A migrant from an Andean country, carrying her daughter on her back, demonstrates for her rights along with other migrant women, in Buenos Aires, during a Mar. 24 march marking the anniversary of the 1976 military coup that ushered in seven years of dictatorship. Credit: Fabiana Frayssinet/IPS

By Fabiana Frayssinet
LIMA, Apr 27 2017 (IPS)

A large proportion of the 4.3 million migrant workers in Latin America and the Caribbean survive by working in the informal economy or in irregular conditions. An invisible wall that is necessary to bring down, together with discrimination and xenophobia.

“Looking for work is just one of the causes, but not the only one, or even a decisive one,” said Julio Fuentes, president of the Latin American and Caribbean Confederation of Public Sector Workers (CLATE). “I believe the determining factors driving migration are poverty, low wages, lack of access to health and education services, and the unfair distribution of wealth in our countries.”

The study “Labour migration in Latin America and the Caribbean,” released in August 2016 by the International Labour Organisation (ILO), identifies 11 main migration corridors used by workers throughout this region, including nine intra-regional, South-South corridors that connect countries in the region, and two extra-regional South-North corridors connecting with the United States and Spain.

According to the report, this network is constantly evolving due to changes in economic interdependence and labour markets, and has been expanding in volume, dynamism and complexity, growing from 3.2 million migrants in 2011 to 4.3 million at the start of 2016.

Denis Rojas, a Colombian sociologist with the Latin American Council of Social Sciences (CLACSO), mentioned from Buenos Aires other intra-regional migratory causes based on the experience of her compatriots in Argentina.

“It is necessary to bear in mind that the migration to Argentina seen in the past few decades is of different types: one well-identified group is that of generally middle-class professionals, who in view of the high costs and the constraints of access to postgraduate education in Colombia, decide to look for other options abroad, with Argentina being a country of interest due to its wide educational offer and accessible costs in comparison with Colombia,” she told IPS.

Moreover, “several years ago, the number of families sending their children to study in Argentina started increasing due to the high tuition costs in Colombian universities and extensive structural limitations to access education. It is similar to the case of Chile,” she said.

But although the main driver of this current of migration is access to education, Rojas doesn’t rule out labour causes.

“It responds fundamentally to Colombians’ need to enter the labour market. Due to the unemployment and a pervasive flexibilisation of labour standards, people believe that a higher level of education will give them a chance for a better income and better jobs,” she said.

Another group of migrants, she said, are those who were driven out of their homes by Colombia’s armed conflict. They range from poor peasant families and labourers to students and better-off activists.

“Insertion into the labour market depends in this case on the existing support networks,” she stressed.

The ILO points to several common labour-related aspects in these migration flows, which are important to note on International Workers’ Day, celebrated on May 1st.

Map of the 11 main migration corridors in Latin America and the Caribbean: nine South-South intra-regional and two North-South towards the US and Europe. Credit: ILO

It mentions the “feminisation” of labour migration, with women accounting for more than 50 percent of migrants; the high proportion of irregular and informal migrant workers and the low access to social protection; and the frequently deficient work conditions as well as the abuse, exploitation and discrimination faced by many migrant workers.

This is the case of a 35-year-old Peruvian migrant to Argentina, identified as Juliana, who was originally from the department of Arequipa in southern Peru.

To pay for her university studies, she worked five years as an unregistered domestic worker.

“At that time it was the only kind of work we could aspire to as foreigners with no contacts and often without the necessary papers. Back then, there was no immigration law as we have today, and it was very difficult to find something better. It took me three years to get my national identity document,” recalls Juliana, who is about to become a lawyer.

Pilar, a 34-year-old Colombian who has been in Brazil for eight years, mentioned a problem faced by many other migrants: they can only get jobs for which they are overqualified. Although she has a university degree, she had to work in a hostel without a contract or labour rights.

She chose Brazil because in her country higher education is expensive and “Brazil, with its free public education, is like a kind of paradise for many Colombians.”

“Many of the young Latin American migrants in Río de Janeiro end up being absorbed by the tourist market. I had no working permit the first few years and I would take whatever work cropped up. I would work over eight hours, with barely one day off a week, and they paid me less than minimum wage,” she said.

In Brazil as well as Argentina, Bolivians work in large clandestine textile sweatshops in near-slavery conditions, a reality that is repeated among migrants in different sectors and countries.
The ILO study points out that there are also migration corridors to other regions. Of a total 45 million migrants in the United States, more than 21 million are Latin American. In Spain, nearly 1.3 million foreigners living in the country are South American.

“The exploitation of Latin American and Caribbean immigrant labour by the central powers is another side of our dependence; they not only plunder our natural resources, but we also provide them labour, which is overexploited. Generating poverty conditions in our region, or in others such as Africa, allows the central powers and their multinationals double benefits: natural resources and cheap labour,” CLATE’s  Fuentes told IPS.

He is worried about the tightening of US immigration policies and the threat of building a wall along the border with Mexico.

“No wall can keep out people seeking to leave behind the poverty to which they have been condemned,” Fuentes said.

“Latin Americans seeking a better life in the US undertake a terrifying journey, which costs the lives of many, and those who reach their destination take the worst jobs, with low wages and more precarious working conditions,” he said.

“They make an enormous contribution to the US economy, but never get to become citizens and are forced to always live as undocumented immigrants,” he said.

This year the annual International Labour Conference, which sets the ILO’s broad policies, will meet June 5-17 in Geneva, Switzerland, with a focus on migrant worker’s rights. CLATE will launch a campaign targeting public employees working in government agencies linked to immigration, to “put a human face on border posts”.

“As unions, we also have to represent those migrant workers whose irregular migratory situation is used by employers to get around labour legislation, subjecting migrants to more precarious conditions, and abusing the possibility of temporary employment,” said Fuentes.

“Those who don’t have a right to citizenship will always be victims of abuse. As trade unions, we must combat the idea that migrants compete with local workers. We have to accept that we are all part of the same class, which knows no borders,” he said.

Excerpt:

María Elena Rodríguez, 54, makes a living selling fruit at a street stand in San Salvador. She forms part of El Salvador’s informal economy, where workers are not covered by the pension system and women are a majority. Credit: Edgardo Ayala/IPS

By Edgardo Ayala
SAN SALVADOR, Feb 17 2016 (IPS)

El Salvador is debating reforms of the country’s privatised pension system, which could introduce changes so that it will no longer discriminate against women.

“The pension system has a male-centred, patriarchal focus that fails to take into account the specific differences that women face in the world,” said Marta Zaldaña, secretary general of the Federation of Independent Associations and Unions of El Salvador (FEASIES).

The head of FEASIES, which groups more than 20 trade unions, told IPS that one example of the sexist treatment received by women is the 115,000 domestic workers who are completely outside the system, with no right to a pension or even the minimum wage, or any other kind of protection or regulation.

People working in the informal sector of the economy, 65 percent of whom are women, do not pay into the system and will have no right to a retirement pension, economist Julia Evelin Martínez, a researcher at the José Simeón Cañas Central American University School of Economy, told IPS.“The reform should be an opportunity to redesign the pension system from the very foundations, in order for it to offer equal benefits to men and women.” -- Julia Evelin Martínez

The system was designed “based on the labour experiences and lives of men,” she said.

María Elena Rodríguez, 54, a street vendor who sells fruit at a stand on a San Salvador street, said the outlook for her old age is grim.

“I don’t have any coverage, I pray that the lord will give me the strength to work until I’m 65, and then I’ll ask my children to put me in an old-age home, because I don’t have any pension, I have nothing,” Rodríguez told IPS as she sold papaya slices to passersby.

She has three children, but says she doesn’t “want to be a burden for anyone,” adding that after a life of hard work, she should have the right to an old age without worries.

Lawmakers did not create rules enabling people in the informal sector of the economy to be covered by the system, which only applies to formally employed wage-earners.

With contributions by their employers, those covered by the system pay 13 percent of their wages into individual accounts managed by the pension fund administrators (AFPs), which take a 2.2 percent commission and invest the money.

Since late 2015, the government, the business community, academics and social organisations have been discussing what to do with the pension system which, since it was privatised in 1998, has neither expanded coverage nor improved pensions, as promised.

According to official figures, as of November 2015, 2.7 million people were enrolled in the pension savings system (SAP), in this country of 6.3 million people with an economically active population (EAP) of 2.8 million.

But 65.7 percent of the EAP works in the informal sector, while only 24.7 percent actually pays into the system, despite the fact that nearly everyone is formally enrolled, because at some point they registered and their names are still in the system.

That means only one out of four people in the EAP will have coverage when they retire, and many of these will draw very small pensions.

The debate is currently focused on how to improve returns in the pension funds, which were worth a total of 7.3 billion dollars in November. If the returns increase, pensions will grow.

Around 58 percent of that total is invested in pension investment certificates issued by the state, with low interest rates between 1.4 and three percent. Legally, El Salvador’s AFPs cannot invest in the international stock market, where the returns are higher, although the risks are too.

The government of left-wing President Salvador Sánchez Cerén wants to go even further, proposing a reform to create a mixed system that would include the private pension fund administrators – an idea that is opposed by the business community and the right-wing opposition.

Little information about the proposed reform has come out. But the government is reportedly proposing that workers who earn less than 484 dollars a month would be covered by a public system, and the rest by a mixed one.

In this debate, “we want to incorporate a gender perspective in the pensions system,” said Zaldaña, who also belongs to a group fighting for decent jobs for women, the CEDM.

The government acknowledges that women face unequal conditions. They retire at the age of 55, compared to 60 for men, which means they pay less into their accounts, and thus receive lower pensions when they retire.

To that is added the fact that they earn 15 percent less than men on average, even though on average women have more years of formal schooling, according to the United Nations Development Programme (UNDP) Human Development Report 2015.

The lower their wages, the less they pay into their individual accounts, under the current system.

“The problem is that culturally the population still has no awareness about the inequality in wages,” a public employee in a government office, Johana Peña, told IPS.

Roberto Lorenzana, the president’s secretary on technical questions, said in remarks to the government online news outlet Transparencia Activa that the gender imbalance is “a problem that we need to address” in any future reform.

He said the government’s position on this has points in common with that of the Salvadoran Association of Pension Fund Administrators (ASAFONDOS), which represents the country’s two AFPs.

However, it is unclear as to what changes are proposed to move in that direction, and Lorenzana and René Novellino, executive director of ASAFONDOS, did not respond to requests from IPS for an interview to discuss the issue.

Martínez, the researcher, believes the debate should look at the foundations of a system that is unfair to women – a problem that she said is not only seen in private systems.

“The reform should be an opportunity to redesign the pension system from the very foundations, in order for it to offer equal benefits to men and women,” she said.

The economist pointed out, for example, that women with formal jobs stop paying into the system during their four months of maternity leave. If they have an average of three children, they will have stopped paying towards their retirement for an entire year.

That time lost is added to the five years that they do not pay into the system as they retire earlier than men.

“This creates a distortion, a gap, a discontinuity, which is reflected in their labour history,” said Martínez.

Zaldaña, the head of FEASIES, said these gap periods should be counted as time worked, and the state should contribute the funds to make up for that lost time. This proposal has been presented to Lorenzana, she said.

A similar reform was implemented in July 2009 in Chile, where the government offers a bonus per child to each female worker.

The economist Martínez is pleased that the trade union movement is pushing for these changes, while she lamented that women’s rights groups in El Salvador have not taken up the battle.

Meanwhile, Rodríguez said, without slowing down in her sales of fruit to her customers, that she scrapes by “with the few cents that I make from my fruit stand, but I don’t know what I’ll do when I’m old.”

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

A group of demonstrators protest in the Argentine city of Rosario against the wave of lay-offs of public employees since President Mauricio Macri took office. Credit: Courtesy of Indymedia.org

By Fabiana Frayssinet
BUENOS AIRES, Jan 23 2016 (IPS)

Argentina’s new conservative government has already laid off 20,000 public employees since early December. Analysts have described the phenomenon as a “purge” of “militants” who supported the last administration, facilitated by the precarious employment conditions in the public sector, despite the steps taken to provide greater job stability over the last decade.

“What we have encountered is a state at the service of political activism,” said centre-right President Mauricio Macri, who took office on Dec. 10 after eight years of government by centre-left President Cristina Fernández and the four-year administration of her late husband Néstor Kirchner, both of whom belonged to the Front for Victory, now in the opposition.

The new minister of finance, Alfonso Prat Gay, said the state needed to shed some “militant fat” – an allusion to the supposed hiring of “Kirchnerist militants”.

A majority of employees of government ministries, state enterprises, and municipal and provincial administrations whose short-term contracts came up for renewal on Dec. 31 were laid off, according to the Social Law Observatory of the Argentine Workers’ Central Union (CTA).

In many cases, the dismissed workers had been in their positions for five to 10 years, although they worked under temporary contracts.

In La Plata, capital of the eastern province of Buenos Aires, which is now governed by Macri’s Cambiemos coalition, 4,500 public employees were dismissed, and their protests were targeted by a police crackdown.

“The way we found out about the dismissals was traumatic,”one of the laid-off workers, Marcela López, told IPS. She worked for eight years for a municipal programme that helps the homeless, under a contract that was renewed every three months.

“When I got to my workplace one day, I discovered they had taken me off the payroll. They sent us to human resources, who told us we had been fired, although they didn’t say we were laid off – they said our contracts expired,” said López, who supports her family, including a disabled son.

The government argues that the laid-off workers were“ñoquis” – slang for employees who only show up for work on the 29th of every month, the day ñoquis (or gnocchis), classic Italian dumplings, are traditionally eaten in Argentina.

But Lópezand many other laid-off public employees say they can prove that they had good work attendance records.

“I think the ñoquis business is a longstanding phenomenon that has to do with the way politics work here,” she said. “I don’t think that trying to fix this problem is a bad idea. But they can’t just throw everyone into the same category. Especially not those of us who do work, and who turned a (social) programme into a public policy.”

Julio Fuentes, a leader of the ATE public employees union, said that if the government really wanted to root out those who “collect paychecks without working, no one would come out to defend these people.”

“But that would have to be done on the basis of a serious analysis, with the participation of the trade unions and guarantees that arbitrary measures will not be taken,” Fuentes, who is also the president of the Latin American and Caribbean Federation of Public Employees, told IPS.

In different government offices, employees have complained that they have been asked who recommended them for the job, and that they have been questioned about their professional and educational background. Some protested that their social network profiles were searched for signs of political activism.

Despite a 15 percentage point drop over the last decade, 35 percent of the population of Argentina still works in the informal economy, like Daniel Reynoso, who supports his family selling dusters on a busy street in central Buenos Aires. Credit: Fabiana Frayssinet/IPS

“Is the state in a position today to carry out an exhaustive, systematic assessment of the situation of public employees,when official statistics do not even exist, and there is no office dedicated exclusively to the systematic compilation of information?” Gonzalo Diéguez, director of the Centre for the Implementation of Public Policies Promoting Equity and Growth’s (CIPPEC) public administration programme, remarked to IPS.

According to the ATE, the government’s argument is an excuse to justify indiscriminate dismissals and shrink the state, as part of its adjustment plan.

These arbitrary measures, Fuentes says, were made possible by the precarious nature of public employment, the result of neoliberal labour flexibility measures adopted in Argentina in the 1990s.

“For a long time we have been complaining in Latin America, and in Argentina in particular, about informal employment or so-called ‘junk contracts’, which are basically ways used by governments to get around the constitution, which guarantees job stability for public employees,” he said.

Argentina, Latin America’s third-largest economy, has a total population of 43.4 million, an economically active population of 19 million,and an unemployment rate that according to official figures stood at six percent in the last quarter of 2015 – a figure considered unrealistically low by independent experts.

According to Fuentes, of the 3.9 million state employees, some 600,000 work under different kinds of temporary contracts, and many of these enjoy no social protection whatsoever.

Of these 600,000, 90,000 work in the national administration and 510,000 work for provincial or municipal governments, without counting outsourced services, “another way to get around guarantees for public employees,” he said.

To justify the lay-offs, the government also points to how much the state has grown.

An as-yet unpublished CIPPEC study reports that between 2003 and 2015, the number of public employees rose 55 percent, in the central administration, decentralised state bodies and public enterprises.

In that period, six ministries, 14 decentralised bodies, 10 new state-owned companies and 15 new universities were created.

“Public employment grew because the state also grew, along with its organisational structure. Today the state provides a number of goods and services that it did not previously offer,” Diéguez argued.

Fuentes said that despite this growth, the recovery in the number of public sector jobs was “absolutely insufficient” after the “dismantling” of the state that began with the broad privatisation process launched by former president Carlos Menem (1989-1999).

“The number of public employees is not excessive. There are shortages of public employees, such as nurses, or professionals in all areas,” the trade unionist said.

In his view, the new government thinks there are too many public workers because “it believes in a discourse that no one believes in anymore: that the market is going to regulate economic activities and run a country.”

Fuentes said that what were recovered in the last decade were “good quality jobs with poor quality contracts.”

The problem, he said, is that the public administration has increasingly depended on workers with flexible labour contracts, “who are easily fired, which turns them into political hostages.”

Over the last decade, some six million jobs have been created in Argentina, 19 percent of them in the public sector and the rest in the private sector, where roughly 10,000 people have been laid off as well, according to trade union sources.

Informal employment has also shrunk, from 50 to 35 percent, according to the latest figures. But four million people, especially the young, still work in the informal economy.

“Above and beyond the government’s political decision on whether or not to renew contracts, the underlying issue here is the informal nature of public employment,” said Diéguez.

This, he said, is aggravated by the state’s hiring practices, which are not based on public competitions but on contracts that depend on “changes of political stripe.”

He said the previous administration made strides in formalising public employment.

But the big pending challenge, he argued, is to avoid a repeat of cases such as the mass lay-offs that occur when there is a change in the party in power. And when a new administration takes office in 2019, “there shouldn’t be a review of contracts, or if there is, it shouldn’t look like a witch hunt,” he added.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

David Kamau on his farm in Nyeri County, Central Kenya. Although he now grows carrots for sale in addition to maize, he says his efforts are yet to pay off. Credit: Miriam Gathigah/IPS

By Miriam Gathigah
NAIROBI, Dec 17 2014 (IPS)

David Kamau is a small-scale maize farmer in Nyeri, Central Kenya, some 153 kms from the capital Nairobi. He recently diversified into carrot farming but is still not making a profit.

He says that inputs cost too much and if this trend continues he will sub-divide and sell his five hectares.

This is the story of many small-scale farmers in this East African nation, where agriculture accounts for about one-quarter of the Gross Domestic Product (GDP). But small-scale farmers – accounting for about 75 percent of total agricultural produce – barely break even.

“A 150 kg bag of carrot is now going for about 27 dollars, up from 22 dollars, but as prices go up, so does the cost of inputs,” says Kamau.“The growth of both urban and rural slums is an indication that more people are falling on hard times” – Dinah Mukami of the Bunge la Mwananchi pro-poor social movement

According to the Ministry of Agriculture, an estimated five million out of about eight million Kenyan households depend directly on agriculture for their livelihoods. Yet agriculture fails to provide an adequate return to farmers because their sector is significantly underfunded, explains Jason Braganza, an economic analyst based in Nairobi.

The percentage of the budget for the agricultural sector is 2.4 percent, down 0.6 percent from the 3 percent in the 2012/2013 budget and well below the threshold of the 2003 African Union Maputo Declaration on Agriculture and Food Security, which mandated that at least 10 percent the national budget should be allocated to agriculture.

The result, says Kamau, is that “farmers are slowly moving out of the farms and trying other economic ventures, Central Kenya used to be a breadbasket but farmlands are being replaced by residential and commercial complexes.”

Farming is not the only sector feeling an economic downslide. Small businesses in Kenya are faced with a lack of essential business support services, especially financial services. Two-thirds of Kenyans do not have access to basic financial services such as banking accounts.

“The growth of both urban and rural slums is an indication that more people are falling on hard times,” according to Dinah Mukami of the Bunge la Mwananchi [People’s Parliament] pro-poor social movement.

She says that the group is planning to hold the government responsible regarding the use of the information in the ‘Socio-Economic Atlas of Kenya’ which the government released last month. The report exposes significant disparities in poverty levels across the country.

“The Atlas is a powerful tool, but whether the government will use the information to change lives and improve living standards remains to be seen,” she says.

Felix Omondi, a resident of Kibera, a division of Nairobi considered the largest slum in Africa, and a member of the Unga Revolution, a local activist group, is one of those who believes that the Atlas is doing some good.

He told IPS that that a programme is under way to upgrade slums and said that this is “one of the ways that the government is using the Atlas to improve the lives of people in the slums.”

In the last three months, the government has been working with residents of the slums to establish income-generating projects and provide basic amenities such as toilets, lighting and drainage.

At least 3,000 youths in Kibera will benefit from these projects. Omondi, a beneficiary, says that he is running one of the posho (corn meal) mills set up by the government to generate income.

Kenya now officially a “middle-income country”

Meanwhile, in autumn the news came out that Kenya had seen its economy grow 25 percent after statistical revision and is now officially a “middle-income country”. A few months ago, a similar type of revision brought Nigeria’s economy to the top of African countries in terms of the size of the economy, surpassing South Africa for the first time.

A growing middle class population is an important driver of this growth, but what does that middle class look like? The recently revised Kenyan figures indicate that the Gross National Income (GNI) per capita is 1,160 dollars against the World Bank’s “middle income” threshold of 1,036 dollars.

The latest income-distribution indicators for Kenya (which date back to 2005) show the following:

• 45.9 percent of the population was at the national poverty line;
• The income share held by the top 10 percent was 38 percent.

This out-of-date, official information excludes the informal economy, observes Africa Arino, professor of strategic management at the IESE Business School in Spain.

“A taxi driver makes KES 15,000 a month (about 178 dollars or 132 euro), and pays KES 3,500 (close to 25 percent of his income) to rent a room where he lives with his wife and two children,” Arino explains.

“They don’t have a kitchen or a bathroom: these are facilities shared with others in the same building lot. His income is pretty much the average salary of a driver, according to the Kenya Economic Survey 2014. Is he middle class?”

According to Braganza, one of the main challenges facing Kenya is that while the country’s economic growth is real and sustainable, the structure of the economy has remained unchanged. Resources have not shifted into the most productive sectors of the economy which would increase overall productivity and an increase in remunerative employment.

Braganza says that for people to feel the trickledown effect of the economic growth, there must also be structural transformation. “There is a need for more investment in the more productive sectors, as well as investment in emerging sectors. This will contribute towards a reduction in unemployment and poverty.”

(Edited by Phil Harris)

Makers of handmade shoes sit on the pavement in Harare, Zimbabwe’s capital. There are almost 200,000 youth involved in unlicensed, backyard handmade shoe businesses across the country. Credit: Jeffrey Moyo/IPS

By Jeffrey Moyo
HARARE, Jul 3 2014 (IPS)

For many young Zimbabweans like 19-year-old Shelton Mbariro, running an unlicensed, backyard handmade shoe business has become a way to escape unemployment in this southern African nation.

“We craft the shoes using raw hides that we get from abattoirs and cattle farms in and outside Harare, making strong and long-lasting shoes,” Mbariro tells IPS.

According to statistics from the Harare United Cobblers Association, an organisation of young shoemakers, Mbariro is one of 196,423 young people aged between 19 and 24 who have set up shop on street corners across towns and cities in Zimbabwe, offering a range of handmade shoes.

There are no clear figures about the total number of youth in the informal sector. However, in 2012 the Zimbabwe National Statistics Agency said 3.7 million of the country’s 13.7 million Zimbabweans worked in the informal sector.

Handmade shoes for either men or women can cost anything from 25 to 40 dollars, with sandals costing about 10 dollars. According to shoemakers interviewed in Harare, these prices fluctuate, often falling during the day. However, the prices are linked to demand and increase during peak hours and at month end.

Despite the increased availability of cheap, Chinese-made shoes, these handmade shoes are popular because of their long lifespan, attractive designs and negotiable prices. They could also be popular because soon after Zimbabwe’s July 2013 elections, the country’s sole shoe manufacturing company, Bata, scaled down operations citing the country’s poor economic performance.

But Mbariro and even 21-year-old Shadrack Bvumb, another shoemaker from Harare, attract large numbers of customers.

“When business is good, mostly during month end, I pocket at least 100 dollars from my daily sales,” Mbariro says.

Making shoes by hand has become the way of life for youth here in a country where the economy continues to shrink amid perpetual closures of industries.

• The National Social Security Authority’s Harare Regional Employer Closures and Registrations Report for July 2011 to July 2013 shows 711 companies shut down in Harare during that period, leaving 8,336 people jobless.
• In 2013, over 2,300 workers lost their jobs after 165 companies embarked on staff rationalisation programmes, according to statistics from the country’s Ministry of Public Service Labour and Social Welfare.

“This is the way we now survive as you see us here selling these handmade shoes. We make them on our own and come here to sell them because it’s a waste of time to keep searching for unavailable jobs,” Bvumbi, who comes from Mabvuku, a high-density suburb in the Zimbabwean capital, tells IPS.

But local authorities say they hardly benefit from these young people, whom they accuse of evading tax and flouting council bylaws.

“As council, we get nothing from these shoemakers because they operate at undesignated points often evading council cops,” Harare City Council spokesperson Lesley Gwindi tells IPS.

Most street venders here have, at some time or another, engaged in running battles with council cops for selling their handmade shoes without licences.

It costs about 20 dollars to apply for a vendor’s licence in the city. If approved, the licence costs 120 dollars and is valid for a year.

But the young entrepreneurs say they cannot pay local authorities and get nothing in return.

“We make money on the streets where there are no designated points for us to do business. Council authorities here have no facilities for us,” Mbariro says.

Edmund Chiutsi, who heads the Harare United Cobblers Association, tells IPS: “There are no proper points for us in towns here to sell the shoes we make; there are no shelters and what should we pay councils for?” Instead, the association lobbies local and government authorities to recognise informal shoemakers’ strides in stimulating the economy and to allow them to safely operate in cities and towns.

Economists say young people are finding a way to survive the current economic crisis.

“Increasing retrenchments in workplaces and the increase of jobless young people fuels the rise of local innovators as people strive to fight against the tide of economic challenges here,” economist Daniel Mbewe tells IPS.

“Unemployed youth have shifted focus to the informal sector, often learning completely new skills in order to survive under harsh economic conditions,” adds Mbewe.

In 2011, the Ministry of Youth, Indigenisation and Economic Empowerment created the 11-million-dollar Youth Fund to assist young people start self-help projects.

But only two percent of young footwear makers benefitted from this, according to the Harare United Cobblers Association. And those who benefitted allegedly had links to ruling party politicians.

“We rather prefer to fight on our own and keep going,” Bvumbi says.

An informal, used tyre shop at a residence in Harare's Hatfield suburb. Zimbabwe has 2.8 million micro, small and medium businesses — 85 percent of which are unregistered. Credit: Tatenda Dewa/IPS

By Tatenda Dewa
HARARE, Apr 24 2014 (IPS)

Zimbabwe’s extensive informal sector could help boost government revenue if regularised, but this won’t happen unless the government creates incentives for the informal sector to register, economists say.

“Formalisation of the informal sector would significantly improve revenue inflows through taxation on employees’ salaries, import duty, property fees and other forms of taxes on the sector. However, there is need to create incentives for the informal sector to register,” Eric Bloch, a Bulawayo-based economist, told IPS. Many businesses would be reluctant to pay taxes because of concerns that “taxes collected will not be used in the national interest”.

A 2013 FinScope survey, which is now being used by government officials as reference, indicates that 2.8 million micro, small and medium businesses — 85 percent of which are unregistered — have created 5.7 million informal jobs. These businesses generate an estimated turnover of 7.4 billion dollars, according to the survey.

Finance and Economic Development Minister Patrick Chinamasa has already cast a light on the growth of the informal sector and its significance to the economy in this southern African nation.

Responding to questions in parliament in February, Chinamasa said: “Our economy is now informal…That is the reality of our economy and it is a reality we must recognise and take measures on how to tap into this sector.”

Godfrey Kanyenze, an economist and director of the Labour and Economic Development Research Institute of Zimbabwe, a think tank of the Zimbabwe Congress of Trade Unions, explained that the government was failing to fund public programmes because the treasury struggled to mobilise money from existing industry and labour.

“There is no way the government can maximise on revenue collection in the informal sector if it is not regularised. Government must come up with a working strategy to ensure that the informal sector is formalised and taxed to improve revenue collection, which is currently in a sorry state,” he told IPS.

He said the government was also losing out because the Zimbabwe Revenue Authority (ZIMRA) was struggling to tax registered small to medium enterprises.

The formal sector has been negatively affected for more than a decade by the withdrawal of investment, low investor confidence, rampant power outages and a struggling economy that was marked by hyperinflation and acute shortages.

Kanyenze said that to ensure effective monitoring, the government must organise the informal sector into clusters based on the services or products they supplied or produced. He said the government should also offer business development and training services to the sector and devise mechanisms to protect and promote them.

Economist John Robertson told IPS that formalisation of unregistered enterprises would bring a host of other advantages.

“Besides improving revenue collection and encouraging better public sector performance, formalisation of the informal sector would hopefully ensure better working conditions for the millions said to be employed there. They would enjoy benefits associated with the formal sector such as medical aid schemes, pension, better work safety and the ability to negotiate salaries,” he said.

Tapson Mandiziva, who works as an assistant carpenter at an unregistered furniture-making firm in Glenview, a low income suburb in Harare, does not enjoy such benefits.

“I don’t have an employment contract and my boss pays me as and when he likes. Sometimes he makes huge profits from the sale of wardrobes and the kitchen furniture that we manufacture but uses the money to buy cars and personal items and does not pay us. When he does, the money is too little and he has dismissed workers on flimsy grounds,” Mandiziva, 31, told IPS.

In the three years he has worked for the furniture firm, the highest salary he has received is 200 dollars a month. But Mandiziva says he can go for as long as four months without receiving a wage and does not receive backdated payments.

The police and municipal authorities periodically raid backyard industries like the one Mandiziva works for. They have been accused of confiscating products or extorting bribes from companies operating without licences. There are also allegations that they sell the seized goods at office auctions where the officers or local authority officials are the only buyers.

Innocent Makwiramiti, an economist and former chief executive officer of the Zimbabwe National Chamber of Commerce, told IPS that the illegal raids could be avoided if the informal sector was regularised.

“The police officers, municipal and ZIMRA officials are collecting thousands of dollars in bribes from the informal traders and, in some cases,  are forcing traders to surrender part of their earnings as a protection fee against the raids.

“Part of this money could be going to the treasury had the informal sector been registered and compelled to observe company and taxation regulations,” he said.

However, formalisation and taxation of the informal sector will not be easy, according to experts.

“The biggest constraint is reluctance by small businesses to register. They tend to suspect that formalisation would open them to too much scrutiny that would affect their income generation. Since most of them are run by individuals and families that view adhering to labour laws as a burden, they would rather remain as they are,” said Bloch.

The February edition of the Public Administration and Development Journal shows that there are numerous hurdles the government faces in its attempts to harness taxes from the informal sector and registered SMEs. This includes the manpower and administrative constraints of ZIMRA.

According to the report, many businesses would be reluctant to pay taxes because of concerns that “taxes collected will not be used in the national interest”.

Many are also disgruntled over poor service delivery and the fact that some politically-connected businesspeople were being let off the hook for failing to pay tax.

Augustine Tawanda, the secretary general of the Zimbabwe Crossborder Traders Association, which comprises informal entrepreneurs whose businesses involve sourcing for resale or selling goods in neighbouring countries, told IPS: “There is plenty of money circulating in the informal sector and it is possible to innovate a win-win situation with the government.”

However, his organisation is opposed to registration of informal businesses, preferring that the government just includes them in its data base only for purposes of taxation rather than formalisation.

“The main problem is that the government is only concerned about taxing us, rather than making us grow as businesses. It does not have clear policies for formalisation and has not shown how it is going to incentivise informal traders,” he said.

Daniel Reynoso with one of his three children at one of the spots in Buenos Aires where he sells the feather dusters that support his family. Credit: Fabiana Frayssinet /IPS

By Fabiana Frayssinet
BUENOS AIRES, Apr 23 2014 (IPS)

At the age of 22, Franco finally landed his first job, although he is not on any payroll and receives no labour benefits. He is part of Argentina’s informal economy, where one out of three workers are employed – a proportion the government aims to reduce by means of a new law.

Franco, who asked that his last name not be used, works in a company where 10 percent of the total 150 workers are not on the payroll – most of them young people.

“I don’t have any medical coverage, so if something happens to me in the street on the way to work, they won’t assume any responsibility,” Franco, who is also a student, told IPS. “And no contributions are made towards a pension, so this whole year I’ve been working won’t be counted towards my retirement.

“But I couldn’t afford to say no to the job because it’s off the books; I took it because I needed it.”

During the governments of the late Néstor Kirchner (2003-2007) and his successor, President Cristina Fernández, unemployment fell from 17.3 percent in 2003 to 6.4 percent in late 2013.

In addition, informal sector employment was reduced from 49.6 to 33.6 percent, according to official figures.

But unemployment and precarious employment are still a problem, especially for the young.

The Ministry of Labour, Employment and Social Security reports that young people under the age of 24 account for 58.7 percent of precarious employment.

“Since a large part of the population does not have access to posts with social protection, workers are forced to accept the labour conditions they are offered,” economist Juan Graña of the Centre of Studies on Population, Employment and Development (CEPED) and author of the book “Salario, calidad de empleo y distribución” (Salary, quality of employment and distribution), told IPS.

“Large companies directly put their workers in precarious conditions by means of legal mechanisms, thanks to the reforms of the 1990s, which expanded this kind of work through short-term contracts or trial periods, or by outsourcing part of their processes to small companies,” to cut costs, he added.

The manager of a company that sells school supplies told IPS that in small or medium companies like his, the costs of labour and social benefits represent an additional 50 percent on top of the wages paid.

“They are very high fixed costs that leave little profit margin, and if the company doesn’t manage to sell, it goes under,” said the executive, who asked to be identified only by his initials, D.G.

On Apr. 15, the centre-left government introduced a bill in Congress for the “promotion of registered labour and prevention of labour fraud”.

The bill is aimed at regularising the situation of 650,000 workers in the first two years, in order to lower the portion of the workforce active in the informal economy from 33.6 percent to 28 percent.

According to President Fernández, precarious and informal labour “is the second-most pressing problem” facing workers in Argentina, after unemployment.

The bill would cut employer contributions in half for companies with up to five workers, and would create incentives for putting employees on the payroll, based on the size of the company.

Companies with up to 15 workers would not make contributions for new employees in their first year of work, and would only pay 25 percent in the second. Businesses with between 16 and 80 employees would be given a 50 percent discount for 24 months, and those with more than 80 would have a discount of 25 percent for the same period of time.

Another central pillar of the reform is a public registry of companies that receive subsidies, credits and tax exemptions from the state. If they commit labour fraud, these benefits would be cancelled, and they would be subject to other penalties as well.

In addition, the number of labour inspectors would be increased.

The most likely to work in the informal economy are domestics, plumbers, electricians, cleaners, and textile workers, followed by agricultural labourers, construction workers, and hotel and restaurant workers. There are also many freelance professionals and self-employed workers, such as street vendors.

Daniel Reynoso, who has sold feather dusters in Buenos Aires since the age of 12, is one of them. With his work as a street vendor he supports his three children and managed to build a house in a poor suburb of the capital.

Although he likes a job where he feels “free,” such as selling feather dusters at a street stall, he laments that he has neither health coverage nor the right to a pension when he retires.

“I’m scared for my kids; when something happens to them I have to go to a clinic and pay up front, or to a public hospital,” said Reynoso, who has a feather duster workshop in his house.

Moreover, sales are not steady. “When it rains, I don’t go out, and I lose what I would have earned that day,” he told IPS.

In the past decade, some six million jobs were created in this country of 42 million.

But Fernández admits that precarious working conditions continue to undermine social equality.

Graña said, “Precarious workers, who have no institutional coverage, are in poor conditions to improve their working situation and defend their wages,” which are threatened by inflation.

Furthermore, these jobs “tend to have high turnover, which hurts people’s job prospects, since they don’t gain skills or knowledge in these jobs.”

And wages are 35 to 50 percent lower than those of employees in the formal sector of the economy.

“Precariousness is one of the main factors of income inequality in any economy,” Graña said. For that reason “any policy aimed at combating the phenomenon is welcome, because of the effect on the living standards of families and on the distribution of income.”

There are factors that influence the precariousness of labour, such as the difficulty to compete faced by companies, which cut labour costs in order to survive, the expert said. “The definitive solution for that is economic development,” he argued.

He said there is a need for measures such as the ones the bill would introduce, because the mentality is “I won’t register any of my workers until the process is subsidised.”

The economist stressed that since the late 2001 financial meltdown that plunged the economy into the most severe economic crisis in Argentine history, “the quality of the labour market has improved, and in many cases, labour flexibility measures of the 1990s have been revoked.”

But “in terms of both pay and quality, we are currently far from the levels that we once had in Argentina. The purchasing power of industrial workers is still 27 percent lower than it was in 1974,” Graña said.

Ernesto Mattos, an economist at the Centre for Research and Management of the Solidarity Economy (CIGES), underscored advances made in combating informal labour conditions for rural workers and domestics, for example, whose labour rights have been guaranteed by new legislation passed in 2011.

In his view, more credit should be made available to small businesses which, although they are low capital intensive, “hire more labour power for production.”

Growth of economic activity was the main factor in reducing the informal economy, said Mattos. But in order to continue making progress, labour training is essential “in this stage of capitalism in which technology is important,” he said.

There has been a boom in Zimbabwe’s informal carpentry sector. An unidentified carpenter is pictured at work in Glenview, a high-density suburb in Zimbabwe’s capital, Harare. Credit: Jeffrey Moyo/IPS

By Jeffrey Moyo
HARARE, Apr 21 2014 (IPS)

Tracy Chikwari, a 36-year-old single mother of two and informal furniture dealer in Harare, Zimbabwe’s capital, is all smiles as she talks about her flourishing business.

“I bought two houses here in Harare by trading in furniture that I buy from the informal market and I have no doubt this feat is taking me to greater heights,” Chikwari tells IPS.“Yes, informal businesses like carpentry are doing very well considering the ready market for their products. But the government is not earning revenue from them.” -- Independent economist Kingston Nyakurukwa

Informal carpentry is becoming a fast-growing industry in this southern African nation.

Fainos Dziva, a carpenter in Zimbabwe’s Chitungwiza town, 25 kilometres southeast of Harare, manufactures furniture that he says caters for all people — the rich, the poor and the middle class.

“Many people, including business people, owing to the exorbitant prices of furniture in department stores here, prefer to come here where prices are negotiable,” he tells IPS.

In places like Harare’s high-density suburbs of Glenview, Machipisa, Budiriro and Kuwadzana, busy carpenters make and sell furniture to individuals and big businesses.

According to the Informal Woodworkers’ Association, a Harare-based organisation, 18,500 people are currently engaged in informal carpentry in the capital.

“Most carpenters here shun practicing formally, evading operational costs from local and government authorities for the land and resources they use, resulting in close to 20,000 people turning to informal carpentry. Indeed it is a sharp rise from about 7,000 back in 2009,” the association’s chairperson, Dickson Mapuranga, tells IPS.

He explains that the association guides carpenters on how to grow their business and links them to ready markets for their products.

The informal sector is absorbing jobless Zimbabweans. Here, 60 percent of this country’s 13 million people are unemployed, according to figures from the United Nations World Food Programme.

And a number of industries here have closed down over the years. According to the 2013 National Social Security Authority Harare Regional Employer Closures and Registrations Report, 711 companies closed shop between July 2011 and July 2013.

Many people who had previously been formally employed, some 3.7 million, are now working in the informal sector, according to the Poverty Income Consumption and Expenditure Survey, which was released by the Zimbabwe National Statistics Agency in January.

The formal carpentry industry has been declining steadily as well. According to statistics by the Ministry of Small to Medium Enterprises, 13,400 people are said to be currently working in the formal carpentry sector countrywide. This is a fall from the 22,132 who worked in the same sector three years ago.

Carpenters like 39-year-old Ignatius Mhara from Chitungwiza town have turned their homes into mini furniture factories, sometimes earning thousands of dollars each month.

“Every day I have new furniture orders from my customers, which keeps me busy. Often I take home 400 to 600 dollars from daily sales as most of my customers can’t afford to make once-off payments for the furniture they purchase from me,” Mhara tells IPS.

But more often than not these informal industries are unregistered and unregulated and their owners often evade registration and taxation.

Economists here say these informal businesses have failed the government.

“Yes, informal businesses like carpentry are doing very well considering the ready market for their products. But the government is not earning revenue from them,” independent economist Kingston Nyakurukwa tells IPS.

A top government economist speaking to IPS on the condition of anonymity says the government is losing close to 32 million dollars a month in tax revenue from the informal carpentry sector.

Zimbabwe’s Small and Medium Enterprise Minister Sithembiso Nyoni tells IPS: “About 7.4 billion dollars is circulating in the informal sector; imagine if millions of people in informal sectors were to pay one dollar each per month to government fiscus.”

Zimbabwe’s Finance Minister Patrick Chinamasa announced this year that the government is set to formalise the unofficial job sector through registering and licensing informal businesses and their economic activities.

But for many informal traders like Mhara, it remains to be seen whether or not they will embrace surrendering portions of their profits to the government as tax.

“Paying the government tax for our activities depends on what we also get from them. But we are getting nothing. We are harassed daily by so-called plain clothes officials from the Zimbabwe Revenue Authority, who accuse us of not benefiting the government,” Mhara says.

Behind “yerba mate”, a caffeinated herbal brew that is popular in Argentina and neighbouring countries, lies a shameful reality: the dismal labour and living conditions of the workers who harvest the leaves of the bush used to make the infusion.

The precarious conditions faced by yerba pickers and other seasonal workers are a longstanding problem in rural areas of this South American country. But in the 1990s, informal employment expanded in the rest of the economy as well.

And the problem has remained intractable over the last decade, despite steady high levels of economic growth since 2004 and the subsequent rise in decent, formal sector employment.

Rural worker in Argentina. Credit: Courtesy of Estudios y Proyectos

Informal sector employment mainly affects rural labourers, domestic workers – almost all of whom are women – and employees in small and medium-size companies.

“Yerba mate is green gold here,” said Roque Pereira, president of the Asociación Civil de Tareferos y Obreros Rurales, the union of yerba mate pickers and rural workers of the northeastern province of Misiones, known as the home of yerba mate.

“It cheers people up at parties and comforts them at funerals. But excluded from that is the enslaved rural labourer who harvests the crop,” he added.

The “tareferos”, who pick the leaves of yerba mate – which is a type of holly (Ilex paraguariensis) that grows in the subtropical regions of South America – only work from March to September, and are paid per ton of leaves harvested.

That means they have to find an alternative source of income for the rest of the year.

A new law on agricultural labour, the Régimen de Trabajo Agrario, that went into effect in 2011 offers them a monthly stipend from the state between harvest seasons.

But in order to qualify for the monthly payments, workers have to be formally registered, which means that only just over 10 percent of the tareferos receive the stipend, the union says.

“There are 16,000 tareferos, and only 1,750 of us earned the stipend in 2011. The contractors could register us, but there is a culture here that sees us as numbers, not people, and they keep us without papers,” Pereira told IPS.

The situation is similar for workers hired to harvest tobacco, cotton or the different kinds of fruit grown in Argentina. They are hired for the season, with no health or social security coverage or guarantees that they will be given a job the following year.

A few measures; scant results

According to the National Institute of Statistics and Census, in 2003 – when the country began to pull out of a severe economic crisis – the unemployment rate stood at just under 25 percent of the population, and workers not registered in the social security system represented almost 50 percent of the workforce.

Since that peak, both figures have gone down. Today the unemployment rate is just 7.2 percent, and the proportion of informal sector workers has fallen to 34 percent – still a high rate, however, which is even higher in the yerba mate growing areas and the rest of northern Argentina, where black market workers represent 40 percent of the total.

Labour Minister Carlos Tomada himself admitted that the percentage of informal sector workers was going down at a slower pace than the government would like.

“Unregistered work grew for 25 years, and only started to decline in 2004. But now it has plateaued, and we are not happy about that,” said Tomada, who announced the creation of a tripartite body made up of business, trade unions and government, to craft policies aimed at reducing informal sector employment.

Nevertheless, experts say informality continues to shrink, but more as a result of the strong growth in the number of formal sector jobs than because of a decline in the absolute number of unregistered workers.

“There are always around four million informal sector workers (out of an economically active population of 17 million). They have a low educational level and meagre incomes,” Jorge Colina, an economist with IDESA, a centre for research on the labour market, told IPS.

In a 2011 study, IDESA found that a majority of small companies employed unregistered workers.

“The system puts a heavy burden on small companies,” Colina said. “For every 100 pesos of monthly wages, the employer has to pay 43 in social security and other contributions.”

He said a “laxer regime” would be better for small and medium-size companies. But “in the last few years, the government has made no effort to change the framework of regulations for these firms. It argues that it does not want a double standard for employees of small and large companies.”

Sociologist Eduardo Donza, a researcher on labour issues at the Social Debt Observatory of the private Catholic University of Argentina, acknowledged that it is “very difficult” to fight the phenomenon of informal labour.

“Would registered work increase with more inspections? It might bring some results, but you run the risk that the company would close and fire the few employees it has,” said Donza, a former Labour Ministry adviser.

“In general, the state focuses on preserving sources of jobs. If the activity is very informal and the earnings are small, it’s understood that it is difficult for these workers to be registered,” he explained.

Donza also stressed that, unlike in the 1990s, there are now “more protectionist” labour policies. For example, there is the Programa de Recuperación Productiva, which provides a small company in crisis with a subsidy, in order to prevent lay-offs.

Under the programme, the business presents a detailed report on its financial difficulties, and the government pays part of the company’s registered workers’ wages for a year, or until the firm recovers.

There are also job training and scholarship plans to help school dropouts complete their primary or secondary education, as well as programmes providing support for microenterprise, he said.

But he acknowledged that there are cultural factors, which mean that unregistered labourers, child workers, and inhumane working conditions are invariably found in the ministry’s inspections of rural establishments.