SAIS Review

SAIS Review 21.1 (2001) 71-82

Women in the Informal Sector: A Global Picture, the Global Movement

Martha Alter Chen

[Tables]

Over the past two decades, employment in the informal sector has risen rapidly in all regions in the world. Until the recent Asian economic crisis, it was only the rapidly-growing economies of East and Southeast Asia that experienced substantial growth of modern sector employment. However, in the wake of that crisis, most of these countries have experienced a decline in formal wage employment and a concomitant rise in informal employment. Even before the crisis, official statistics indicated that the informal sector accounted for nearly half of total non-agricultural employment in East Asia, over half in Latin America and the Caribbean, and as much as 80 percent in other parts of Asia and in Africa. ¹ In terms of urban employment, the informal sector accounted for well over half in Africa and Asia and a quarter in Latin America and the Caribbean.

[Table 1] Not only its size but the contribution of the informal sector in income terms is significant in many regions. For example, in several African countries, it accounts for nearly 30 percent of total income and over 40 percent of total urban income. The contribution of the informal sector to gross domestic product is probably also sizable. For those countries where estimates exist, the share of the informal sector in non-agricultural GDP is between 45 and 60 percent.

Estimates of the size, contribution, and composition of the informal sector vary widely, according to what size of enterprises are included, whether agriculture is included, and how much of women's [End Page 71] informal work is included. Like others who have worked closely with women in the informal sector, I would argue that the informal sector is even larger than official statistics suggest. My argument is based on the fact that much of women's paid work, not just their unpaid housework, is not counted in official statistics. If the magnitude of women's invisible paid work, particularly home-based remunerative work, were to be fully counted, both the share of women and the share of informal workers in the work force would increase. Recognizing and, more importantly, counting women's invisible remunerative work would challenge our empirical understanding not only of the informal sector but also of the economy as a whole.

Why should we be concerned about women who work in the informal sector? There is a significant overlap between being a woman, working in the informal sector, and being poor. There is also a significant overlap between being a woman, working in the informal sector, and contributing to growth. This paper examines the evidence on the linkages between gender, informality, poverty, and growth; postulates some possible explanations of these linkages; and describes the global movement of women in the informal sector. [End Page 72] [Begin Page 74]

The Female Informal Workforce

Size and Composition

Women are over-represented in the informal sector worldwide. This basic fact has several dimensions. First, the informal sector is the primary source of employment for women in most developing countries. Existing data suggest that the majority of economically active women in developing countries are engaged in the informal sector. In some countries in sub-Saharan Africa, virtually all of the female non-agricultural labor force is in the informal sector. For example, the informal sector accounts for over 95 percent of women workers outside agriculture in Benin, Chad, and Mali. In India and in Indonesia, the informal sector accounts for nine out of every ten women working outside agriculture. In five Latin American and four East Asian countries, ² for which data are available, more than half of the female non-agricultural workforce is in the informal sector (see Table 2). Second, the informal sector is a larger source of employment for women than for men. ³ The proportion of women workers in the informal sector exceeds that of men in most countries. Third, women's share of the total informal workforce outside of agriculture is...