Ideas & Insights / All Perspectives / Ideas & Insights

For Workers Outside the Formal Economy, Health Is the First Casualty

Photo credit: Flickr user Timothy Krause

“More than 60 percent of the world’s workforce is in the informal sector, and 70 to 90 percent have few or no health benefits.”

Over 1 billion urban women in low-income countries do not have full rights to property, including land and finances. As a result, they face significant threats of eviction and often lack access to financial tools like savings accounts and business loans. This post, researched and written by my team and its partners, discusses the many property rights challenges urban women face in countries around the world and the way new technologies in some places are offering novel solutions.

The following story is from Insights:

Alma Rosa was born into a hard working life in Santo Tomás, a small municipality in San Salvador, El Salvador. At 17, she started work as a seamstress. Now, at age 35, she earns the equivalent of about USD 60 cents an hour. She could have earned much more working in a factory job, but she needs to stay at home to care for her mother, who is seriously ill.

Rosa often wonders who will take care of her when she can no longer work. After decades of 12-hour work days, at home, hunched over a small circular frame where she churns out piece after piece of embroidered children’s clothing headed for North American retailers, she has limited use of one arm and her hands ache constantly. But as an informal contractor, she doesn’t receive health benefits or sick days and can’t afford to take a day off or visit a doctor if not absolutely necessary. What’s more, home-based workers such as Rosa can’t easily connect with others who do similar work and are therefore less likely than factory employees, who are concentrated in one space and more readily organized, to receive paid sick days, health care, or a retirement account.

Albertina Mundlovo, of Maputo, Mozambique, was also a home-based worker until the physical toll of her corn-grinding business proved too much. The work required her to use a mortar and pestle to pound the corn into meal, which she then sold to neighbors in the evening. But a serious hemorrhage requiring surgery upended her business, and her sister convinced her to take a less strenuous job as a domestic worker for a local family. Instead, Mundlovo has discovered that her daily tasks are often more grueling and health-depleting than grinding corn. Like many domestic workers, her wages are low; there are no medical benefits, she is exposed to toxic cleaning agents, and her situation makes her an easy mark for abuse.

“The global financial crisis has pushed more traditionally corporate settings and larger employers to sub-contract and hire part-time workers to save costs, creating a growing group of informal workers.”

Rosa (whose story was featured in an interview published by the Central America Women’s Network) and Mundlovo (who was a case study published by the international advocacy group Women in Informal Employment: Globalizing and Organizing) are considered to be “informal workers,” the official designation covering 1.8 billion workers globally whose economic activities are not regulated or protected by government, and who do not receive the health care benefits and safety provisions available to the formal workforce.

Informality is no longer a fixture only in developing countries, but rather the global financial crisis has pushed more traditionally corporate settings and larger employers to sub-contract and hire part-time workers to save costs, creating a growing group of informal workers. In low- and middle-income countries, many employers prefer to operate in the informal sector to avoid taxation and regulation, which makes it harder to regulate social protections for workers.

As a result, most informal workers still have few options when they or their family members get sick, as they are unable to take hours off of work to get medical care, and have no funds to pay for services. Yet their living and working conditions make them more vulnerable to illness and injury as compared with the general population.

Bearing the brunt of these problems are women, who make up the largest proportion of the most vulnerable across all categories of informal workers. Many have been denied opportunities for education and are forced into the lowest-paying jobs; they have special health care needs during childbearing years that go unmet; and they often suffer bodily harm, as well as psychological and sexual abuse, due to societal norms, lack of regulation, and gender discrimination.

Too many countries are ignoring informal workers through health systems that manage to cover most other formally-employed people. In Latin America, for example, only about one-third of domestic workers and non-wage workers have health insurance, compared with three-fourths of salaried employees in private organizations that have six or more on the payroll, and 90 percent of public sector employees.

Dr. Jeanette Vega, the former managing director for The Rockefeller Foundation’s health work and now a senior health official in Chile, finds this astounding. “It’s amazing because the trend is that the numbers of informal workers are increasing. They are becoming the norm rather than the exception.”

As such, Rockefeller Foundation managing director Michael Myers said that the question is not how to make informal workers more visible in the traditional labor sense, but that “instead, we should be reframing to think about who these populations are visible to—for example, to their suppliers, clients, and customers, as customers and contributors to GDP, as users of mobile technology and financial services, and to each other—and use those channels as entry points for solutions that are consistent with the lifestyles of these workers.”

“The informal sector is a great driver of innovation, as workers by nature must take risks and think creatively for their economic survival.”

As an example, Myers cited the national efforts in India to bring HIV/AIDS education and testing services to truck stops throughout the country. A 2013 study showed that more than three-fourths of the truckers who were targeted with these services were likely to wear condoms when engaging in commercial sex, versus only 65 percent who were not targeted—an important step in curbing the spread of HIV in South Asia.

Another opportunity may lie in new partnerships and agreements with the businesses that depend on informal worker productivity for their profits. The goal is to have more companies recognize that their fiscal health is directly tied to worker health and well-being. “The main benefit to them should be that this is a social investment,” says Myers. “but there also is a simple business case to be made: If you invest to provide more favorable working conditions, you will have a much healthier workforce, which means a much more productive workforce for a longer period of time.”

As one example, in 2012, The Hershey Company debuted CocoaLink, a mobile phone and SMS program connecting cocoa farmers in Ghana with information on improved growing practices, child labor, and health. The increased access to information has allowed farmers to cut their use of agro-chemicals that not only destroyed their crops, but posed significant health risks, including impotence, when applied without proper protective gear.

Other partnerships of government officials, private funders, worker-led organization staff, NGO leaders, and private insurers have been making some progress along two strategy tracks: innovative population-level programs such as universal health coverage and worker training; and worker-level programs that are smaller and tailored to specific categories of workers and the regions in which they are based. Among some of the leaders, WIEGO, the Self-Employed Women’s Association, and HomeNet Thailand have been effective in organizing women to press policymakers for financial protection programs that meet their needs.

Despite the challenges, there is a great opportunity to help informal workers improve their own resilience. “The informal sector is a great driver of innovation, as workers by nature must take risks and think creatively for their economic survival,” says Myers. “If we can harness that power—and help more start-ups and small- and medium-sized enterprises think about the safety and health of their workers from their earliest stages—we can begin to dissociate informality and vulnerability once and for all.”

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