From the Local to the Global Arena; the Informal Worker Question
Introduction
The topic chosen as the theme of this historic Conference is very significant. It shows the growing concern of thinkers and practitioners with the workers in the informal economy and it shows that this situation is something that cuts across both the national and global arenas. It also points towards the fact that a lot of things remain unresolved about understanding the informal economy, particularly the working class component in it, with the phrase; “the informal worker question”.
What I will try to so with this paper is to put in perspective the following: different views on what the informal sector is; some insights into how workers in the informal sector have been/are being organised locally and globally’ policy challenges in addressing the informal worker question for government and other stakeholders; possible challenges for informal workers’ organisations and particularly the emerging Federation of Informal Workers’ Organisations of Nigeria (FIWON).
It is important to point out a few things here. Probably the most important is that this is not an academic paper. It is geared towards equipping informal workers with views and perspectives, while realizing that the greatest teacher of any worker might be real life. This however is not to say that this paper will not be concerned with theory. On one hand, I do think that to believe that informal workers or indeed any average worker for that matter can not understand theoretical issues is to look down on people, many of whom have deeper intelligence than we intellectuals who often argue that we need not include “theory” in our presentations, but just dwell on the “practical” tasks. The challenge rather in my own view is how we can break down the heavy jargons of theory into more digestible building bricks. On the other hand, the emancipation of the working class, across the formal and informal sectors division, can only be done by the workers themselves. If this is so, workers must be equipped with the deepest tools of thinking arranged in the simplest manner possible and then we will see that really, even a cook can run a state.
We shall however not limit ourselves to theory; indeed theory and practice are usually intertwined. The main theoretical section here will be the first one. We shall then look deeply at practical issues towards addressing the informal worker question.
Understanding the informal economy
The term “informal sector” or “informal economy”, gives us the idea immediately that there is a “formal sector” or “formal economy”. But, what is the dividing line and how did this come to be? Some people have argued that there has always been informal sector and that the form of production before the modern form of industrial production started was an informal economy. The matter might however not be as simple as that.
In the period before the industrial revolution started in England over two hundred years ago, there were various ways in which human beings went about organising the production of their basic needs. The most predominant one for a long time was what is usually called “feudalism”. This simply put was a society in which the dominant property in the process of production was land. There were the landowners who were lords, barons, earls, etc, all of which were titles for chiefs, called the nobility and kings. Then there were those that farmed these lands and paid tribute in the form of a good part of their produce to the landlords. These were known then as serfs.
There were also artisans in the towns in this period in the England and the rest of Europe. It is not our intention here to go into the history of that period. What we are concerned with is that virtually all forms of production then were “informal”. But until a formal sector was established in the factories and mines through the industrial revolution, where employers who workers without any property entered into contracts with capitalist who owned the factories, mines and machineries for working in these workplaces entered into formal contract, we could not talk of an informal sector, in the true sense of the word. What we had then was the division between the traditional sector and the modern, industrial sector.
The informal sector had actually existed from the very beginning of industrialization which created the modern, formal sector. The factories, mines and other workplaces had never been able to provide employment for the large number of people who trooped regularly from the villages in search of work in the cities. Slums and ghettos where thousands of workers and unemployed men and women lived had long been the sites of survivalist economic activities by these people which included a broad range of what is now characterized as the informal sector and even crime.
Informal work relations however existed even within the formal sector and dominated it, at this early period. All early workers were practically informal workers, even within formal enterprises. They had to wage intense struggles to become formal workers with recognition and rights before the law, by forming unions which themselves were initially illegal.
As workers in Europe formed unions, and trade union centres, with which they fought successfully for improvements in the working and living conditions; such social safety nets as unemployment benefit, employment exchange centres, universal access to healthcare and education all served to make the informal economy become more and more invisible in Western countries, especially as industrialization expanded and almost full employment was won in those countries, from the period after World War II to the late 1960s, known as the “Golden Age” of capitalism.
There have been two broad waves of deep discussions and practice around the informal worker question and organisation. The first commenced in 1971, just before the neoliberal attacks against working people and the popular sectors which has lasted till today, began. That year the Self-Employed Women’s Association branched out of the Textile Labour Association with the initial support of that union . That same year, Hart conducted some studies for the ILO in Ghana which gave birth to the term “informal sector” by showing that there were forms of employment and income opportunities that were not part of the formal sector but which also could not be considered as part of a traditional economy.
Several thinkers and policy-makers gave deep thought to trying to understand and interpret this “urban informal sector”, particularly over the last thirty years in which neoliberal globalization has led to drastic constriction of the formal sector in most countries and the extensive expansion of informal work relations. Most of the earlier academics who addressed the matter saw informality as something in passing, which was “invisible”. They described it as: an irregular economy ; a subterranean economy; an underground economy . A common feature of all these interpretations is their view of the informal economy as being, unregulated activities by enterprises on the margins of capitalist development which “would tend to be absorbed by the modern economy” .
This line of thinking is described as “dualist”. This is to say it sees the relationship between the formal and informal sectors as two opposites in which the more modern formal sector will eventually swallow the informal economy.
Major disagreements with the dominant traditional view emerged early in the 1980s . McChrohan and Smith (1986) further propositioned the informal economy as an interpretation, laying the basis for a rethinking which would influence the adoption of this perspective and the consequent expansion of the conception of informality beyond enterprises into the broad scope of employment relations by the International Conference of Labour Statisticians in 1993. The new view of informality grasped the permanent nature of the phenomenon, realized its many and diverse linkages with the formal sector and its own heterogeneity or broad mixture of types.
The rigorous analyses which were done with the new view of work informality which accepts the permanence of the urban informal sector and the loss of membership by trade unions grounded in the formal sector into the informal economy, due to restructuring and downsizing, served to bring attention to bear on “informalization and the crisis of representation” . This in the simplest term is about how the largest number of workers, particularly in developing countries, being in the informal economy, have little or no voice and power because of their lack of representation at the workplace, and in the broader society.
Some of the features of the “crisis of representation” of the urban informal sector relate to the understanding of the components of what comprise the informal economy. There are those who believe that producers in the informal economy are “neither capitalists nor workers but rather constitute a distinct social class” . Some as well stress the illegal dimensions of the informal economy noting the difficulty of legal voice for what they consider as an illegal sphere of economic activities.
The informal economy is does however cover a broad spectrum of class positions, including employers, self-employed/own-account workers, wage workers and even outsourced wage workers in the modern industrial economy. Martha Chen in figure 1 below puts this graphically.
Fig 1
Source: Chen, M. 2003
We thus see that there are workers as well as employers and the self-employed in the informal economy. Some other thinkers like Devan Pillay (2008) for example argue that even many self-employed persons in the informal economy could be categorized as workers. This is due not just to their low wages but equally due to their relationship in the broader society to the bug capitalists.
We might avoid going into the details of the correctness of this position for now due to space and time. It is however important to observe that a major challenge that the typical working class faces, particularly in societies like Nigeria where it is a relatively small proportion of the population, is how to bring consistently give leadership to and bring the bulk of working people to recognize its world view and standpoint, as being in the interests of their social and economic emancipation. Thus, organising the employers and self-employed persons within the informal economy under the banner of informal workers is a major step forward in building progressive working class politics that promotes a united front of struggle for the transformation of Nigeria into a better society.
The Urban Informal Sector: people’s practice and government policies
Human beings as individuals and groups in carrying out daily activities for their continued survival enter into economic practices involving relations with other persons and groups of persons. These practices lead us to thinking resulting in the formulation of social and economic theories. But theory also now affects our practices. The way we go about activities in the economic and other spheres of our human existence is influenced by one theory or the other even when we are not consciously aware of this. Governments also carry out practices which are determined by some theory or the other and which defend the interests of groups or classes of people that control that government or the state as a whole. The practices of governments are carried out through policies.
In this section we shall look at how the informal economic practices of working people have evolved in Nigeria over the years and the policy approaches that the Nigerian state through its different governments have brought to bear on the urban informal economy. We try to show the linkages in the two and how they relate to the development of theory and practice of informalization world-wide. Our main focus is on the urban informal sector, not because we consider the rural informal sector as being unimportant. On the contrary this is because the informal economy in the urban areas gives us a sharper picture of the non-agricultural informal economy. Since with the poor level of mechanization of our agricultural sector, a great deal of agricultural practices is subsistent, with informal family relations being probably dominant, it could blur the more impersonal dimensions of informality in the heart of the cities and towns.
The rate of urbanization in Nigeria is one of the highest in the world. At 5.5% per annum, the rate of expansion of the urban areas is almost double the rate of the country’s population growth as a whole, which is 2.9%. The proportion of Nigerians living in the cities and towns increased from 39% in 1985 to 43.5% at the beginning of the 21st Century. It is presently about half of the entire country’s population and is expected to be over two thirds within the next ten years . The number of urban centres in the country itself has expanded with the creation of new states and local governments from the three regions structure we had at independence.
Today, there are over seven cities with over 1million residents and more than five thousand towns which have between 20,000 and 500,000 residents. Due to the poor records keeping culture in Nigeria in general and the informal nature of the sector itself, information on the scope, structure and dimensions of the informal economy are inadequate. Generally though, it is estimated that while the proportion of the urban workforce in the informal economy immediately after independence in the 1960s was about 25%, it is today between 50% and 65%.
The history of development of the urban informal sector in Nigeria is a long one. There were cities in what later became know as Nigeria even before the arrival of the British colonialists. These included; Kano, Ile-Ife, Arochukwu, Zaria, Ibadan, Calabar, Abeokuta, Sokoto, Benin, Maiduguri, Oyo and Eko . These were seats of political power and religious authority, centres of trade and military bases. Crafts developed in these old urban areas like pottery and blacksmithing, carving and bronze-smelting. These flourished with agriculture and would make them sites of the new informal economy as the modern formal sector took its roots in their communities, re-ordering the lives of the peoples of these lands into the singular overall order of the a rudimentary capitalist economy. In these cities, we note extensive layers of informality, particularly in the crafts. Some of these are part of the tourism trade (such as in pottery, bronze materials and beads), and others part of the newer forms of the informal economy.
In general though, the spread of the urban informal sector could be traced to the growth and development of the early capitalist incursions of the British colonialists. As the railways and ports through which they siphoned off our mineral and agricultural resources grew and with these road networks and administrative centres where the colonial government’s resident and district officers ruled from; cities and towns grew along the ports, railway and road terminuses and administrative centres. In these cities and towns, wage labour took shape with clerks, potters, conductors, drivers, locomotive technicians on the pay roll of the colonial state and companies such as the Royal Niger Company and later the United African Company (UAC), PZ, Leventis Mandillas, Chellarams, etc.
The earliest informal economy activities in these cities and towns were the petty traders and small shop keepers who would sell foodstuffs, beers, cigarettes and other commodities to the workers in these firms, often on credit to collect payment at the end of the month when the workers got their wages.
The British did not favour this. They never conceived of cities as sites for industrialization. Indeed they never saw a need for the industrialization of the colony which they sought to bleed for their own country’s development. They were not concerned with jobs creation, seeing the employment of “natives” as being at best a necessary evil. Housing for these native wage workers was never planned. Housing was actually a tool for segregation with the Government Reserved Areas (GRAs) meant for the expatriate Europeans and at best a few cooks and gardeners in the boys’ quarters. For the Informal worker and the wage worker alike, home was in the slums around the mines and towns.
Independence came on October 1, 1960 and with it came hope for the millions of working people in the formal sector and urban informal economy, the rural farmer and the idealist youth. There however seemed to be some basis for such hope initially, even if such was slight. The earlier attempts at pursuing Import Substitution Industrialization as stated in the first two National Development Plans of 1962 – 1968 & 1970 – 1974, saw to an increase in the number and proportion of workers in formal employment.
In the 1960s and early 1970s, the informal economy was not perceived as a distinct sector by the Nigerian state. On one hand, it had the dualist view that a large number of those in informal work relations would be absorbed into the modern economy with its envisioned industrialization project. On the other hand it categorized some informal activities as being traditional craftsmanship or petty trading while some others it saw as being small-scale enterprises which could be considered as micro-units within the formal sector. However, many more Nigerians kept flocking in from the villages to the cities in search of better lives, compounding the problems of informality still.
In the mid-1970s, the government set up some bodies to address the informality question by way of increasing the level of productivity of activities in the informal economy. The two major ones where: the small Industrial Development Centres (IDCs) in several cities and; the Small-Scale Industry Credit Scheme (SSICS) which was meant to provide micro-credit and technical expertise to small-scale entrepreneurs. These were part of the drive at indigenization which the Gowon and later Muhammad/Obasanjo regimes pursued.
There was however little protection for the small-scale entrepreneurs against the influx of cheaper goods imported by foreign multinational companies and even larger, so-called indigenous firms. The consequence of this was that very little production took place in the informal economy. Informal sector practice was largely restricted to buying and selling, provision of services and transportation. The informal economy remained not just a means of survival for informal workers but as well the avenue for formal wage-workers to survive as they could buy cheap quality and lower-priced goods and services, often on credit from the petty trade, barbers, shoe shiners, etc on the streets.
The lives of workers in both the formal and informal sectors took a turn for the worse in the 1980s. The freeze on workers wages while the prices of commodities rose through the rooftops led to increased poverty. The government started selling “essential commodities” like foodstuffs such as imported rice which the retail seller in the informal sector used to supply workers. Many government functionaries like Umaru Dikko and Adisa Akinloye became billionaires overnight while workers in the formal and informal sectors alike grew closer to starvation and penury.
Matter got only got worse, particularly for the urban informal sector when the Shehu Shagari-led 2nd Republic administration was overthrown on December 31, 1983 by the Buhari/Idiagbon-led junta. Its War Against Indiscipline greatly targeted the urban informal sector. Kiosks where pulled down, shantytowns where many informal economy operators lived were destroyed and hawkers were continually harassed. Yet, no significant improvement in the lives of the citizens or economic development as a whole was recorded.
In 1985, when the Ibrahim Badamis Babangida junta came to power, many heaved sighs of relief. On the face of it, the IBB administration with the Structural Adjustment Programme it adopted from the IMF despite Nigerians rejection of IMF and its conditionalities seemed to have concern for the development of the informal economy. What with all the talk about building self-employment and the consequent retrenchment of tens of thousands of workers in the informal economy, it seemed that the urban informal sector would receive the attention it deserved. This was however not to be the real case despite the establishment of structures that on the face of it seemed geared to empower self-employed persons.
There were three basic ways that SAP affected the informal economy negatively. First, the costs of commodities that informal economy workers bought to sell or in-puts used for petty commodities produced increased with the devaluation of the naira. Second, at the same time the real wages of workers in the formal sector declined, making it more and more difficult to pass off the added costs to them in sales. And third, the retrenchments that went with SAP saw to large numbers of people that used to be wage-earners in the formal sector coming into the informal economy in search of means of survival.
The IBB government established structures that were supposedly meant to alleviate the conditions of informal workers and create more employment as well. These included the National Directorate of Employment (NDE), the Directorate for Food, Road and Rural Infrastructure (DFFRI), the People’s Bank and Community Banks. Billions of naira were committed to these white elephant projects with very little to show for these in terms of providing better life for Nigerians in general and informal workers in particular.
The National Directorate of Employment was established in 1987 to stem the rural-to-urban drift and improve youth employment. The National Open Apprenticeship Scheme, which was part of the NDE was supposed to train and place youths in gainful informal employment relations within the cities. Only a very tiny percentage of youths or even older informal workers benefited from both the NOAS and NDE in general. The programme was marred with corruption, diversion of funds meant for its programmes and nepotism.
The People’s Bank and Community banks were developed along the lines of the Asian micro-credit schemes’ model. Between 1990 and 1992, over 200 People’s and Community Banks were established. They had assets of close to one billion naira and depositors and savings to the tune of more than 640 million naira. Yet, all the loans and advances they issued were barely up to 150 million naira, despite all the noise made! Several studies also showed that just about 10% of informal workers understood the processes for benefitting from either the banks or employment directorates facilities.
The main beneficiaries of the monies pumped into these schemes were the top civil servants, military officers, their wives, children, members of their families and concubines. This of course was part of the broader “settlement” culture which Babangida’s junta helped to perfect in Nigeria as corruption became an untameable monster and the name of the game.
The state of government policies on informality over the last ten years as been guided by the principles of neo-liberalism which the advanced capitalist countries have dictated to the visionless governments of developing countries like Nigeria. Neo-liberalism entails three different components all of which worsen the fate of workers generally and place informal workers in particular in terrible situations. These are: privatization, deregulation and cuts in funding for social services. These have resulted in over 100,000 workers in public services retrenched; thousands of wage-workers in the organized private sector equally sacked; outsourcing and contract staffing (which are forms of informal employment relations with direct linkages of being exploited to the formal sector); less government involvement in the provision of social services such as education and health with these now being provided by the informal sector.
This government, we are told, has no business with the provision of employment, commodities or services, except for a few “core” services like administration of the state for which the “right-size” of employees is as minimal as possible. The market is supposed to be the alpha and omega in the allocation of resources and the economy is supposed to be private sector-driven.
The practical results of this policy thrust captured in the National Economic Empowerment and Development Strategy (NEEDS) and the Vision 20: 2020 is that: the poverty rate has remained high; unemployment and underemployment remain the order of the day (“jobs” created include graduates selling recharge cards and “pure water”); crime and prostitution have taken over our streets; inequality have reached an all time high; life expectancy has decreased and; Nigeria still remains at the bottom of all indices of human development despite the huge human and natural resources it has.
The Federal Government has tried to court the support of some elements within the informal sector. Micro-credit schemes have been established but the interest rates on the loans they give go as high as 40% as against 17% for the formal sector. The national agency established for developing small and medium scale enterprises has not done any better than Babangida’s NDE. We can see that obviously the support that the present government has for some elements within the informal economy is not borne out of improving the conditions of life of the average informal worker. On the contrary as Obasanjo was said to have made clear at a summit for the informal sector it is geared at separating the informal workers’ collective from the organized labour’s might which in eight General Strikes and Mass Protests have shown that the way forward for the working class and the masses of Nigerians is through struggle for a better social order.
The way forward: challenges and prospects
The way forward for the informal worker and the working class as a whole in Nigeria and across the world is through solidarity and struggle. This has been demonstrated time and again both globally and locally. It is also clear from our collective experiences that to successfully struggle for a better society where the workers’ needs and not the greed of a few is the basis of economic development and social policy, we must give great attention to organization and organising. In this concluding section we look at the challenges and prospects that face us in these regards.
The informal economy had always in some manner or the other been organised. The forms of organisation have at times overlapped with ethnic, age-group, gender, or mutual aid societies of different types. These have been organisations that have not necessarily been strictly for informal sector operators but which they have been able to use for time immemorial, so to speak, to give themselves visibility and voice within the broader society.
There have also been strictly informal economy organisations, over the past hundred years and more, which have been very strong. Probably the best example of this is the market women association. Baker (1994) describes the Lagos market women association as “exhibiting an exceptionally high degree of internal solidarity”. The strength of market women associations could be said to go back to their roots in traditions where market women leaders known in the Yoruba South West for example as Iyalode or Iyalaje, played key roles within the political structures of public governance.
Informal economy organizations which see themselves as organizing informal economy workers constitute a relatively new development going back just about forty years back. Probably the most successful of this is the Self-Employed Women Association of India which was formed in 1972. It started as the women’s wing of the textile workers union in India until it the stood on its own feet and in a matter of years its membership grew from a few hundreds into millions. It was initially encouraged by the Textile Labour Association from which it branched out. But as it grew and became even more influential on its own account, the TLA became jealous and hostile.
There are also inspiring developments in organizing informal workers in Africa. Some of these include the experiences of the General Agricultural Workers Union (GAWU) of Ghana and the Ugandan Public Employees Union (UPEU). GAWU started organizing informal workers in 1979 when austerity measures in Ghana led to a reduction of its membership from 130,000 to barely 30,000. Today GAWU is again one of the largest unions in Ghana and over 70% of its members are informal workers. UPEU started later in the early 1990s when its membership declined from over 108,000 to just 700, due to public sector downsizing and restructuring. In less than eight years though it had over 17,000 members and most of these were informal workers .
A picture that emerges from the examples above is that of the two basic ways of organizing informal workers. These could be directly by informal workers organizations (which like SEWA might have started as a wing of a trade union, or might not), or it might be that informal workers are organized by a trade union. The two are not mutually exclusive approaches and indeed we find both approaches in Nigeria already.
It is interesting to note that the first trade union on record in Nigeria was in the informal economy. This was the Mechanics’ Mutual Aid Provident and Mutual Improvement Association, formed in July 1883 . The current National Automobile Technicians Association was formed in 1962, before more than three quarters of the unions in the formal sector today were formed. You also have several informal workers unions including those of the fitters, hairdressers and barbers, welders, masons, etc.
It should also be pointed out that while trade unions in Nigeria might not have been as successful as their colleagues in Ghana or Uganda for example, in organizing informal workers; there have been a number of steps forward. The National Union of Civil Engineering Construction Furniture and Wood Workers, has organized masons, and carpenters into associations which have affiliate membership to NUCECFWW itself. Agricultural and Allied Employees Union of Nigeria has also made attempts at organizing informal agricultural workers in the rural areas.
This diversity of approaches is one of the major strengths that a federation of informal workers would be building on in Nigeria. The emerging federation should try to build on the diverse experience that come with the diverse approaches in engaging with the challenges that will confront the move towards building the power of informal workers and indeed the working class as a whole in Nigeria.
Yet a major opportunity which could be utilized is the attention of the world on the informal worker. Over the last decade and a half, the International Labour Organization has passed several resolutions in defence of the informal worker and workers rights in general. Related to these are the rights of informal workers as citizens which must be used as defensive planks by informal workers.
We would have to address what the key challenges that have to be addressed in organizing informal workers could be. These include but are not limited to the following:
The legal framework: The law in most countries including Nigeria is not in the interest of the informal worker, basically because they are not registered. Informal workers must realize two things about the law. First, the law is basically formulated to defend the interests of the economically dominant classes in any society such as big employers and plantation farm owners. Second, concessions have to be made to marginalized classes such as workers only when they fight for their own emancipation or at least to change the unilateral power of the dominant classes and groups. The informal workers have been doubly marginalized; first as workers and then as workers at the margin of modern industrial society. Informal workers have to test the legal framework while looking beyond it to ensure that the legal framework is reformulated, recognizing them;
Developing new organizing strategies: Lessons learnt from different informal workers organizations in their endeavours should be harnessed together. More importantly the Collective Bargaining rights of the formal trade unions should be seen as part of organising strategies. Developing new organizing strategies for informal workers would include amongst other things identifying possible negotiating partners and how to set up formal, semi-formal or even informal but definitive structures and mechanisms of grievance-handling and disputes resolution. Such include between local government councils and vendors or hawkers for example;
Giving priority to women informal workers: Women constitute a significant proportion of informal workers in Nigeria as is the case also in most countries. Women however face several cultural and economic hindrances to their optimal participation in unionism. The informal workers unions must develop women-specific programmes as well as include women in general union programmes, particularly those involving education and leadership development. Women should be active both as members and as leaders. Meetings should also be fixed for times that women could participate actively;
Playing a leading role in civil society; Informal workers unions are critical components of civil society. Non-membership, non-governmental associations have tried to define civil society in a narrow manner. Informal workers unions along with unions in the formal sector have to re-define civil society and its goals to include struggle for the fullest economic, political and social democratic rights;
Challenging globalization: The economic dynamics that have resulted in the poverty of most people in the informal economy are part of what is called “globalization”. The informal worker question has to be tackled simultaneously at both the global and local levels. The federation and federating organizations will have to identify how globalization affects their members and build networks and alliances with social forces across the world that could have similar interests to change the situation of things. In these light such informal workers global network as; streetnet, homenet and “women in informal economy; globalizing, organizing” (WIEGO) are examples of global informal workers organizations;
Relating with formal sector unions; Workers all have a common bond of being exploited and marginalized in capitalist society. Workers are however also always in competition for the limited work available. More importantly, trade unions of workers become institutions with lives of their own and their leaders could feel threatened when they do not understand other newer workers organizations or feel they are growing more than the unions which they lead, as was the case in India. The federation will have to engage the two trade union federations, NLC & TUC, comradely in a manner of “let us build working class power together”.
Conclusion
This paper has tried to address the informal worker question across the local and global arenas. It considered perspectives for understanding the informal economy, looked into the practices of peoples and policies of governments on the urban informal sector and finally identified some of the key challenges that face organizations that would organize informal workers.
This paper has running through it the necessity for workers across the formal and informal divide to unite in principle and in practice. Indeed, the powers that be realize the powerful force that such unity of the working people would present. We must build our collective strength to win our own self-emancipation and build a better more equal and more just society.
On a final note, I thank the organizers of this historic occasion for the opportunity to present this paper.
Thank you.
References
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The topic chosen as the theme of this historic Conference is very significant. It shows the growing concern of thinkers and practitioners with the workers in the informal economy and it shows that this situation is something that cuts across both the national and global arenas. It also points towards the fact that a lot of things remain unresolved about understanding the informal economy, particularly the working class component in it, with the phrase; “the informal worker question”.
What I will try to so with this paper is to put in perspective the following: different views on what the informal sector is; some insights into how workers in the informal sector have been/are being organised locally and globally’ policy challenges in addressing the informal worker question for government and other stakeholders; possible challenges for informal workers’ organisations and particularly the emerging Federation of Informal Workers’ Organisations of Nigeria (FIWON).
It is important to point out a few things here. Probably the most important is that this is not an academic paper. It is geared towards equipping informal workers with views and perspectives, while realizing that the greatest teacher of any worker might be real life. This however is not to say that this paper will not be concerned with theory. On one hand, I do think that to believe that informal workers or indeed any average worker for that matter can not understand theoretical issues is to look down on people, many of whom have deeper intelligence than we intellectuals who often argue that we need not include “theory” in our presentations, but just dwell on the “practical” tasks. The challenge rather in my own view is how we can break down the heavy jargons of theory into more digestible building bricks. On the other hand, the emancipation of the working class, across the formal and informal sectors division, can only be done by the workers themselves. If this is so, workers must be equipped with the deepest tools of thinking arranged in the simplest manner possible and then we will see that really, even a cook can run a state.
We shall however not limit ourselves to theory; indeed theory and practice are usually intertwined. The main theoretical section here will be the first one. We shall then look deeply at practical issues towards addressing the informal worker question.
Understanding the informal economy
The term “informal sector” or “informal economy”, gives us the idea immediately that there is a “formal sector” or “formal economy”. But, what is the dividing line and how did this come to be? Some people have argued that there has always been informal sector and that the form of production before the modern form of industrial production started was an informal economy. The matter might however not be as simple as that.
In the period before the industrial revolution started in England over two hundred years ago, there were various ways in which human beings went about organising the production of their basic needs. The most predominant one for a long time was what is usually called “feudalism”. This simply put was a society in which the dominant property in the process of production was land. There were the landowners who were lords, barons, earls, etc, all of which were titles for chiefs, called the nobility and kings. Then there were those that farmed these lands and paid tribute in the form of a good part of their produce to the landlords. These were known then as serfs.
There were also artisans in the towns in this period in the England and the rest of Europe. It is not our intention here to go into the history of that period. What we are concerned with is that virtually all forms of production then were “informal”. But until a formal sector was established in the factories and mines through the industrial revolution, where employers who workers without any property entered into contracts with capitalist who owned the factories, mines and machineries for working in these workplaces entered into formal contract, we could not talk of an informal sector, in the true sense of the word. What we had then was the division between the traditional sector and the modern, industrial sector.
The informal sector had actually existed from the very beginning of industrialization which created the modern, formal sector. The factories, mines and other workplaces had never been able to provide employment for the large number of people who trooped regularly from the villages in search of work in the cities. Slums and ghettos where thousands of workers and unemployed men and women lived had long been the sites of survivalist economic activities by these people which included a broad range of what is now characterized as the informal sector and even crime.
Informal work relations however existed even within the formal sector and dominated it, at this early period. All early workers were practically informal workers, even within formal enterprises. They had to wage intense struggles to become formal workers with recognition and rights before the law, by forming unions which themselves were initially illegal.
As workers in Europe formed unions, and trade union centres, with which they fought successfully for improvements in the working and living conditions; such social safety nets as unemployment benefit, employment exchange centres, universal access to healthcare and education all served to make the informal economy become more and more invisible in Western countries, especially as industrialization expanded and almost full employment was won in those countries, from the period after World War II to the late 1960s, known as the “Golden Age” of capitalism.
There have been two broad waves of deep discussions and practice around the informal worker question and organisation. The first commenced in 1971, just before the neoliberal attacks against working people and the popular sectors which has lasted till today, began. That year the Self-Employed Women’s Association branched out of the Textile Labour Association with the initial support of that union . That same year, Hart conducted some studies for the ILO in Ghana which gave birth to the term “informal sector” by showing that there were forms of employment and income opportunities that were not part of the formal sector but which also could not be considered as part of a traditional economy.
Several thinkers and policy-makers gave deep thought to trying to understand and interpret this “urban informal sector”, particularly over the last thirty years in which neoliberal globalization has led to drastic constriction of the formal sector in most countries and the extensive expansion of informal work relations. Most of the earlier academics who addressed the matter saw informality as something in passing, which was “invisible”. They described it as: an irregular economy ; a subterranean economy; an underground economy . A common feature of all these interpretations is their view of the informal economy as being, unregulated activities by enterprises on the margins of capitalist development which “would tend to be absorbed by the modern economy” .
This line of thinking is described as “dualist”. This is to say it sees the relationship between the formal and informal sectors as two opposites in which the more modern formal sector will eventually swallow the informal economy.
Major disagreements with the dominant traditional view emerged early in the 1980s . McChrohan and Smith (1986) further propositioned the informal economy as an interpretation, laying the basis for a rethinking which would influence the adoption of this perspective and the consequent expansion of the conception of informality beyond enterprises into the broad scope of employment relations by the International Conference of Labour Statisticians in 1993. The new view of informality grasped the permanent nature of the phenomenon, realized its many and diverse linkages with the formal sector and its own heterogeneity or broad mixture of types.
The rigorous analyses which were done with the new view of work informality which accepts the permanence of the urban informal sector and the loss of membership by trade unions grounded in the formal sector into the informal economy, due to restructuring and downsizing, served to bring attention to bear on “informalization and the crisis of representation” . This in the simplest term is about how the largest number of workers, particularly in developing countries, being in the informal economy, have little or no voice and power because of their lack of representation at the workplace, and in the broader society.
Some of the features of the “crisis of representation” of the urban informal sector relate to the understanding of the components of what comprise the informal economy. There are those who believe that producers in the informal economy are “neither capitalists nor workers but rather constitute a distinct social class” . Some as well stress the illegal dimensions of the informal economy noting the difficulty of legal voice for what they consider as an illegal sphere of economic activities.
The informal economy is does however cover a broad spectrum of class positions, including employers, self-employed/own-account workers, wage workers and even outsourced wage workers in the modern industrial economy. Martha Chen in figure 1 below puts this graphically.
Fig 1
Source: Chen, M. 2003
We thus see that there are workers as well as employers and the self-employed in the informal economy. Some other thinkers like Devan Pillay (2008) for example argue that even many self-employed persons in the informal economy could be categorized as workers. This is due not just to their low wages but equally due to their relationship in the broader society to the bug capitalists.
We might avoid going into the details of the correctness of this position for now due to space and time. It is however important to observe that a major challenge that the typical working class faces, particularly in societies like Nigeria where it is a relatively small proportion of the population, is how to bring consistently give leadership to and bring the bulk of working people to recognize its world view and standpoint, as being in the interests of their social and economic emancipation. Thus, organising the employers and self-employed persons within the informal economy under the banner of informal workers is a major step forward in building progressive working class politics that promotes a united front of struggle for the transformation of Nigeria into a better society.
The Urban Informal Sector: people’s practice and government policies
Human beings as individuals and groups in carrying out daily activities for their continued survival enter into economic practices involving relations with other persons and groups of persons. These practices lead us to thinking resulting in the formulation of social and economic theories. But theory also now affects our practices. The way we go about activities in the economic and other spheres of our human existence is influenced by one theory or the other even when we are not consciously aware of this. Governments also carry out practices which are determined by some theory or the other and which defend the interests of groups or classes of people that control that government or the state as a whole. The practices of governments are carried out through policies.
In this section we shall look at how the informal economic practices of working people have evolved in Nigeria over the years and the policy approaches that the Nigerian state through its different governments have brought to bear on the urban informal economy. We try to show the linkages in the two and how they relate to the development of theory and practice of informalization world-wide. Our main focus is on the urban informal sector, not because we consider the rural informal sector as being unimportant. On the contrary this is because the informal economy in the urban areas gives us a sharper picture of the non-agricultural informal economy. Since with the poor level of mechanization of our agricultural sector, a great deal of agricultural practices is subsistent, with informal family relations being probably dominant, it could blur the more impersonal dimensions of informality in the heart of the cities and towns.
The rate of urbanization in Nigeria is one of the highest in the world. At 5.5% per annum, the rate of expansion of the urban areas is almost double the rate of the country’s population growth as a whole, which is 2.9%. The proportion of Nigerians living in the cities and towns increased from 39% in 1985 to 43.5% at the beginning of the 21st Century. It is presently about half of the entire country’s population and is expected to be over two thirds within the next ten years . The number of urban centres in the country itself has expanded with the creation of new states and local governments from the three regions structure we had at independence.
Today, there are over seven cities with over 1million residents and more than five thousand towns which have between 20,000 and 500,000 residents. Due to the poor records keeping culture in Nigeria in general and the informal nature of the sector itself, information on the scope, structure and dimensions of the informal economy are inadequate. Generally though, it is estimated that while the proportion of the urban workforce in the informal economy immediately after independence in the 1960s was about 25%, it is today between 50% and 65%.
The history of development of the urban informal sector in Nigeria is a long one. There were cities in what later became know as Nigeria even before the arrival of the British colonialists. These included; Kano, Ile-Ife, Arochukwu, Zaria, Ibadan, Calabar, Abeokuta, Sokoto, Benin, Maiduguri, Oyo and Eko . These were seats of political power and religious authority, centres of trade and military bases. Crafts developed in these old urban areas like pottery and blacksmithing, carving and bronze-smelting. These flourished with agriculture and would make them sites of the new informal economy as the modern formal sector took its roots in their communities, re-ordering the lives of the peoples of these lands into the singular overall order of the a rudimentary capitalist economy. In these cities, we note extensive layers of informality, particularly in the crafts. Some of these are part of the tourism trade (such as in pottery, bronze materials and beads), and others part of the newer forms of the informal economy.
In general though, the spread of the urban informal sector could be traced to the growth and development of the early capitalist incursions of the British colonialists. As the railways and ports through which they siphoned off our mineral and agricultural resources grew and with these road networks and administrative centres where the colonial government’s resident and district officers ruled from; cities and towns grew along the ports, railway and road terminuses and administrative centres. In these cities and towns, wage labour took shape with clerks, potters, conductors, drivers, locomotive technicians on the pay roll of the colonial state and companies such as the Royal Niger Company and later the United African Company (UAC), PZ, Leventis Mandillas, Chellarams, etc.
The earliest informal economy activities in these cities and towns were the petty traders and small shop keepers who would sell foodstuffs, beers, cigarettes and other commodities to the workers in these firms, often on credit to collect payment at the end of the month when the workers got their wages.
The British did not favour this. They never conceived of cities as sites for industrialization. Indeed they never saw a need for the industrialization of the colony which they sought to bleed for their own country’s development. They were not concerned with jobs creation, seeing the employment of “natives” as being at best a necessary evil. Housing for these native wage workers was never planned. Housing was actually a tool for segregation with the Government Reserved Areas (GRAs) meant for the expatriate Europeans and at best a few cooks and gardeners in the boys’ quarters. For the Informal worker and the wage worker alike, home was in the slums around the mines and towns.
Independence came on October 1, 1960 and with it came hope for the millions of working people in the formal sector and urban informal economy, the rural farmer and the idealist youth. There however seemed to be some basis for such hope initially, even if such was slight. The earlier attempts at pursuing Import Substitution Industrialization as stated in the first two National Development Plans of 1962 – 1968 & 1970 – 1974, saw to an increase in the number and proportion of workers in formal employment.
In the 1960s and early 1970s, the informal economy was not perceived as a distinct sector by the Nigerian state. On one hand, it had the dualist view that a large number of those in informal work relations would be absorbed into the modern economy with its envisioned industrialization project. On the other hand it categorized some informal activities as being traditional craftsmanship or petty trading while some others it saw as being small-scale enterprises which could be considered as micro-units within the formal sector. However, many more Nigerians kept flocking in from the villages to the cities in search of better lives, compounding the problems of informality still.
In the mid-1970s, the government set up some bodies to address the informality question by way of increasing the level of productivity of activities in the informal economy. The two major ones where: the small Industrial Development Centres (IDCs) in several cities and; the Small-Scale Industry Credit Scheme (SSICS) which was meant to provide micro-credit and technical expertise to small-scale entrepreneurs. These were part of the drive at indigenization which the Gowon and later Muhammad/Obasanjo regimes pursued.
There was however little protection for the small-scale entrepreneurs against the influx of cheaper goods imported by foreign multinational companies and even larger, so-called indigenous firms. The consequence of this was that very little production took place in the informal economy. Informal sector practice was largely restricted to buying and selling, provision of services and transportation. The informal economy remained not just a means of survival for informal workers but as well the avenue for formal wage-workers to survive as they could buy cheap quality and lower-priced goods and services, often on credit from the petty trade, barbers, shoe shiners, etc on the streets.
The lives of workers in both the formal and informal sectors took a turn for the worse in the 1980s. The freeze on workers wages while the prices of commodities rose through the rooftops led to increased poverty. The government started selling “essential commodities” like foodstuffs such as imported rice which the retail seller in the informal sector used to supply workers. Many government functionaries like Umaru Dikko and Adisa Akinloye became billionaires overnight while workers in the formal and informal sectors alike grew closer to starvation and penury.
Matter got only got worse, particularly for the urban informal sector when the Shehu Shagari-led 2nd Republic administration was overthrown on December 31, 1983 by the Buhari/Idiagbon-led junta. Its War Against Indiscipline greatly targeted the urban informal sector. Kiosks where pulled down, shantytowns where many informal economy operators lived were destroyed and hawkers were continually harassed. Yet, no significant improvement in the lives of the citizens or economic development as a whole was recorded.
In 1985, when the Ibrahim Badamis Babangida junta came to power, many heaved sighs of relief. On the face of it, the IBB administration with the Structural Adjustment Programme it adopted from the IMF despite Nigerians rejection of IMF and its conditionalities seemed to have concern for the development of the informal economy. What with all the talk about building self-employment and the consequent retrenchment of tens of thousands of workers in the informal economy, it seemed that the urban informal sector would receive the attention it deserved. This was however not to be the real case despite the establishment of structures that on the face of it seemed geared to empower self-employed persons.
There were three basic ways that SAP affected the informal economy negatively. First, the costs of commodities that informal economy workers bought to sell or in-puts used for petty commodities produced increased with the devaluation of the naira. Second, at the same time the real wages of workers in the formal sector declined, making it more and more difficult to pass off the added costs to them in sales. And third, the retrenchments that went with SAP saw to large numbers of people that used to be wage-earners in the formal sector coming into the informal economy in search of means of survival.
The IBB government established structures that were supposedly meant to alleviate the conditions of informal workers and create more employment as well. These included the National Directorate of Employment (NDE), the Directorate for Food, Road and Rural Infrastructure (DFFRI), the People’s Bank and Community Banks. Billions of naira were committed to these white elephant projects with very little to show for these in terms of providing better life for Nigerians in general and informal workers in particular.
The National Directorate of Employment was established in 1987 to stem the rural-to-urban drift and improve youth employment. The National Open Apprenticeship Scheme, which was part of the NDE was supposed to train and place youths in gainful informal employment relations within the cities. Only a very tiny percentage of youths or even older informal workers benefited from both the NOAS and NDE in general. The programme was marred with corruption, diversion of funds meant for its programmes and nepotism.
The People’s Bank and Community banks were developed along the lines of the Asian micro-credit schemes’ model. Between 1990 and 1992, over 200 People’s and Community Banks were established. They had assets of close to one billion naira and depositors and savings to the tune of more than 640 million naira. Yet, all the loans and advances they issued were barely up to 150 million naira, despite all the noise made! Several studies also showed that just about 10% of informal workers understood the processes for benefitting from either the banks or employment directorates facilities.
The main beneficiaries of the monies pumped into these schemes were the top civil servants, military officers, their wives, children, members of their families and concubines. This of course was part of the broader “settlement” culture which Babangida’s junta helped to perfect in Nigeria as corruption became an untameable monster and the name of the game.
The state of government policies on informality over the last ten years as been guided by the principles of neo-liberalism which the advanced capitalist countries have dictated to the visionless governments of developing countries like Nigeria. Neo-liberalism entails three different components all of which worsen the fate of workers generally and place informal workers in particular in terrible situations. These are: privatization, deregulation and cuts in funding for social services. These have resulted in over 100,000 workers in public services retrenched; thousands of wage-workers in the organized private sector equally sacked; outsourcing and contract staffing (which are forms of informal employment relations with direct linkages of being exploited to the formal sector); less government involvement in the provision of social services such as education and health with these now being provided by the informal sector.
This government, we are told, has no business with the provision of employment, commodities or services, except for a few “core” services like administration of the state for which the “right-size” of employees is as minimal as possible. The market is supposed to be the alpha and omega in the allocation of resources and the economy is supposed to be private sector-driven.
The practical results of this policy thrust captured in the National Economic Empowerment and Development Strategy (NEEDS) and the Vision 20: 2020 is that: the poverty rate has remained high; unemployment and underemployment remain the order of the day (“jobs” created include graduates selling recharge cards and “pure water”); crime and prostitution have taken over our streets; inequality have reached an all time high; life expectancy has decreased and; Nigeria still remains at the bottom of all indices of human development despite the huge human and natural resources it has.
The Federal Government has tried to court the support of some elements within the informal sector. Micro-credit schemes have been established but the interest rates on the loans they give go as high as 40% as against 17% for the formal sector. The national agency established for developing small and medium scale enterprises has not done any better than Babangida’s NDE. We can see that obviously the support that the present government has for some elements within the informal economy is not borne out of improving the conditions of life of the average informal worker. On the contrary as Obasanjo was said to have made clear at a summit for the informal sector it is geared at separating the informal workers’ collective from the organized labour’s might which in eight General Strikes and Mass Protests have shown that the way forward for the working class and the masses of Nigerians is through struggle for a better social order.
The way forward: challenges and prospects
The way forward for the informal worker and the working class as a whole in Nigeria and across the world is through solidarity and struggle. This has been demonstrated time and again both globally and locally. It is also clear from our collective experiences that to successfully struggle for a better society where the workers’ needs and not the greed of a few is the basis of economic development and social policy, we must give great attention to organization and organising. In this concluding section we look at the challenges and prospects that face us in these regards.
The informal economy had always in some manner or the other been organised. The forms of organisation have at times overlapped with ethnic, age-group, gender, or mutual aid societies of different types. These have been organisations that have not necessarily been strictly for informal sector operators but which they have been able to use for time immemorial, so to speak, to give themselves visibility and voice within the broader society.
There have also been strictly informal economy organisations, over the past hundred years and more, which have been very strong. Probably the best example of this is the market women association. Baker (1994) describes the Lagos market women association as “exhibiting an exceptionally high degree of internal solidarity”. The strength of market women associations could be said to go back to their roots in traditions where market women leaders known in the Yoruba South West for example as Iyalode or Iyalaje, played key roles within the political structures of public governance.
Informal economy organizations which see themselves as organizing informal economy workers constitute a relatively new development going back just about forty years back. Probably the most successful of this is the Self-Employed Women Association of India which was formed in 1972. It started as the women’s wing of the textile workers union in India until it the stood on its own feet and in a matter of years its membership grew from a few hundreds into millions. It was initially encouraged by the Textile Labour Association from which it branched out. But as it grew and became even more influential on its own account, the TLA became jealous and hostile.
There are also inspiring developments in organizing informal workers in Africa. Some of these include the experiences of the General Agricultural Workers Union (GAWU) of Ghana and the Ugandan Public Employees Union (UPEU). GAWU started organizing informal workers in 1979 when austerity measures in Ghana led to a reduction of its membership from 130,000 to barely 30,000. Today GAWU is again one of the largest unions in Ghana and over 70% of its members are informal workers. UPEU started later in the early 1990s when its membership declined from over 108,000 to just 700, due to public sector downsizing and restructuring. In less than eight years though it had over 17,000 members and most of these were informal workers .
A picture that emerges from the examples above is that of the two basic ways of organizing informal workers. These could be directly by informal workers organizations (which like SEWA might have started as a wing of a trade union, or might not), or it might be that informal workers are organized by a trade union. The two are not mutually exclusive approaches and indeed we find both approaches in Nigeria already.
It is interesting to note that the first trade union on record in Nigeria was in the informal economy. This was the Mechanics’ Mutual Aid Provident and Mutual Improvement Association, formed in July 1883 . The current National Automobile Technicians Association was formed in 1962, before more than three quarters of the unions in the formal sector today were formed. You also have several informal workers unions including those of the fitters, hairdressers and barbers, welders, masons, etc.
It should also be pointed out that while trade unions in Nigeria might not have been as successful as their colleagues in Ghana or Uganda for example, in organizing informal workers; there have been a number of steps forward. The National Union of Civil Engineering Construction Furniture and Wood Workers, has organized masons, and carpenters into associations which have affiliate membership to NUCECFWW itself. Agricultural and Allied Employees Union of Nigeria has also made attempts at organizing informal agricultural workers in the rural areas.
This diversity of approaches is one of the major strengths that a federation of informal workers would be building on in Nigeria. The emerging federation should try to build on the diverse experience that come with the diverse approaches in engaging with the challenges that will confront the move towards building the power of informal workers and indeed the working class as a whole in Nigeria.
Yet a major opportunity which could be utilized is the attention of the world on the informal worker. Over the last decade and a half, the International Labour Organization has passed several resolutions in defence of the informal worker and workers rights in general. Related to these are the rights of informal workers as citizens which must be used as defensive planks by informal workers.
We would have to address what the key challenges that have to be addressed in organizing informal workers could be. These include but are not limited to the following:
The legal framework: The law in most countries including Nigeria is not in the interest of the informal worker, basically because they are not registered. Informal workers must realize two things about the law. First, the law is basically formulated to defend the interests of the economically dominant classes in any society such as big employers and plantation farm owners. Second, concessions have to be made to marginalized classes such as workers only when they fight for their own emancipation or at least to change the unilateral power of the dominant classes and groups. The informal workers have been doubly marginalized; first as workers and then as workers at the margin of modern industrial society. Informal workers have to test the legal framework while looking beyond it to ensure that the legal framework is reformulated, recognizing them;
Developing new organizing strategies: Lessons learnt from different informal workers organizations in their endeavours should be harnessed together. More importantly the Collective Bargaining rights of the formal trade unions should be seen as part of organising strategies. Developing new organizing strategies for informal workers would include amongst other things identifying possible negotiating partners and how to set up formal, semi-formal or even informal but definitive structures and mechanisms of grievance-handling and disputes resolution. Such include between local government councils and vendors or hawkers for example;
Giving priority to women informal workers: Women constitute a significant proportion of informal workers in Nigeria as is the case also in most countries. Women however face several cultural and economic hindrances to their optimal participation in unionism. The informal workers unions must develop women-specific programmes as well as include women in general union programmes, particularly those involving education and leadership development. Women should be active both as members and as leaders. Meetings should also be fixed for times that women could participate actively;
Playing a leading role in civil society; Informal workers unions are critical components of civil society. Non-membership, non-governmental associations have tried to define civil society in a narrow manner. Informal workers unions along with unions in the formal sector have to re-define civil society and its goals to include struggle for the fullest economic, political and social democratic rights;
Challenging globalization: The economic dynamics that have resulted in the poverty of most people in the informal economy are part of what is called “globalization”. The informal worker question has to be tackled simultaneously at both the global and local levels. The federation and federating organizations will have to identify how globalization affects their members and build networks and alliances with social forces across the world that could have similar interests to change the situation of things. In these light such informal workers global network as; streetnet, homenet and “women in informal economy; globalizing, organizing” (WIEGO) are examples of global informal workers organizations;
Relating with formal sector unions; Workers all have a common bond of being exploited and marginalized in capitalist society. Workers are however also always in competition for the limited work available. More importantly, trade unions of workers become institutions with lives of their own and their leaders could feel threatened when they do not understand other newer workers organizations or feel they are growing more than the unions which they lead, as was the case in India. The federation will have to engage the two trade union federations, NLC & TUC, comradely in a manner of “let us build working class power together”.
Conclusion
This paper has tried to address the informal worker question across the local and global arenas. It considered perspectives for understanding the informal economy, looked into the practices of peoples and policies of governments on the urban informal sector and finally identified some of the key challenges that face organizations that would organize informal workers.
This paper has running through it the necessity for workers across the formal and informal divide to unite in principle and in practice. Indeed, the powers that be realize the powerful force that such unity of the working people would present. We must build our collective strength to win our own self-emancipation and build a better more equal and more just society.
On a final note, I thank the organizers of this historic occasion for the opportunity to present this paper.
Thank you.
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