Informal workers earning less than 75% of their pre-Covid earnings, study warns

By mid-2021 the typical informal economy worker was earning 64% of their pre-Covid earnings

A new study by Women in Informal Employment: Globalizing and Organizing (WIEGO) shows how Covid-19 has lowered informal workers’ incomes.

The study, which looked at how workers from 11 cities in nine countries were faring mid-2021, compared to their pre-Covid economic conditions, was carried out with the aid of a grant from the International Development Research Centre, Ottawa, Canada.

According to the research, the average number of days worked per week was only four in mid-2021, lower than 5.5 in the pre-Covid period.

By mid-2021 the typical informal economy worker was only earning 64% of their pre-Covid earnings, the study found. Furthermore, four in every ten (40%) domestic workers, street vendors and waste pickers were still earning less than 75% of their pre-Covid earnings in mid-2021.

Home-based workers were among the hardest hit. In mid-2021 their earnings were only 2% of pre-pandemic levels.

Many informal urban workers found themselves unable to secure food for themselves and their families. A third of respondents in mid-2021 said an adult and/or child in their household had gone hungry over the last month while 57% reported challenges with dietary diversity and/or skipping meals.

In terms of access to government cash support, 48% of respondents said they needed capital to resume their work, but only 9% of these used government relief grants for this purpose, and only 7% received government loans. The percentages of workers who received forgiveness of rent, utilities and/or school tuition were in the single digits.

To cope with these challenges many informal workers had to take out loans. According to the study, respondents were forced to borrow money (46%), draw down on already meagre savings (35%), or reduce household spending on non-food (26%) and food (23%) items.

The study also points out that access to vaccines also varied, with respondents in countries in the global South trailing their Northern counterparts in vaccination rates.

Based on these findings, the study makes several recommendations to governments and global institutions, including provision of immediate material needs such as food and cash grants as well as low-interest loans and expanding social protection, including access to social insurance, health care and basic income support on terms equal to those of formal workers.

The report also suggests that governments provide an enabling policy and legal framework for informal workers, with inclusive urban planning for the self-employed, minimum wages or piece rates, fair working hours, and health and safety requirements for employees and dependent contractors.

Furthermore, the study recommends ending punitive practices such as confiscation, fines and evictions for workers in the informal economy.