{"id":133983,"date":"2019-04-03T02:47:40","date_gmt":"2019-04-03T00:47:40","guid":{"rendered":"http:\/\/www.myza.co.za\/south-africas-informal-sector-why-people-get-stuck-in-precarious-jobs-the-conversation\/"},"modified":"2019-04-03T02:47:40","modified_gmt":"2019-04-03T00:47:40","slug":"south-africas-informal-sector-why-people-get-stuck-in-precarious-jobs-the-conversation","status":"publish","type":"post","link":"https:\/\/www.myza.co.za\/press\/south-africas-informal-sector-why-people-get-stuck-in-precarious-jobs-the-conversation\/","title":{"rendered":"South Africa’s informal sector: why people get stuck in precarious jobs | The Conversation"},"content":{"rendered":"

South Africa’s informal sector: why people get stuck in precarious jobs<\/a>: <\/p>\n

Understanding how people move through job sectors is crucial.<\/span> Monkey Business Images\/Shutterstock<\/span><\/span><\/figcaption><\/figure>\n

South Africa has a jobs crisis. In the fourth quarter of 2018, 6.14 million people were out of work, an unemployment rate of 27.1%, which is one of the highest rates in the world, along with sub-Saharan African countries like Lesotho, Mozambique and Namibia.<\/p>\n

South Africa\u2019s labour market has another important distinction. Only about three million people who are working \u2013 about 18% of all employed (16.53 million) \u2013 are in the informal sector. That\u2019s much lower than other developing countries. For example in India and Ethiopia, up to 50% of those with jobs are employed in the informal sector. The figure is as high as 90% in Ghana and Mali.<\/p>\n

There are two schools of thought around the role and value of a country\u2019s informal sector. Some argue that it\u2019s an important alternative to the limited opportunities available in the formal sector; a survivalist strategy that allows those without much formal education to work and earn money. In addition, others argue, the informal sector is also an important space for entrepreneurs.<\/p>\n

But there are some who disagree, arguing that employment in the informal sector tends to be poorly paid and precarious. A mere 20% of informal sector employees are hired permanently, compared to 70% of those in the formal sector.<\/p>\n

Little is known about how many people transition between the two sectors, a phenomenon called \u201cchurning\u201d. Addressing this knowledge gap is important for a number of reasons. These include the fact that informal workers may be spending some time in the formal sector, getting valuable skills and work experience to boost their chances at formal employment, with the hope that they eventually settle permanently in the formal sector, which would be good news. <\/p>\n

Conversely, knowing whether there\u2019s a high rate of transition from the formal to the informal sector would be cause for concern because it would suggest high rates of retrenchment and fewer formal job opportunities.<\/p>\n

The data<\/h2>\n

We set out to understand \u201cchurning\u201d between South Africa\u2019s formal and informal sectors. To do this we analysed data from the country\u2019s National Income Dynamics Study \u2013 a study that was conducted four times between 2008 and 2015 by the Southern Africa Labour and Development Research Unit based at the University of Cape Town\u2019s School of Economics. <\/p>\n

We found there was a lot of movement between the informal and formal sectors during these years. But there were very few instances of people making successful, lasting transitions from informal to formal sector employment.<\/p>\n

This emphasises South Africa\u2019s skills mismatch. The formal sector requires skills that those in the informal sector simply don\u2019t have. More education and support is necessary to bridge this gap.<\/p>\n

Our data were drawn from the National Income Dynamics Survey, which is the first national household panel study in South Africa. It examines the living standards of individuals and households over time.<\/p>\n

By analysing data from the four waves of the study we were able to make some key findings about churning, and about the informal sector more broadly. These included:<\/p>\n