The Institute of Social and Economic Research (ISER) at Rhodes University says the informal economy has been affected disproportionately by the Covid-19 crisis.

The informal sector comprises about 20% of South Africa’s total employment.

ISER on August 20 hosted the first webinar in a series, presenting vital research on socioeconomic issues in South Africa.

The measures to curb the spread of Covid-19 have impacted negatively on informal workers, whose jobs are precarious and who often depend on daily earnings for survival, while also lacking legal and social protection.

ISER says these impacts have been experienced unevenly by different groups of workers within the informal economy. 

ISER has analysed the first wave of the National Income Dynamics Study-Coronavirus Rapid Mobile Survey (Nids-Cram) survey to identify how the effects of the Covid-19 crisis differ within the informal economy, particularly by gender and type of employment.

The survey, undertaken by the Southern Africa Labour and Development Research Unit, provides nationally representative data gathered from about 7 000 individuals about unemployment, household income, child hunger and access to government grants.

Rhodes University economics associate Professor Mike Rogan says the Nids-Cram survey estimates that about three-million jobs were lost in South Africa in April, with women accounting for two-thirds of these lost jobs.

Globally, the pandemic has resulted in a “shecession”, meaning that the impacts of Covid-19 have been much more intense on women.

In many contexts, the current moment has been described as a “triple crisis” consisting of a health, economic and care crisis that has a greater impact on women than men.

ISER finds that 31% of informal workers who did not lose their livelihoods completely, were "locked out" of employment in April, compared with 26% of those in formal employment.

ISER reports that among those who were employed informally in February and April, women in the informal economy saw a decrease of 49% in the typical hours worked in April, while men in informal employment saw a 25% decrease in typical hours.

“Thirty-three per cent of informally employed women were completely locked out of their jobs or income earning activity in April, while 29% of men were locked out of employment in April.

“The decrease in hours worked within the informal economy was greatest for the self-employed, where average hours decreased by a third and typical hours decreased by more than 50%,” Rogan explains.

Not surprisingly, these large reductions in hours coincided with earnings losses in the informal economy.

Men who were able to keep their jobs worked 25% fewer hours in April, compared with February, while women had almost a 50% reduction in working hours. Even if they did not lose their jobs, even those who were able to do some work, were not able to do it to a full extent.

Among the informal self-employed who were working both in February and April, average earnings decreased by 27% and typical earnings by 60%. For women in informal self-employment, typical earnings decreased by nearly 70% between February and April, while this number was 60% for men.

“These findings suggest that, as the pandemic unfolds in South Africa, current interventions need to be significantly scaled-up and far better targeted at informal workers, in general, and women informal workers in particular.

“The rate of extreme poverty among households with informal workers – roughly 21-million people in the country, would increase from 10% to 26% in the absence of direct income support.

“Unfortunately, we do not know how many of the three-million jobs lost in April were in the informal sector,” Rogan states.

Just over a third of all workers are informal – without any type of legal or social protection linked to their employment.

Casual workers saw a 50% reduction in working hours in April, compared with February, while self-employed people in the informal sector saw more than 54% reduction in their working hours. Informal employees saw a 10% decrease in their working hours in the two comparing months.

Rogan notes that the ISER's analysis should be considered a conservative estimate of livelihood losses in the informal economy.

He says attention needs to be paid to the special Covid-19 grants, since two-thirds of the nearly three-million grants were delivered to men, despite women suffering most.

Rogan adds that the amounts of grants need to be in line with international norms and increase accordingly.

“We need to understand the workers that continue to survive, to draft strategies on the recovery of the informal sector.”

Rogan says we need to rethink the role of the informal economy, as it remains inextricably linked with the formal economy.

“Perhaps the hardest question is what is happening with households with 0% income. The short-term questions should not distract from the longer-term questions, determining how the economy got to this point.

“Do we want or need an informal economy? For me it is about a social contract. If we know that a third of the workforce has no work security and no social protection, what types of contracts do we need in South Africa?

“We know that the informal economy is closely tied with the formal economy in South Africa. We need to develop ways of recognising the informal economy’s contribution and extend protection measures to it,” he explains.

ISER director Professor Nhlanhla Mbatha says this type of research helps to inform interventions going forward, to mitigate further against the negative impacts of Covid-19, especially for women.