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DoL: Mildred Oliphant: Address by Minister of Labour, on the occasion of the National Informal Economy summit, Bloemfontein, Free State (23/06/2016)

Labour Minister Mildred Oliphant
Photo by Duane
Labour Minister Mildred Oliphant

23rd June 2016

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Programme Director;
Minister of Small Business Development; Ms Lindiwe Zulu
MEC for Economic, Small Business Development, Tourism and Environmental Affairs; Mr Sam Mashinini
Her Worship: The Executive Mayor of Mangaung
Directors General here Present
Acting Director of the ILO; Dr Joni Musabayana
Representatives of Government, Organised Business and Labour
Distinguished Delegates;
Ladies and gentlemen

It is indeed an honour for me to stand before you today to talk about a subject that has taken the centre stage, not only in South Africa, but globally. The choice of the theme for this summit, “Uplifting the Informal Economy and Creating Pathways to Formalisation” is impressive and appropriate to the task at hand.

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I have no doubt that this Summit is underpinned by the understanding that, successful nations are built on the foundation of common purpose. Our culture of consultation and dialogue to build a shared national vision and unity of purpose is the very reason we are all here today.

Ladies and gentlemen: The informal economy, as you will all notice, thrives in the context of high unemployment, underemployment, poverty, gender inequality and precarious work. It is more prevalent in such circumstances, especially as the much-needed income generating activities. It is also relatively easy to enter as there are no educational requirements, skills or technology barriers. It is important to note however, that most people enter the informal economy not by choice, but out of a need to survive and have access to basic income-generating means.

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It is needles to point out that, whilst the Informal economy has become the only source of livelihoods for those who cannot get into formal jobs, it is however characterised by acute decent work deficits and higher risks than those in the formal economy.  It is also characterised by undesirable features such as;

  • Inadequate and unsafe working conditions,
  • High levels of illiteracy,
  • No access to training opportunities;
  • No guarantee of regular and lower incomes than those in the formal economy,
  • Longer working hours,
  • They exist outside the perimeters of  social security schemes, health and safety, and maternity benefits,
  • Limited or no protection by National labour legislations

Just imagine a worker who wakes up at 3 am to sell foodstuff to workers on the move, at taxi ranks, train stations, bus ranks and building construction sites in order to irk a living. Come rain or sunshine, hot weather or ice cold temperatures, often without any shelter, they are there. Others you find them at robot intersections selling all kinds of items. Evidence has shown that whilst some of them may be entrepreneurs and engaged in these activities for themselves, the majority of them are doing it on behalf of someone else.

It is a fact that workers in the informal economy are also vulnerable to violence, including sexual harassment, and other forms of exploitation and abuse including Child labour.

The undesirable practices that are inherent in the informal economy cannot be left unchallenged, as they go against the grain of our constitution and the Freedom Charter. The Freedom Charter, for example, emphasises protection of all workers regardless of whether they are in formal or informal economy.

Therefore we have a duty to ensure that protection accrue to all workers without any exception. To re-enforce this obligation, Chapter 2 of our Constitution contains the Bill of Rights and Section 23 is explicit about the rights of workers. This is yet another reason why there is no question about why we should deal with this matter.  You can also glean all the ruling party’s election manifestos and I can guarantee you that you will find that, protection of workers feature prominently in all of them.

Programme Director: The prevalence of informal employment in many parts of the world, and a pervasive trend towards higher levels of precarious and informal employment, has worsened as a result of the global economic challenges. Although the informal economy covers many different realities, today a global consensus exists, that inclusive development is not possible, unless rights and opportunities are extended to workers in the informal economy.

It is also worth noting that the informal sector is not the only driver of informal employment, as informality is also gaining ground in the formal sector in many countries. Globalisation has given it new meaning through outsourcing and global supply chains.  There is also global consensus that if economic growth is not associated with formal job creation, a shift towards better employment opportunities in the formal economy and an improvement in the conditions of employment in informal activities, it will continue to generate inequality, poverty and vulnerability.

It is estimated that more than half of the world’s workforce is trapped in the informal economy.

This is characterised by the denial of rights at work, the absence of sufficient opportunities for quality employment, inadequate social protection, a lack of social dialogue and low productivity, all of which constitutes a significant obstacle to the development of sustainable societies. It was for these reasons, Ladies and Gentlemen, that the ILO resolved that Transition from the informal economy to the formal economy is clearly an important target for the Decent Work Agenda.

The adoption of the Recommendation to tackle the informal economy by the 104th Session of the ILO International Labour Conference in 2015, was hailed as a historic moment for those who are trapped in the Informal economy. The first ever international labour standard, specifically aimed at tackling the informal economy, provides strategies and practical guidance on policies and measures that can facilitate the transition from the informal to the formal economy.

“This new Recommendation is a major step forward in bringing the grey economy out of the shadows. It will help transform the informal economy, which has been particularly pervasive in developing economies. Importantly, it will facilitate the transition of millions of workers in the informal economy; promote job creation in the formal economy and prevent further informalisation,” said Virgil Seafield from South Africa, who chaired the ILC Committee on the Transition from the Informal to the Formal Economy.

The Director General of the ILO had this to say on the adoption of the Recommendation, “It is not just the adoption of this Recommendation; it’s actually putting it into practice that will matter.” This initiative, led by the Minister of Small Business Development, is an important step in bringing the ILO Recommendation into reality.

This initiative demonstrates our government’s commitment to translate the adoption of this milestone Recommendation into reality. Dealing with Informal Economy challenges is very much in-keeping with the country’s commitment to the United Nations’ Sustainable Development Goals, The UN Agenda 2030.

Programme Director: We do acknowledge that informal economy has relevance for the creation of livelihood opportunities and alleviating poverty as part of individual survival strategies of the poor. Therefore the informal economy forms a key component of strategies to address unemployment and poverty, and to support the creation of sustainable livelihoods.

According to the Quarterly Labour Force Survey in the first quarter of 2012, there were 2.1 million people in South Africa who were active in the informal economy and 857,000 were women.  Evidence has shown that Limpopo at 34%, has the biggest share of people who are active in the Informal Economy, followed by Mpumalanga at 20%.  The Free State Province is number 3 on the list of prevalence.

The share of the informal economy by Province, further illustrates some correlation with the overall unemployment rate found in each Province, supporting the idea that for many people, the informal economy has become the alternative to unemployment.  It is argued that without the informal economy, our unemployment rate could almost double. Therefore paying special attention to informal economy is a good starting point in dealing with unemployment and poverty.

Therefore monitoring and providing the necessary support in making the ILO Recommendation a reality, is not a choice, but the right thing to do.

Ladies and Gentlemen: We have an obligation as a country, to take all the necessary steps to ensure that the Transition from the Informal to the Formal Economy is realised. Conferences like these are therefore vital, as they provide a platform to mobilise the nation around these issues.

Whilst we recognise the huge challenges that lie ahead in doing this work, we are encouraged by the commitment of our social partners to work with us.

In order to ensure that our labour laws are aligned, we have established a task team that continues to identify gaps that may prevent the extension of legal protections and rights to all those who participate in the informal economy.

I am advised that the first draft of the gap analysis and possible interventions will be presented in this Summit. We hope that it will stimulate robust dialogue among our social partners and assist in the development of a national action plan.

As I conclude, I also would like to indicate that the ILO, at its recent International Labour Conference, which I had the rare privilege to Chair, discussed Decent Work in the Global Supply Chains. This discussion highlighted the issues that have a direct bearing on the informal economy, I must say.

It is worth noting that South Africa has ratified and domesticated various ILO core Conventions that would promote decent work in global supply chains.  However, consideration should be given to the proposal that all trade agreements should include fundamental principles and rights at work. This is important given the increasing trend of South African companies investing setting up business operations beyond our borders.

I am particularly impressed with the line-up of speakers in this summit and I hope that they will fill-in the details on some of the issues that I may have left out in my input. I am also confident that they will be able to answer any questions that you may have on this topic.

Let me once again thank and congratulate the Minister of Small Business Development for her foresight in convening this summit.

As you join the queue on the third of August 2016 to cast your vote in the local government elections, take a deep breath and remember where we come from as a country and the work that remains to be done.

I thank you

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