Same storm, different boat : Covid-19 and South African informal workers

Many people have suffered during the Covid-19 pandemic but some groups of  South Africans have more than others. Michael Rogan and Caroline Skinner show through statistics and data analysis that workers in the informal economy, particularly women, have borne the brunt of job losses while carrying the burden of care.

With very few exceptions, the COVID-19 pandemic and government restrictions have upended labour markets around the world. However, not all workers have experienced the negative effects of the crisis in the same way.

Globally, there are now two key characteristics concerning the economic impacts of COVID-19.

The first is that women have borne the brunt of job losses and the restrictions and curfews. This has been termed a ‘shecession’.  Coupled with this, women have experienced an increase in unpaid care responsibilities as schools have closed and household members fall ill.

Second, there is a recognition that informal workers have been the most affected group in most countries.  Features of the ‘pandemic recession’ are particularly severe for workers that depend on a daily wage and who have no legal and social protection in their employment. Since the majority of the world’s workers – 60% – are informal, and since most of these workers are the working poor, there has been a large setback in progress towards global poverty reduction.

In South Africa there have been two estimates of the total number of jobs lost during the strictest lockdown – March to April 2020. Statistics South Africa’s second quarter 2020 data estimated 2.2 million job losses across the April-June period, while the National Income Dynamics Study Coronavirus Rapid Mobile Survey (NIDS-CRAMS) data estimated that 3 million jobs were lost between February and April 2020. 

Using NIDS-CRAMS data, Daniela Casale and Dorrit Posel found that women accounted for two-thirds of lost jobs. Thus, job losses were highly gendered in South Africa during the first phase of the pandemic. However, there has been less attention to the impact of the crisis on informal employment which makes up about 30% of women and men’s total employment in South Africa.

The release of employment data from the first three quarters of 2020 now allows an assessment of how the crisis impacted on both formal and informal employment, the focus of this article.

In order to understand these statistics it is necessary to explain the terms informal economy and informal sector.

The informal economy includes both self-employed people, as well as employees working in formal businesses and in private households (like domestic workers). These workers do not have a written contract of employment and so are not entitled to a pension or medical aid.  They work in places that employ fewer than five people, and do not report income tax deducted from salaries. Employment in the informal sector consists of people in informal businesses including both employees and the self-employed. The self-employed include employers, own-account workers, and unpaid family workers in household businesses not registered for income tax or value-added tax (VAT). 

Informal Employment Second Quarter April –June 2020 

Figure 1 shows both relative (percentage changes in employment), and absolute job losses (job losses in themselves, year-on-year) for the second quarter, April-June 2020. Of the 2.2 million job losses, the vast majority – 1.46 million – were informal. In relative terms, the decrease in informal employment (29%) was more than three times greater than the drop in formal employment (8%). While this pattern was expected, the size of job losses among the informally employed is startling. These are workers with some of the lowest earnings in the labour market, who live below or near the poverty line, and who have the least secure forms of employment. 

Figure 1: Relative and absolute decreases in informal and formal employment between 2019 and 2020 (year-on-year, second quarters)

Within the informal economy (Figure 2), most of the job losses (about 814,000) were in the informal sector. The informal sector refers to self-employment and employment in unregistered workplaces.  The informal sector shrunk by 25% in the second quarter of 2020 while the formal sector decreased by just under 10%.

The other area of employment that was affected severely by the pandemic was domestic work. This type of employment is dominated by women and the vast majority of domestic workers are informal, meaning they work without a written contract, medical aid, a pension, or UIF (Unemployment Insurance Fund).  About 250,000 domestic workers lost their jobs in the early days of the pandemic. Domestic work decreased by 25% in the face of strict regulations.

Figure 2: Relative and absolute decreases in informal and formal sector employment between 2019 and 2020 (year-on-year, second quarters)

Not surprisingly, women in the informal economy were disproportionately affected by the early phases of the pandemic, relative to men – see Figure 3 below.  Within the informal sector, women experienced a 29% decrease in employment compared with a 23% drop in men’s informal sector employment.

The gender differences in job losses in private households were particularly large but this is a sector with very few men.

Overall, among all types of informal employment (including in private households and the informal sector), the decrease in employment was greater for women – 31% – than for men – 28%.

Figure 3: Gender differences in employment losses within the informal economy between 2019 and 2020 (second quarters)

Informal Employment Third Quarter July-September 2020

More recently Statistics South Africa released the 3rd Quarter 2020 Labour Force Survey.  The findings from the July-September 2020 period suggest only a small recovery in the labour market overall.

For example, there were only 540,000 more jobs recorded in the 3rd quarter compared with the 2nd quarter of 2020 – a 3.8% increase. This represents a small recovery in the post-lockdown period compared with the estimated 2.2 million jobs which were lost in the 2nd quarter.

Notably, the limited jobs recovery was also uneven. Most of these ‘recovered’ jobs (about 300,000) were in the informal economy but this is still a small number compared with the estimated 1.5 million informal job losses in the previous quarter.

One positive finding is that the number of domestic workers in employment increased by about 16% between quarters 2 and 3 of 2020. This represents about 120,000 more domestic workers with employment during the July-September period in comparison to the lockdown period.

Less positive is the finding that, apart from employment in private households, the recovery of jobs in the informal economy favoured men. 

For men in informal employment, the quarterly increase in employment was 12% for the informal sector compared to 4% for women, and 10% for the informal economy compared to 6% for women as a whole. This means job losses in the informal economy during the lockdown period were greater for women, while job recoveries in the following period were lower for women.

There are two cautions to these most recent figures on employment losses and recovery during the pandemic crisis.

First, the recovery of jobs does not imply a return to pre-COVID working conditions, hours or earnings.  We still need to analyse the recovery of earnings in particular, and whether there are gendered patterns in this recovery.

Second, the third quarter data represent a particular point in the unfolding crisis in South Africa. For example, the third period followed the harshest lockdown restrictions but it also occurred during a ‘lull’ between the first and second waves of the pandemic. We need more recent data to analyse the longer-term impacts of the second wave of COVID-19 infections, including the re-introduction of curfews and restrictions at the end of 2020 and the beginning of 2021.

Conclusion

The data shows that in South Africa, informal workers in general, and women informal workers in particular, have been affected disproportionately to men and to workers in the formal economy, by COVID-19 restrictions.  While no section of the labour market has escaped the storm, the effects have been markedly different for informal workers.

How does this line up with policy responses?  WIEGO’s (Women in Informal Employment Globalising & Organising) analysis of informal workers’ access to COVID-19 impact mitigation measures shows that informal workers largely missed out. Small business support has not reached informal enterprises, and unemployment relief has been extended to a minority of informal wage workers. The increases in the child support grant were well targeted at informal workers but were discontinued; while the introduction of the COVID-19 Special Relief of Distress grant has only been extended until the end of March 2021 and excludes caregivers who are largely women.

Given the role informal workers play in supporting low-income households and communities, government is missing a critical opportunity to kickstart the economy and reset it on a more inclusive growth path.