JOBS SUMMIT

POLICY BRIEF SERIES

August 2018
STREAM 3, POLICY BRIEF 1

INFORMAL ECONOMY/
SECTOR
Policy brief prepared for the Labour Caucus in the Jobs Summit Small and Micro-
enterprise Support working group by the Institute for Economic Justice (IEJ).
Stream: Small and Micro-enterprise Support Stream 3, brief 1
IEJ Collaborator: WIEGO South Africa with inputs from Laura Alfers, Jane Barrett,
Vanessa Pillay, Mike Rogan, Marlese von Broembsen; co-ordinated by Caroline
Skinner.

1. INTRODUCTION
In response to the 2018 Job Summit priorities of inclusive for creating more and better-quality jobs – both formal
growth and redistribution and (small and) micro enterprise and informal.
development, this brief focuses on informal economy.
Informal work should not be romanticized – incomes are 2. WHAT IS THE INFORMAL
low for all but a few, while for most working conditions
are poor with little security or social protection. However,
ECONOMY / SECTOR?
in South Africa, three in every ten of those who work There is considerable confusion about who and
are informally employed. This is a significant source of what activities are included in the informal economy
employment and, as is the case globally, is increasingly or sector. The International Conference of Labour
dominant. With unemployment levels increasing Statisticians (ICLS) has approved international statistical
(recorded at 27% and 37% for the narrow and expanded definitions of the two distinct but related concepts. These
definitions in quarter 2 of 2018), the chances of accessing norms are reflected in box 1. With the International
any job in South Africa, whether informal or formal, are Labour Organization (ILO) and the International Expert
currently low. Group on Informal Sector Statistics, WIEGO pushed for
the broader concept on informal employment which
captures all forms of informal employment both inside
In contrast to micro enterprise development approaches and outside the informal sector. A focus just on informal
that focus on lowering wages and reducing regulation, sector enterprises tends to side step the complexity of
these proposals focus on increasing incomes of informal informality, including informal wage employment in
workers and improving working conditions and social both formal and informal enterprises and households. An
protections. A holistic approach to the informal economy enterprise lens also tends to narrow the policy focus to
considers the multiple needs of informal operators as supply side measures of training and micro finance.
workers and entrepreneurs, working in different locations
and segments of the economy. Increasing the incomes and
work conditions of the bottom quintiles of the labour
force will generate further demand for goods and services
especially in low-income areas, so contributing to inclusive
growth and redistribution. In turn this has the potential

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worker and informal sector data is reflected. This is a

BOX 1: INTERNATIONAL missed opportunity to regularly highlight the quality of
CONFERENCE OF LABOUR work in South Africa.

STATISTICIANS DEFINITIONS 3. THE SIZE AND CONTRIBUTION

Informal sector (enterprise-based definition) refers to OF THE SOUTH AFRICAN
the production and employment that takes place in
unincorporated, small or unregistered enterprises (1993 INFORMAL ECONOMY / SECTOR1
ICLS) Statistics South Africa’s non-agricultural labour force data
Informal employment (worker-based definition) refers show that 4.5 million people are in informal employment.
to all workers not covered or insufficiently covered by Four hundred thousand of these workers are employed
formal arrangements through their work, including, in the formal economy but under precarious conditions,
another 1.3 million as domestic workers, and 2.8 million
• Own-account workers and employers in informal
in the informal sector. Further interrogation of informal
sector enterprise
sector data shows that it is largely constituted by own
• Employees who do not have labour rights (such account workers – street and spaza shop traders, taxi
as not receiving social insurance through their drivers, construction workers, educare providers, waste
job or the right to vacation or sick leave, whether recyclers, tailors, shoe repairers, bush mechanics, among
they work in informal or formal enterprises or others (see Rogan and Skinner, 2017 for details).
households.)
Recent research also shows informal employments’
• Unpaid workers, including family workers, own use significant contribution to poverty alleviation (Cichello
producers, volunteers and trainees (2003 ICLS) and Rogan, 2017; 2018). While individual incomes are often
low, cumulatively these activities contribute significantly
Informal economy refers to all units, activities, and to gross domestic product (GDP). Stats SA estimated the
workers so defined and the output from them. informal sector contributed 6% of GDP (Stats SA, 2014).
This work is connected into the formal economy in a
myriad of ways – either purchasing from, supplying into or
Statistics South Africa applies ICLS norms, defining the being the last mile distribution for, the formal sector. This
informal sector as having the following two component is while informally employed domestic and care workers
two components: allow others to work. Any policy intervention needs to be
critically informed by these interconnections.
i) Employees working in establishments that employ
fewer than five employees, who do not deduct
income tax from their salaries/wages; and
ii) Employers, own-account workers and persons 4. THE NATURE OF THE PROBLEM
helping unpaid in their household business who are Protections and benefits – non-compliance and
not registered for either income tax or value-added significant gaps: Protection of and support to the
tax (2018: 17). informally employed has been intermittent in the post-
This is in contrast to informal employment, which is apartheid period. With respect to employment and social
defined as all people ‘who are in precarious employment protections, some key legislation, like the Basic Conditions
situations, irrespective of whether or not the entity for of Employment Act (BCEA), cover all employees whether
which they work is in the formal or informal sector’. They they are working in the formal or informal economies.
further clarify, There is however little capacity within the Department
of Labour to monitor compliance in the formal, let
• Persons in informal employment therefore comprise
alone informal sectors. In addition, for critical benefits
all persons in the informal sector, employees in
and protection – like maternity benefits, unemployment
the formal sector, and persons working in private
insurance and occupational safety and health protections
households who are not entitled to basic benefits
– own account workers are not covered.
such as pension or medical aid contributions from
their employer, and who do not have a written State destruction of livelihoods and patchy support
contract of employment. (2018: 17-18). measures: A detailed analysis of local, provincial and
national policy responses to the informal sector in the
While informal employment is defined in regular
post-apartheid period concluded this has been a mix of
Quarterly Labour Forces Survey releases, only domestic
ambiguity, omission, but also repression. Notable cases

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of destruction of livelihoods cited are violent removal of industry estimated to generate R15 billion in revenue.
6000 inner city street traders in Johannesburg in 2013; Understanding these interconnections are a key to
the closure of 600 informal businesses by the Limpopo designing more effective interventions. Philips’ (2018)
government in 2012, but also ongoing confiscation also details formal-informal inter-connections, arguing
of informal goods (Skinner, 2018). When the informal that a key reason that South Africa’s informal economy is
sector is addressed, it tends to be regarded as micro and/ comparatively small, is in fact concentration in the formal
or survivalist small businesses predominantly requiring economy. Again, this broadens the policy focus, to include
micro-finance, training and removal of regulatory economic policies such as competition policy.
constraints. The first and only attempt to have a nationally The role of big corporates – unregulated and
coordinated informal sector policy – the National Informal unaccountable: Many multinational corporations –
Business Upliftment Strategy or NIBUS (DSDB, 2014) – is a Unilever, Breweries (e.g. Anheuser-Busch InBevIt) and
case in point. While such support interventions may assist, Coca-Cola, Gold Leaf Tobacco – informal retailers provide
a much more comprehensive and nuanced approach is the final point of distribution for their products. Some
required. of these corporates claim that their use of informal
Governance mismatches – the informal economy as a low operators is part of their commitment to black economic
priority issue combine with ambivalent attitudes: While empowerment or even, as in the case of Coca Cola,
recent progress has been made in the Departments’ of corporate social investment (Woodward, Rolfe & Ligthelm,
Labour and Small Business Development in acknowledging 2014). Closer scrutiny shows that this is often a commercial
the informal economy, it is an issue that is accorded low strategy that can simply devolve risk to smaller players
priority with insufficient human and financial resources (the ABI controversial owner-driver scheme being a case
being allocated. The activities of local government are in point) or as in Gold Leaf Tobacco, a tax evasion strategy.
particularly critical to those working informally but This suggests far greater attention needs to be paid to
local authorities often have an ambivalent attitude to the big corporates. The policy challenge in South Africa,
informal work, especially those operating in public space, and globally, is finding ways to ensure corporates take
since this is seen as antithetical to what constitutes a responsibility for, and contribute to protection of, work
‘modern’ city. Further multiple departments across all and workers in their value chains.
three tiers of government impact work in the informal Lack of voice for informal workers and their
economy. Informal economy budget analyses powerfully representatives in policy processes: Informal workers are
demonstrate this (see Budlender, Valodia and Skinner, often assumed to be unorganised, which is not the case. In
2004 and Robbins and Quazi, 2015). In terms of policy towns and cities across South Africa, informal workers act
levers, this shows that the importance of considering collectively. This is increasingly aggregating up to national
multiple departmental players. alliances of informal worker organisations, notably the
Anti-foreign sentiment as a key driver of punitive South African Waste Pickers Association (SAWPA); the
approaches: Due to low barriers to entry, the informal South African Informal Traders Association (SAITA) and
economy is a source of employment for foreign economic the South African Domestic Service and Allied Workers
and political refugees. Post-apartheid experience has Union (SADSAWU). While these and other informal
shown, in the face of state failures, foreign migrants are worker organisations have been recognised as part of the
easy scape goats. Xenophobic sentiments, within and Community Constituency in NEDLAC and are active in the
outside the state, are a key risk in securing a progressive ILO Recommendation 204 process described below, they
stance on the informal economy. Anti-foreign sentiment are often excluded from other policy processes, both at a
has been a key driver of punitive approaches (e.g. the national and local level.
Draft Business Licensing Bill) that are destructive to South
African and migrant operations alike.
The multiple linkages between the formal and informal 5. CURRENT AGREEMENTS AND
economies not informing interventions: Any detailed
analysis of the informal economy and / or segments PROCESSES BY SOCIAL PARTNERS
within it, show that the formal and informal economies TO ADDRESS THIS ISSUE
are critically intertwined2. For example, the CSIR (2015) There are a range of ongoing informal employment
estimates that approximately 60 000 waste pickers policy efforts. The Jobs Summit process holds the hope of
collecting between 16-24 tons of recyclables each per cohering these multiple initiatives.
annum are a critical source of supply to formal recycling
companies – Mpact, Consol and Universal Recycling – an The 2014 and 2015 International Labour Conference

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focused on the informal economy. This resulted in informal worker organisations in April 2016.
Recommendation 204: Transition from the Informal to • An Informal Economy National Summit convened in
the Formal Economy. This is a major break through in June 2016.
the international policy arena. South Africa was selected
• The establishment of an implementation Task Team in
as test case for the ILO of implementation of R204. The
June 2017 comprising representatives of government,
partners in NEDLAC have been engaged for a few years
organised labour, informal worker organisations,
in a Decent Work Country Programme (DWCP), as part
business and the ILO. The Task Team has agreed terms
of the ILO’s Decent Work agenda. Informal worker
of reference and is supposed to meet once every
organisation representatives are involved in the process
two months, although meetings have to date been
via the Community Constituency. Implementation of R204
slightly less frequent. The Task Team has agreed on
was agreed to be a key pillar of the DWCP’s work. R204
an expanded version, to meet when necessary, with
provides an important framework for informal economy
more representatives for each social partner.
policy making. Key elements of R204 include:
• Agreement by the Task Team on a process of
• Providing rights, protections and incentives for
identifying a number of municipalities in which pilot
informal workers, and recognises the need for a
policy and implementation engagement processes
friendly legal and policy environment.
should be rolled out, including the establishment
• Promoting the preservation and expansion of formal of local negotiating forums between the council
jobs, with the informalisation of formal jobs to be authorities and informal worker organisations.
prevented.
• The establishment by the Task Team of a legal reform
• Recognising public spaces as work places, and the sub-committee to look into whether amendments
need for regulated access by informal workers to will be required to any or all of the following laws,
public natural resources. in order to comply with commitments made in R204,
• Ensuring freedom of association and collective including the recognition of all informal workers as
bargaining for informal workers. workers. The legal reform sub-committee has agreed
• Providing social protection, including the extension on terms of reference but is yet to start work on the
of social insurance coverage, and occupational health substance of the identified laws. (See Appendices).
and safety for informal workers. • In principle agreement by the Task Team that Social
• Ensuring gender-based equality and the elimination Protection needs to be established as an additional
of all forms of discrimination and violence against stream of work, with proposals on what needs to be
informal workers, including gender-based violence. focused on having been tabled in the Task Team (See
Annex 3).
• Including the membership-based organisations of
informal workers in all tripartite negotiations and • A National Dialogue in March 2018, which produced
consultations on issues that affect them. a roadmap of actions.
• Extending labour inspection to protect informal
workers. Another important initiative not under the R204 process,
• Collecting statistics on the informal workforce. but aligned to it, is the South African Local Government
Association’s (SALGA) process of developing informal
• Preserving and improving livelihoods of informal
economy guidelines for the 257 municipalities who are
workers during the transition to formalization.
their members.
The South African government, together with the three
The above is an impressive list of agreements and
social partners in the tripartite plus one arrangement, has
high-level engagement processes. However, there are
committed to the implementation of R204. Because R204,
some serious obstacles to moving these agreements
like all other ILO instruments, sets out only basic principles,
and processes beyond talk shop status. These obstacles
the social partners are now expected to elaborate and
include:
agree on precise steps to be taken to put R204 into effect.
These steps include identifying changes in all laws that • Inadequate financial resources for the R204 Expanded
relate to the bullet points listed above. Task Team to meet. Currently only the Task Team
members are being financed by government to
To date, the main features of the R204 implementation
attend meetings.
process have been:
• No financial resources for informal worker
• A national workshop of organised labour and
organisations to convene national meetings together

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to ensure accountability. including an examination of the relationship between,

• Insufficient engagement on the part of COGTA with for example, large powerful firms and small weak firms.4
its constituent municipalities to encourage and guide Legal reforms: Changes in the core labour statutes and
(and if necessary fund) them in their engagements other Acts are however urgently required in order to
with informal worker organisations. In the absence of extend rights, protections and benefits to own account
resources or directives from COGTA, SALGA informal workers. Appendix 1 outlines amendments to the
economy guidelines, municipalities may remain Labour Relations Act (LRA) and the Basic Conditions of
unresponsive. Employment Act (BCEA), and various social protections
including legislation relating to occupational health and
6. PROPOSED APPROACH, safety.
INCLUDING POLICY SHIFTS In addition to these, attention needs to be paid to the
REQUIRED TO ACHIEVE THE recognition of public spaces as work places. The Socio-
Economic Rights Institute have been working with SALGA
SYSTEMIC CHANGE on street vending regulations. SERI’s Fish-Hodgeson
The proposed approach is to improve protections and and Clark (2018) analyse jurisprudence with respect to
enhance incomes of informal operators as workers street vending and show that the law grants protection
and entrepreneurs, working in different locations and to foreign nationals who participate in informal
segments of the economy. WIEGO has multiple work trade, cautions local government to the illegality of
streams and is involved in research, policy and advocacy impoundment of traders’ goods. The report concludes
at local, national and international levels. Due to the time with various recommendations that have been drawn
available to draw together this briefing note, we were from case law. Clark (2018) translates this into a set of
not able to do full justice to all of these issues but can recommendations to local government including outlining
furnish further details on request. Our work however bylaw clauses that need to be changed if current laws are
does suggest the following priorities: to comply with the constitution. Further work needs to be
Do no harm measures: As noted above, precarity in many done regarding the need for regulated access by informal
instances is generated by the state. Ongoing confiscation workers to public natural resources like waste, medical
of informal traders’ goods, evictions of informal retails in plants and fish.
blitz interventions like ‘Operation Clean Sweep’ in inner
city Johannesburg and ‘Operation Hardstick’ in Limpopo Investing in infrastructure: Infrastructure has an important
being cases in point. Other occupations like waste and positive impact on the resilience and productivity of
picking are also subject to ongoing harassment while informal workers. Those working in public spaces need
the distribution of fishing quotas have had devastating access to basic infrastructure – water and toilet facilities
impacts on small scale fisherfolk3. A critical starting point as well as infrastructure to support their work – shelter,
needs to be ‘do no harm’ measures. An inventory of storage and sorting facilities. Dobson and Skinner (2009)
these state actions needs to be established as a matter of for example, show how providing electricity to street
urgency, and working alongside representatives of these and market traders working in inner-city Durban has led
worker groups, alternative paths of action identified. to increased value addition. The DSDB has established a
Implement protections that are there: Where protections fund - the Shared Economic Infrastructure Facility (SEIF)
have been put in place, for example basic conditions of – for infrastructure for clusters of informal enterprises,
employment or sectoral minimum wages, there is little SMMEs and cooperatives. The fund requires a matching
enforcement oversight. When workers are ‘informal’ 50/50 contribution by the municipality or province and
because of noncompliance – what is required is inspection makes up to R5 million available per project. According
and compliance by all employers, whether in the informal to the DSDB reports to parliament, there however has
or formal sector. The enforcement capacity of the DOL’s been very little uptake of these funds (https://pmg.org.za/
labour inspectorate needs to be enhanced and a strategy committee-meeting/24671/). The reasons for this need to
needs to be developed that encourages progressive be investigated as a matter of urgency.
compliance by employers, including considering the The evidence shows that for many informal workers their
option of permitting certain exemptions for an agreed home is their workplace – spaza shop owners, those doing
period while compliance is pursued in a step-wise manner. small scale catering and manufacturing to name a few (see
Compliance by all employers and particularly by those in findings from the Survey of Employers and Self Employed,
the informal sector, needs to be made possible through Stats SA 2014). Acknowledging and supporting these
the introduction of coherent employer support measures, realities needs to critically inform approaches to slum

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upgrading and low-cost housing projects. This suggests Own account workers however remain excluded from
a different approach to town planning and settlement all forms of social protection that are dependent on an
design (see Skinner and Watson, 2018). employment relationship. Specifically, they are excluded
Training and access to financial services: Analysis of the from the Unemployment Insurance Act (UI Act), the
supply of training to the informal economy suggests that Occupational Health and Safety Act (OSH Act) and the
the Sectoral Education and Training Authorities (SETAs) Compensation for Occupational Injuries and Diseases Act
have little incentive nor the expertise to service the (COIDA).
specific needs of the informal economy (see Devey et al Social Protection is a specialist area of policy. At almost
2008). DSDB addresses this through the SEIF programme every step of the way there are key policy choices to be
but this is still struggling to scale up their interventions. made, e.g. whether protections are contributory or not,
In their June 2017 report to parliament, DSBD noted they whether they are means tested or universal, whether they
had trained just over 4 400 informal sector operators5. take the form of a cash transfer or are insurance based,
While this is progress, given that in the same period over and so on. Furthermore, all aspects of social protection
2.8 million people were registered as working in the are integrally linked, meaning that piecemeal reform
informal sector, scaling up remains a challenge. is usually not successful. Input from social protection
Lack of access to finance is repeatedly identified as a experts, together with engagement between the social
problem in surveys with informal economy operators partners with a view to reaching policy consensus is
(see Fourie, 2018). The Survey of Employers and the Self absolutely critical before major reforms to laws relating
Employed (SESE) shows how little access to credit those to social protection are proposed.
working in the informal sector currently have. In 2013, The discussion on legal reforms required to bring informal
97% of those interviewed had no access to any credit workers under those key social protections from which
facility or asset finance, rather financing their enterprises they are currently excluded does not however need to
with loans from family or friends (Stats SA, 2014: 15). There start from scratch. There are already a number of policy
is increasing emphasis in the literature on the importance and law processes underway.
on the role of savings (Martin and Paul, 2015) rather than First there is the stalled process of the consolidation of
access just to credit6. Access to banking is thus important. a comprehensive social security system. This discussion
SESE however found that only 21 % of interviewees needs to be urgently revived within NEDLAC. The starting
had a bank account (ibid), suggesting that the financial point of these discussions from the point of view of the
service sector campaign, that is pressuring banks to inclusion of informal workers would be the proposal
service poorer clients, has made only marginal inroads for a National Social Security Fund, with a simplified
into the informal sector in South Africa. Access to a range contribution arrangement for own account and other
of financial services is an important factor in managing informal workers (see the March 2012 Discussion
shocks, for mitigating vulnerability, but also the process of Document produced by the Inter-Ministerial Task Team
entering the informal sector, and the small steps entailed on social security and retirement reform). The envisaged
to expand operations or access new lucrative markets (see NSSF included proposals for disability and survivor
Philip, 2018). Further pressure needs to be placed on the benefits, an extension of Unemployment Insurance after
banks to increase their coverage. the exhaustion of credit days, a funeral benefit, and a
Social protection reforms (inclusive of Occupational low-cost pension fund to supplement the existing old age
Safety and Health)7: South Africa has expanded its social pension – with informal workers being eligible for all of
grant system considerably since 1994. Own account these.
workers and other categories of informal workers, as part Second, there is the National Health Insurance White
of the universal adult population, are eligible for the child Paper, which needs to be engaged with.
support grant as well as all the pensions (old age, disability,
Third, some consideration has been given to the
and veterans). In addition to the above, in 2016 a new
consolidation of the two existing workers’ occupational
national integrated Early Childhood Development (ECD)
illness and injury compensation schemes (one for former
policy was introduced by government to include all 0-4
mine workers and one for all other formal workers).
year olds (as opposed to previous policy covering 3 years
plus). This is a universal policy applying to all children. Fourth, there is currently an investigation being led by the
Given that child care is key to a sustainable income for South African Law Reform Commission into mechanisms
many own account women workers, a concerted effort for the extension of maternity and paternity benefits to
will have to be made by all stakeholders to ensure it is informal workers.
applied to the children of own account workers. Furthermore, it may be useful to draw on a range of

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international examples of steps taken to include informal without any change to the law. The Advisory Council
workers in some or all social protections. For example, could in turn establish a technical committee comprising
• Senegal has fused some small-scale contributory representatives of own account workers as well as experts.
social security schemes with its public schemes; On the advice of the Advisory Council, the Minister of
Labour could issue regulations covering own account
• Tunisia has been expanding workers compensation
workers, again probably with no amendments to the
and pensions to informal workers, sector by sector;
law being necessary. Where changes in the OHS Act may
• India introduced the Unorganised Sector Social be required would be in relation to the election and
Security Act in 2008 which allows for the introduction function of safety representatives (Sections 18 and 19 of
of sector-based schemes for informal workers; the OHS Act), and in relation to the scope and function
• Zambia is currently experimenting with extending of the safety inspectorate (Sections 27-35 of the Act). The
contributory social protections to informal absence of an employment relationship should not be an
construction workers – taking advantage of the obstacle, as in most cases the local authority will become
existence of large employers in the industry which the counterpart bearing responsibility for the provision
makes it possible to adopt a “value chain”/cross of services necessary to keep own account work safe
subsidisation model; and healthy e.g. clean water, toilet facilities, protection
• Thailand has introduced a universal health scheme; against fire hazards, and the provision of lighting and
access to electricity.
• Ghana and Rwanda have extended their contributory
health schemes to include informal workers; Sector specific interventions: While there are cross cutting
issues identified above, different segments within the
• Kenya’s National Social Security Fund allows for self-
informal economy have particular issues. The suggested
employed workers to become ‘voluntary members’ of
approach is to identify segments in the informal economy
the Fund. The Fund provides for old age, withdrawal
and conduct an intervention analysis that identifies:
benefits, survivors’ benefits, an invalidity benefit and
a funeral grant. • What is the current legislative framework that
governs this work. What are the gaps?
• Cape Verde and Mauritius have introduced
noncontributory health insurance systems. • What protections in place and are they being accessed
/ implemented?
Many of these examples have been documented by
WIEGO (www.wiego.com) and by SASPEN (the Southern • Who are the multiple players in the state and private
African Social Protection Experts Network) (see www. sector who shape the working environment?
saspen.com). • Where do informal workers fit in broader value
Regardless of the need for urgent engagement with all of chains?
the above processes, there are some quick legal and other
interventions which would assist to facilitate the inclusion This can then identify the critical points of leverage to
of informal workers in certain social protections, while secure to improve working conditions and security and
the more extensive policy discussions proceed. increase incomes. WIEGO’s work on two sectors suggests
Below are some suggested short term interventions, the following.
most of which would likely not require any significant or
contested changes to the law:
To give effect to a maternity benefit, there are a number INFORMAL RETAIL
of options: - (a) it could be realised in terms of the UI Act In the first quarter of 2018 Statistics South Africa
and BCEA, which is preferable, not least of all because estimated that 1 093 000 people worked informal retail.
the UI Fund currently has massive reserves so there would This is a disproportionate source of employment for
be no additional cost to the fiscus or (b) introducing a women. Further evidence shows that informal retail is a
supplementary payment to the child support grant for key source of food for poor households in general and
self-employed workers for an agreed period (for example food insecure households in particular (Hungry Cities,
for six months after the birth of a child) as a means of African Food Security Urban Network). And yet the
compensating for lost income. policy approach is on a spectrum from violent removals,
With regard to the OHS Act, it should be possible to to punitive (with frequent confiscations), to lower level
include representatives of own account workers on the every day harassment, to benign neglect with only a few
Advisory Council for Occupational Health and Safety cases of progressive inclusion.
Exclusionary approaches are underpinned by punitive

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legislative frameworks that criminalize these activities. improved working conditions and skills development
Anti-foreign sentiment a key driver. However, important for their progression in the recycling value chain. In the
litigation challenging these frameworks has declared context of an environmental and socio-economic crisis,
confiscation of traders’ goods and closing and targeting savings in landfill costs could be applied to inclusive,
foreigners’ spazas unconstitutional. SERI / SALGA details socially responsible models of recycling. Strengthening of
this, including what local government is constitutionally the economic environment: payment for waste pickers’
obligated to do. Good examples of inclusive legislation labour and/or compensation through subsidies; schemes
are Street Vendors (Protection of Livelihood and for payment of environmental service rendered.
Regulation of Street Vending) Act in India. Using this and Policy priorities for waste recyclers:
model bylaws developed by the Legal Resources Centre,
• There has to be alignment of policy and legislative
SERI is currently drafting model bylaws for inclusion in
reforms across different national departments:
the SALGA informal economy guidelines. A critical next
Department of Environmental Affairs to address
step will be to consider how to encourage / ensure that
environmental priorities, Department of Science and
local governments align their street vending bylaws to
Technology as it addresses technological innovation,
the constitution.
Cooperative Governance and Traditional Affairs to
A key and silent player is the Passenger Rail Agency of support the implementation of national policies at
South Africa (PRASA) since they manage the areas around local government level. All the policy and legislative
train stations – a natural market for street vendors. reform processes should be coordinated by the
Currently their approach is to simply profit maximize Department of Labour in its oversight of the country’s
which often means not prioritizing spaces for the informal Decent Work Programme and the transition from the
sector. These requirements need to be revised. informal to the formal economy.
The majority of informal vendors source their supplies • Waste minimization policies such as the separation
from the big corporates. For example, Tsoeu (2009) at source of household waste is threatening informal
estimates that 82% of South African Breweries’ final recycling workers’ livelihood because they have to
point of sale is in the informal sector while Unilever compete against the private sector (contracted by
supplies between 145 000 to 175 000 informal retailers in municipalities) for access to recyclable material,
the country (Personal correspondence, Trade Intelligence, despite politicians’ denial of the unfair competition
11 July 2018). These players seldom engage in policy that the privatization of recycling creates. Clearly
processes and should be drawn on and pressured to take transformative pro-poor policies must be developed,
responsibility for social protections. The opportunity for implemented and regularly monitored.
state – private sector – informal sector synergies could be
• Informal recyclers must be registered on municipal
explored. There is precedent for this in Bhubaneshwar in
databases to have accurate records of the number
India8.
of workers and to measure their contribution to
municipalities’ waste minimization targets.
WASTE RECYCLING • The recognition of informal recycling workers to be
formalized by paying them for the public service that
The current waste management system and the further
they provide (the payment of informal recyclers has
promotion of privatization locks informal recycling
been proven to increase recycling rates in countries
workers into the poverty trap at the bottom of the waste
such as Egypt, Argentina, Brazil, Colombia and India).
value chain. Their income is determined by middlemen
mediating between the workers, who work under • The private sector has already endorsed labour
extremely unsafe and hazardous conditions to retrieve intensive recycling in recognition of the socio-
10.8 million tons of recyclable material from landfills, economic context, however government should
households, industry and public spaces annually, and the regulate the working conditions as it does with all
big recycling companies. A system of social, economic and other sectors in the economy.
political inclusion must be introduced. • Subsidies and coaching/mentoring for workers’ small,
Government’s increasing focus on creating ‘green jobs’ medium and micro enterprises should be provided
must place existing workers at the centre of all green to ensure effective integration into the recycling
economy policies and strategies and not displace them industry.
from their existing livelihood. Recognition of informal
recycling workers as key stakeholders must be a priority
of all efforts in developing the green economy through 7. FINANCING AND SOURCES

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There has been insufficient time to do detailed costing on WIEGO has a wealth of information and hope to engage
all the suggestions above. A few issues related to funding. further with the labour consistency on these issues.
First there are existing state funds allocated to supporting
informal workers within both national and local
authorities. Often these are uncoordinated, insufficient REFERENCES:
and sometimes spent on destroying livelihoods (for Robbins, Glen and Tasmi Quazi. 2015. Informal Economy
example local authorities report how expensive evictions Budget Analysis: eThekwini Metropolitan Municipality.
are, since there are few other opportunities they only WIEGO Working Paper No. 34.
sustained if there is constant policy presence). In addition,
Budlender, D., Skinner C. and Valodia, I. 2004. Budgets
some of the allocated funds go unspent. For example, the
and the Informal Economy: An Analysis of the Impact of
Department of Small Business Development (DSBD) June
the Budget on Informal Workers in South Africa. School of
2017 report to parliament, the DSBD reported R46 million
Development Studies Research Report.
underspending9 on implementation of informal business
support. It is important to understand the institutional Cichello, P. and Michael Rogan, M. 2018. Informal sector
and other blockages to spending. employment and poverty in South Africa: identifying the
contribution of ‘informal’ sources of income on aggregate
The R204 process holds the hope of finally securing a
poverty reduction. for edited volume The South African
more and supportive approach to the informal economy.
informal sector: Creating jobs, reducing poverty, by F.
However insufficient resources have been set aside for
Fourie, Cape Town: Human Sciences Research Council.
the convening of various committees tasked with taking
the process forward. For example, currently, participation Clark, Michael. 2018. Towards Recommendations on the
of informal worker organisations is being funded by the Regulation of Informal Trade at Local Government Level.
Nedlac Community Constituency budget, but this is a Socio-Economics Rights Institute and the South African
very limited budget and needs either to be topped up, or Local Government Association: Johannesburg.
alternative sources found within government. Funding Devey, R. Skinner, C and Valodia I. 2008. The Informal
for this is key. Economy, Human Resource Development Biennial
Our worker group analysis suggests that there are missed Directory. (eds) A. Kraak and Press, K. Human Sciences
opportunities in leveraging private sector funds. Resources Research Council, Cape Town.
to pay waste recyclers for their contribution to the Fish Hodgson, Tim and Michael Clark. 2018. Informal
environment and saving they generate to municipalities10, Trade in South Africa: Legislation, Case Law and
as they do in Colombia, could in part be funded through Recommendations for Local Government. Socio Economics
Extended Producer Responsibility (EPR) levies. Currently Rights Institute and the South African Local Government
producers are reluctant to contribute to national treasury Association: Johannesburg.
as they will have no control over how it is spent (based on International Labour Conference, 2015. Recommendation
their experience of the plastics levy). They are proposing 204: Transition from the Informal to the Formal Economy
the setting up of an EPR accredited system that could pay Recommendation. International Labour Organization:
informal recycling workers through EPR registered buy- Geneva.
back centres. Further work needs to be done to look at
International Labour Organization. 2018. Women and
innovative financing models like these.
Men in the Informal Economy: A Statistical Picture, Third
edition. International Labour Office, Geneva.
8. CONCLUSION Martin, K. and Paul, R. 2015. Saving and Well-Being at
the Base of the Pyramid: Implications for Transformative
Mitigating against continued marginalisation of the
Financial Services Delivery, Journal of Service Research,
informal economy requires multiple departments across
Vol. 18(3) 405-421
levels of government viewing the informal economy,
not a marginal add on, but as a priority issue and co- Moussie, R. and Alfers, L. 2018. Women Workers Demand
ordinating their approach and priorities (including Child Care: Shifting Narratives on Women’s Economic
resource allocation) accordingly. The R204 process should Empowerment in Africa, Agenda, Vol 32, Issue 1
be complemented by a dedicated informal economy Philip, K. 2018. Limiting Opportunities in the Informal
policy development process jointly spearheaded by Sector: The Impact of the Structure of the South African
DSDB and DoL. In both processes informal worker group economy, in The South Africa’s Informal Sector: Creating
representatives need to be intimately involved. Jobs, Reducing Poverty, edited by Frederick Fourie, Cape
This document reflects only elements of WIEGO’s work. Town: Human Sciences Research Council.

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Rogan, M. and Skinner, C. (2017) The Nature of the South

African Informal Sector as Reflected in the Quarterly
Labour Force Survey, 2008-2014, REDI3x3 Working paper
28, February 2017
Skinner, C. 2018. Informal Sector Policy and Legislation in
South Africa: Repression, Omission and Ambiguity, in The
South Africa’s Informal Sector: Creating Jobs, Reducing
Poverty, edited by Frederick Fourie, Cape Town: Human
Sciences Research Council.
Skinner, C. and Watson, V. 2018. The Informal Economy
in Cities of the Global South: Challenges to the Planning
Lexicon’ for edited volume Companion to Planning in
the Global South edited by Bhan, Srinivas and Watson.
London: Routledge.
Statistics South Africa, 2014a. Gross Domestic Product PO
441. Statistics South Africa: Pretoria.
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the Self Employed. Statistical Release PO 276. Statistics
South Africa: Pretoria.
Statistics South Africa, 2018. Quarterly Labour Force
Survey, Q2 2018.
Tsoeu, M. 2009. A Value Chain Analysis of the Formal and
the Informal Economy: A Case Study of South African
Breweries and Shebeens in Soweto, Masters Dissertation
in Industrial Sociology, University of the Witwatersrand:
Johannesburg. http://146.141.12.21/handle/10539/7342

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unions with employers and employer associations

APPENDICES: INFORMAL Our contention is that R204 and the Constitution

recognises that own account workers are also workers and
ECONOMY/SECTOR POLICY BRIEF that 23 (2) (a); (b) and (c) are integral to formalizing their
work. This note aims to identify key areas of reform and
some of the applicable provisions of the LRA and BCEA.
APPENDIX 1: FORMALISATION It is not intended to be comprehensive, or to suggest
appropriate wording for amendments.
FOR OWN ACCOUNT WORKERS In this section we outline in broad terms the proposed
(Extracts from the Concept Note on Legal Reforms Required amendments to the Labour Relations Act (LRA) and
to Align South African Laws to ILO Recommendations 204) the Basic Conditions of Employment Act (BCEA), and
various social protections including legislation relating to
In contrast to what is required for waged informal occupational health and safety.
workers, for own account workers significant legal
changes are required in order to align with R204. The
Recommendation 204 provisions that are relevant for THE LABOUR RELATIONS ACT
own account workers and for this committee to consider In respect of the Labour Relations Act, formalisation for
with respect to legal reform are: own account workers would mean, above all else:-
a) A friendly legal and policy environment that a) Trade union registration: Trade unions of own
provides for progressive implementation and account workers should be able to register as trade
enforcement of rights and protections unions and represent own account workers in collective
b) Freedom of association and collective bargaining negotiations and social dialogues. Trade unions that
have both own account and waged workers in their
c) Inclusion of representative membership-based
ranks should also have their registration take both
organisations of informal workers in all tripartite
into account. India and Malawi are two countries that
negotiations and consultations on issues that affect
have recognized own account workers’ trade unions
them.
as unions. The national trade union federations in
d) Recognition of public spaces as work places, and Tanzania, Kenya, Senegal, Malawi, and Nicaragua
the need for regulated access by informal workers to amongst others have admitted trade unions of own
public natural resources. account workers as members. The International Trade
e) Social protection, including the extension of social Union Confederation (ITUC) has admitted SEWA, an
insurance coverage, and occupational health and Indian federation of informal workers to membership.
safety The concept of trade unions for own account workers
We are of the view that the South African Constitution is therefore not as foreign as many might think.
provides a solid foundation for the reforms necessary for b) A framework that allows trade unions of own
R204 to take effect. Section 23 of the Constitution reads: account workers to bargain collectively with local
23. (1) Everyone has the right to fair labour practices. government and other agreed identified government
(2) Every worker has the right— (a) to form and join institutions over matters of mutual interest (i.e.
a trade union; (b) to participate in the activities and everything that impacts on working conditions,
programmes of a trade union; and (c) to strike including the content of by-laws; the regulation of
their access to public space and; public procurement
It is important to note that the Constitution refers to opportunities for waste collectors; access to waste;
workers and not employees. licenses etc.)
The Labour Relations Act realizes these Constitutional c) Adjudication of disputes/denial of labour rights by
rights broadly in the context of an employment the CCMA and the Labour Court
relationship, which excludes own account workers.
Section 1 states that the purpose of the Act is “to advance d) Representation at NEDLAC in all chambers as a
economic development, social justice, labour peace and partner, preferably as an acknowledged part of the
the democratisation of the workplace” … “to give effect labour constituency
to the fundamental rights conferred by section 23 of the
Constitution.” The LRA proceeds to provide a collective Examples of Sections of the LRA that would require
bargaining framework for employees and their trade amendment to expand the right to freedom of association

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and collective negotiations to own account workers are: and remuneration

a) Definition section: define own account worker • Chapter Five deals with termination of employment
b) Section 4 (1): who has the right to join a trade union • Chapter Six deals with Employment of children and
(or form a union) forced labour
c) Section 14(4): trade union representative may represent • Chapter Seven deals with variation of basic conditions
a union member in disputes with the state e.g. police, of employment
licensing official etc. • Chapter Eight deals with Sectoral Determinations
d) Section 16: possible disclosure requirements on the • Chapter Nine deals with the Employment Conditions
part of local government, in particular with regard to Commission
proposed decisions with respect to public space or public
• Chapter Ten deals with monitoring, enforcement and
resources or services that affect informal workers.
legal proceedings
e) Section 21(3): “Within 30 days of receiving the
notice, the employer (or local government) must meet
the registered trade union and endeavor to conclude a Part B of the BCEA covers legal proceedings, including
collective agreement as to the manner in which the trade procedures for disputes – referral to the CCMA (clause 80)
union will exercise the rights in respect of that workplace” and Codes of Good Practice (clause 87).
whether that work place is the home or a public space”.
f) Sections 21 and 22 deal with the right of the trade The provisions of Chapters Two (Regulation of Working
union employer to go to the Commission for Conciliation, Time) apply clearly only to where an employment
Mediation and Arbitration if agreement is not reached. relationship exists (waged work). It is difficult to see how
These rights should be extended to trade unions of meal intervals, hours of work, or Sunday pay could be
informal workers and local governments, or other regulated for own account workers. It would nevertheless
institutions with who own account workers’ trade unions be useful if organised own account workers looked
are bargaining. carefully at the principles enshrined in Chapter Two
g) Representivity: in general terms, the same principles of as a model of best practice for work-life balance. It is
sufficient representivity as already exist in the LRA should acknowledged however that the realization of work-life
apply to own account worker trade unions. balance for own account workers depends ultimately on
the conditions being in place for a decent livelihood – and
h) Section 23: to provide for collective agreements
these conditions are dependent in turn on many of the
between trade unions of own account workers and local
other elements of formalisation.
governments and other identified institutions of the state.
Chapter Three (Leave) could more easily be adapted to
i) Section 77: Protest action to promote or defend socio-
accommodate own account workers. This adaptation
economic interests of workers should include provision
could take the form of a Sectoral Determination (as we
that own account workers may not lose licenses etc.
have already outlined in Section 3) and/or amendments
j) Section 157: Jurisdiction of the Labour Court amended to the Unemployment Insurance Act to incorporate
to include jurisdiction over disputes between trade unions contributions to the UI Fund to be made by own
and local governments? account workers. Ideally, the government would make
a contribution to make up for the absence of employer
contributions. The clauses in Chapter Three of the BCEA
BASIC CONDITIONS OF that need to be referred to in this process are:
EMPLOYMENT ACT AND a) Sections 20 and 21 on annual leave
SECTORAL DETERMINATIONS b) Sections 22 and 23 on sick leave
c) Section 25 on maternity leave
The substantive chapters of the BCEA are as follows:- d) Section 27 on family responsibility leave
• Chapter One deals with definitions, purpose and
application of the Act We deal with the leave provisions further under the Social
• Chapter Two deals with regulation of working time Protection section point a) below.
• Chapter Three deals with leave provisions Chapter Four (Particulars of employment and
• Chapter Four deals with Particulars of employment remuneration) applies to waged workers only. However

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the principles of record keeping about place of work and a contributory scheme that makes provision for limited
remuneration/income are applicable to other processes of benefits for a fairly short period of unemployment and
formalisation. which currently includes maternity benefits)
Chapter Five (Termination of Employment) again applies iii. The Occupational Health and Safety Act (OHS Act)
to situations where there is an employer (whether in (which provides safety standards and safety assurance
the formal or informal sector). However the principles system for workplaces as well as enforcement)
enshrined here, including notice periods for termination, iv. The Compensation for Occupational Injuries and
payment of compensation for retrenchment (severance Diseases Act (COIDA) (which requires contributions from
pay), certification of employment etc could be used to employers only and provides compensation to workers
develop a Code of Good Practice in terms of the BCEA for injured in the course of their employment or contracting
municipalities where own account workers are dependent illnesses from their employment. This can be for temporary
on their authority to perform their work. incapacity or permanent partial and full incapacity.)
Chapter Six (Employment of children and forced labour) v. The Cooperatives Act
does not apply to own account workers where there is
vi. Local government regulation of public space,
no employment relationship. However the principle of
infrastructure as well as solid waste management
a prohibition on the employment of anyone under the
age of 15 can be applied to own account workers where vii. The Skills Development Act (which provides the
license or permit conditions are attached. financial framework and infrastructure for workers,
including the unemployed and work seekers, acquiring
We have already dealt with Chapter Eight (Sectoral
skills that can lead to employment or self-employment)
Determinations) and how these could be used to extend
rights and benefits to own account and other workers viii. The Skills Development Levies Act
who fall outside of the BCEA employee definition test. ix. The National Minimum Wage draft Bill
Clause 60 of Chapter Nine (Employment Conditions x. The Employment Services Act (in terms of which the
Commission) deals with the composition of the ECC. Minister of Labour may establish schemes to enable
Notwithstanding the fact that the precise form and future youth and vulnerable work seekers to enter employment
role of the ECC is currently under debate in the context or remain in employment, and can also set wages and
of discussions on the draft National Minimum Wage Bill, conditions for such employment)
clause 60 (2) (a) currently states that the ECC will include xi. The Municipal Systems Act
“one member and one alternate member nominated by
xii. The Employment Tax Incentive Act (which provides
the voting members of NEDLAC representing organised
eligible employers with a subsidy for employing young
labour”. Consideration must be given as to how the
workers, with one condition being they must be compliant
interests of own account workers and their trade unions/
with any relevant wage determination or if there is none
membership based organisations are represented within
pay a default minimum wage)
the organised labour constituency (see our point under
Labour Relations Act point d) above). xiii. Taxation laws including the Income Tax Act, the VAT
Act, the Tax Administration Act, and the Customs and
Depending on whether and how the BCEA is amended
Excise Act
to accommodate the above proposals, in particular the
proposals regarding leave, it will be necessary to include xiv. The NHI White Paper
in a definition of own account worker in Chapter One of xv. Legislation that is specific to sectors of industry but not
the Act. obviously labour related e.g. mining, construction, solid
Changes in the core labour statutes and other Acts are waste management and fishing legislation
however required in order to extend rights, protections
and benefits to own account workers. We have focused Each piece of legislation needs to be examined to establish
on the LRA, the BCEA and various social protection which parts can be extended to own-account workers. A
provisions. Additional laws that require auditing and careful audit might reveal that some legislation already
possible recommendations for amendment include: covers own account workers e.g. it would arguably be
i. The Employment Equity Act (which prohibits unfair quite easy for a self-employed person to enrol in training
discrimination on a wide range of grounds and provides via the SDA.
mechanism to challenge it, and it also introduces
affirmative action procedure and monitoring)
ii. The Unemployment Insurance Act (UI Act) (which is

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1. Dr Rogan generated the statistics cited here using

Statistics SA Quarterly Labour Force Survey data for
quarter 4, 2017.
2. One notable exception is the traditional medicine value
chain.
3. See for example https://www.dailymaverick.co.za/
article/2018-08-14-hangberg-why-fishers-have-been-
turned-into-poachers/.
4. In addition, the provisions that already exist in our core
labour statutes need to be creatively exploited in order to
introduce minimum employment standards for workers in
atypical employment relationships.
5. https://pmg.org.za/committee-meeting/24671/
6. Even among those providing micro finance there is
broad acknowledgement that offering a range of services
needs to be a key focus for the future (Center for Financial
Inclusion, 2011).
7. his section draws form Extract from the Concept Note
on Legal Reforms Required to Align South African Laws to
ILO Recommendations 204.
8.Seehttp://www.wiego.org/blog/partnering-street-
vendors-led-one-indian-city-model-way-forward.
9. See https://pmg.org.za/committee-meeting/24671/ and
https://mg.co.za/article/2017-03-10-00-small-business-
fails-to-spend-budget-yet-zulu-wants-more-money
10. The CSIR (2016) estimated that waste pickers save
municipalities between R309 and R749 million in landfill
space in 2014

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