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The COVID-19 pandemic and its associated countermeasures continue to shed light on the social and economic challenges facing African countries. Economic growth in sub-Saharan African countries is expected to decline, putting pressure on already limited fiscal space and resources in the region.
Those most affected will be those working in the informal economy, which in most African countries represents the largest part of the economy. According to the International Labor Organization, around 85.8% of employment is informal in Africa. And the informal economy itself is mainly made up of working poor and day laborers. Many do not have contracts and do not benefit from any form of social protection.
In our working paper, we aimed to provide evidence of the impact of informality on employment and income during the pandemic, and how this differed between informal and formal workers.
We provide real-time survey data on the effects of COVID-19 on the labor market in Senegal, Mali and Burkina Faso. Our results are based on a survey of 900 people across the three countries between April 20 and May 1, 2020. We investigated how informality exacerbates the immediate effects of the COVID-19 pandemic on job loss , declining income and difficulties for individuals to meet their needs. their basic needs.
We have found that workers in the informal economy tend to be hit hardest by the COVID-19 pandemic. Informal workers are more likely to lose their jobs and tend to experience a drop in their income.
These results are also valid for those who work in high risk sectors. Informal workers also appear to be more likely to struggle to meet their basic needs amid the pandemic. We discuss the political implications of these findings.
Containment measurements and results
The three countries have taken joint action to counter the spread of the pandemic: they have closed schools, canceled public events, restricted public gatherings, recommended staying at home, restricted movement within the country and closed borders. They also imposed curfews to reduce the number of hours businesses operate.
There were also other measures specific to each country. For example, most markets in Burkina Faso have been closed for weeks. Restrictions on the movement of people and cars between regions and cities in Senegal resulted in shortages of goods for traders, even where markets were not closed.
Our survey was conducted via Facebook. About 53% of all respondents in our sample were informal workers.
About 25% of those interviewed in our survey lost their jobs and 55% experienced a drop in their income during the period considered.
The share of people who worked in early March but lost their jobs afterwards varied across countries. The percentage was highest in Senegal (29%), followed by Mali (around 23%) and Burkina Faso (22%).
Most affected informal workers
In times of economic downturn, informal workers may suffer the most in terms of reduced working hours and job losses. Our results confirmed that informal workers were more likely to lose their jobs than those in the formal sector.
Informal workers suffered the greatest number of job losses. About 48%, 34% and 42% of informal workers lost their jobs in Burkina Faso, Mali and Senegal, respectively. Formal workers represented a lower proportion of workers who lost their jobs, with 4% job losses in Burkina Faso and 8% in Mali and Senegal.
The results also suggest that informal workers were more likely to experience a drop in income compared to formal workers. About 65% in Burkina Faso, 76% in Mali and 73% in Senegal of informal workers reported a drop in their income.
The striking differences may be due to the overrepresentation of informal workers in high-risk industries (restaurants, hotels, tourism, commerce, beauty salons, tailoring, social events, transport and private education) compared to formal workers. The differences may also be due to the limited potential for working from home. Low percentages of workers reported working from home in all countries and sectors, but the shares were lower for informal workers than for formal workers.
Despite the many strategies to mitigate the dire economic consequences of COVID-19, it is expected to be simply too little due to limited fiscal space. However, family members’ remittances have been identified as playing a far-reaching role in mitigating the adverse effects of the pandemic. Specifically, informal workers in our survey who received remittances tended to be more likely to be able to obtain basic necessities.
Take-out policy
Governments should consider social protection and small business support policies that protect informal workers and mitigate the negative consequences of the pandemic on informal businesses.
Read more: Work as we knew it has changed. It’s time to think beyond the salary
In the context of governments’ limited fiscal resources, direct remittances provide an opportunity to mitigate the economic consequences of the pandemic in African countries. Governments can explore ways to reduce the costs of sending remittances to make sending money cheaper.
This article was co-authored with Dr. Mohammed Boly of the World Bank
The authors do not work, consult, own any stock or receive funding from any company or organization that would benefit from this article, and have not disclosed any relevant affiliation beyond their academic appointment.
By Racky Balde, Economist, PhD, United Nations University and
Elvis Avenyo, Research Fellow, United Nations University, University of Johannesburg
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