Informal Sector

One difficulty analysts face in interpreting trends in women's labor force participation and employment in developing economies is the large number of women engaged in informal sector activities, many of which overlap with subsistence - orientated household or community-based activities. Informal sector employment in most developing countries. whether in microentreprises or in casual work, is an important source of livelihood for women and their households.

The L competitiveness of women's informal sector activities is constrained by women's limited mobility and lack of access to financial and public sectors.

A recent study in Mexico estimates that 41 percent of the work force in Mexico's major-cities is employed in the informal sector (World Bank 1995c). Data from a 1989 survey show that 60 percent of men working in the sector are salaried workers' compared with only 18 percent of women. By contrast. 80 percent of women working in the sector are unpaid family members, as against 27 percent of men. By far the most common activity in the informal sector is commerce (fixed-location or itinerant), followed by repair works food preparation. and sales, and small-scale manufacturing. The sectoral distribution of informal employment reflects the hey role informal workers play in supplying goods and services to low-income consumers. Women tend to be concentrated in commerce and men in services and manufacturing, although the percentage differences are relatively small. Two generalizations can be made on the basis of this study: informal sector workers earn less than workers in large firms and women earn less than men.

Another recent study of tour communities in Lusaka. Guayaquil (Ecuador), Metro Manila, and Budapest shows that informal sector activities ate especially important for during periods of economic reform Although the numbers both of men and of women in the labor force tend to increase during these times women rely more on the informal sector than men clot The competitiveness of women’s informal sector activities is informal by women's limited mobility and lack of access to financial and public services. Women also tend to specialize in non traded goods and services that show relatively low average returns to labor. Across the tour cities in the study, women earn between 46 and 68 percent of men's wages (Moser 1994)

The ability of informal sector workers to increase their returns depends on access to physical and human capital and their relationship to the institutional and regulatory environment. Contrary to the common belief, many microenterprises face considerable costs associated with the regulatory environment, including registration and licensing fees, as well as outlays for contracts with public authorities concerning zoning regulations and use of public utilities. In Argentina regulatory costs are estimated to absorb as much as 21 percent of the average microfirm's operational expenses. In some sectors, such as manufacturing and construction, the costs of regulation are about 44 percent (World Bank 1994d). In Mexico real regulatory costs. including the costs of compliance and evasion, are about 20 percent of total costs.

Regulatory costs also inhibit Job creation in the informal sector. In Argentina across-the-board deregulation could generate as many as 170,000 jobs in small-scale manufacturing alone. Furthermore. poor workers in family-based firms or micro enterprises and particularly women entrepreneurs-often lack access to such basics as water and power. Targeting infrastructure investments to the poor, which takes account of the needs of women entrepreneurs s. can significantly enhance their productivity and earnings.

In rural area where formal markets often are not well developed. informal employment activities play a vital role. In Asia the proportion of female rural wage laborers increased sharply in the 1960s and 1970s. In India women make up a larger proportion of rural wage laborers than of the entire labor force, probably because of growing landlines and poverty among rural households. Rural household labor accounts for a disproportionately large share of employment among the poor and an even larger share among women. Furthermore, a larger proportion of female than male laborers are hired on a casual basis, largely because family arrangements, especially lack of control over property, limit women's ability to work (Hart 1986: Bardhan 1993). Low status in the labor market is also linked to low female indicators in education, health, and nutrition.

Providing credit directly to women has a positive effect on household and individual welfare and improved gender equality.

Social norms affecting decisions within the family about occupational choices or migration can also lead to differential patterns of male and female earnings in informal markets (Bhiswanger and Rosenzweig 1984). Family responsibilities hinder women's geographic mobility, constraining their ability to command high wages and limiting them to certain areas or industries. The concentration of women in certain sectors, especially nontraded goods and set-vices. intensifies competition between women entrepreneurs and wage workers and lowers the returns to female labor. These effects are compounded by women's lack of access to credit. training, and technology.

(fender Inequality in Access to Assets and Services )