Thursday, July 5, 2012

Jonah and the whale of informality

Three quarters of the workers in Guatemala work in System D, according to this thoughtful article from GlobalPost (via the Alaska Dispatch). But the image the article promulgates -- that informality swallows up these workers and denies them "protections and benefits available to salaried, punch-the-clock employees — such as minimum wage, regulated hours, insurance, pensions, and the right to join unions and collectively bargain with employers" --  is overcooked.

Indeed, big businesses all around the globe are attempting to bust unions and trying to shed costly health insurance responsibilities.

Instead of demonizing informal workers, what's needed is a renewed sense of social contract. If street vendors and other informal workers see government working for them, they will work with the government. And if rich people who hire household help would pay a living wage and offer other social protections, like guaranteeing overtime pay for overtime work and providing for the health care needs of the people who care for their kids, the situation would be less dire.

And what if, instead of demanding private property titles as collateral for loans, banks could be trained to give loans based on the social capital informal entrepreneurs represent--essentially providing a pot of money that could be used more in the fashion of venture capital than a traditional loan?

Am I being over-optimistic and all-too enthusiastic? Maybe. But, when 75 percent of the labor force is working off the books, that says that the formal system isn't working for the majority of people. And rather than trying to shoehorn System D into the formal world, doesn't it make more sense to change the structures of the formal world to make room for System D?

1 comment:

Anonymous said...

nice posting.. thanks for sharing.