work is arguably even more important as governments craft their longer-term visions for recovery based on learnings from the pandemic. And, worryingly, more than 100 governments have shifted to austerity policies, tightening budgets even in times of crisis, which takes the greatest toll on the working poor. It’s imperative that these governments see that a strong informal sector is a boon for economies, Gupta says, noting, “They need a seat at the table. They need a voice in the actual design and, frankly, implementation of these types of policies.”


Corrections: We’ve updated this article to reflect that 58% of working women, not all women, are informal workers.

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