Structural Adjustment and Stabilization Policies
The introduction of structural adjustment and stabilization policies (SAPs) led to new strategies for development which many argued disproportionately affected urban dwellers, particularly women.
Some have asserted that the changes in labor practices and the erosion of real wages which accompanied SAPs initiated a substitution of women for men workers. The relatively high concentration of women in export-oriented industries provided support for the argument that export-oriented production required the feminization of employment. This contention was bolstered by the move toward more “flexible” forms of production, meaning “the informalization and decentralization of employment, whereby firms relied more on part-time, casual or temporary workers, subcontracting production and/or using homeworkers.”
By the end of the 1960s, there was a general awareness that a large number of people were not included in statistics regarding the make-up of the urban labor force. Obviously, the urban poor of the developing world were taking advantage of both legitimate and illegitimate income opportunities. This group of people provided a floating pool of labor since it tended
to be intermittently employed, unemployed or underemployed according to the contingencies affecting this economic level. As a result, it inevitably tends to be forced to take refuge in the roles characteristic of the ‘marginal pole,’ where it fluctuates among a numerous range of occupations and labor relations. In this sense, the principal tendency of this labour-force is to turn ‘marginal’ and to differentiate and establish itself as such within the economy.
The Informal Sector
The characteristics of the informal economy were first delineated in 1972. At that time, it was stated that the informal sector provided a wide-range of low-cost, labor-intensive, competitive goods and services through activities that were marked by
- ease of entry
- reliance on indigenous resources
- small-scale of operation
- labor intensiveness
- skills acquired outside the formal school system
- unregulated and competitive markets.
Such activities were (and are) largely ignored and often actively discouraged by the government. In some cases — in both the developed and the less developed worlds — they remain more or less invisible.
The Formal Sector
In contrast, formal-sector activities are characterized by
- difficult entry
- frequent reliance on overseas resources
- corporate ownership
- large scale of operation
- capital-intensive and often imported technology
- formally acquired skills
- protected markets.
Formal sector markets include
- public-sector companies
- multinational corporations
- locally owned firms.
They were (and remain) closely related to the state, and they protect the labor force through legislation, collective bargaining, and social security.
The Informal Sector and FIFA World Cup 2014
While the informal sector sometimes provides solutions to urban unemployment, most usually the estimated 2/5 to 2/3 of the urban labor-force working in this sector find themselves disadvantaged and marginalized since it serves the very young and the very old, women (whose earnings are almost always lower than those of men), and the less educated. Nevertheless, the sector sometimes provides an opening for the emergence of local entrepreneurs. Moreover, since activities of “informal” workers range from artisans making furniture to sellers of basic foodstuffs to prostitutes and drug peddlers, earnings vary a great deal.
Today, in some sectors, the informal and the formal economies are merging. A good example is Brazil’s real estate rental sector — especially relating to tourism and the FIFA 2014 World Cup.
Recent news reports note that in Rio de Janeiro
the residents of Rocinha and other favelas, or slums, are making the most of the city’s acute shortage of lodging for the event: They are renting our their homes to fans around the globe.
Maria Clara dos Santos, 49, is preparing to take as many as 10 World Cup visitors into her three-bedroom home in Rocinha (pronounced ho-SEEN-ha), which commands a stunning view of Ipanema’s sun-kissed beaches in the distance. True, Ms. dos Santos notes, untreated sewage reeks on her street and steel bars on her windows are needed to deter break-ins, so she is offering guests a comparative bargain — about $50 a night to stay with her during the tournament. [NOTE: Hotel rooms are in such short supply in Rio that even modest hotels are charging as much as $450 a night during the World Cup.]
“We can provide a level of human warmth and authenticity that places down below cannot,” she said, reflecting the growing popularity of favelas for their vibrant musical scenes, cheaper prices and absence of pretension compared with ritzier parts of town. (The New York Times — December 21, 2013)