‘It is the work of one's hands that decides what one eats for dinner – for some, it is pounded yam, for others, it is pounded plantain or nothing.’
Nigeria has a population of 184 million, an unemployment rate of 14.2% and a literacy rate of 59.6%, so it unsurprising that those unable to obtain formal jobs – whether from a lack of skill or opportunity – seek solace in the shadow economy. The most recent estimates suggest Nigeria's informal sector is as much as 58% of the formal economy, establishing just how important it is as a provider of livelihoods and opportunity.
'It is only when you look closely at a picture that you see its imperfections'
But the story isn't black and white; many grey areas sit behind the accepted wisdom of the informal sector as a haven for the poor. One of these grey areas is the (non)existence of social security rights within the informal sector. Social security is the theory that suggests that workers have the right to access and maintain benefits such as a minimum wage, financial assistance and employment protection without discrimination.
“The informal sector is notorious for its poor labour standards and its lack of social security rights due to the invisible nature of the sector which limit the government's ability to monitor the sector and in turn protect its workers.” - International Labour Organisation
Many individuals rush to the sector for survival. The International Monetary Fund estimates that over half of all working Nigerians participate in the informal sector. But what price do these people pay for this? Looking at domestic workers as an example, the issue of minimum wage is never discussed as remuneration is entirely at the employer's discretion. Collective agreements rarely cover domestic workers in cases of an injury or disability while in service, as the agreements are mostly verbal, making it hard for the workers to demand their labour rights. There are no labour standards to protect the workers, so assaults and child labour are rife, with basically no regulation.
The dilemma of a double-edged sword
Nevertheless, there are laws which serve the purpose of protecting workers and providing social security rights. The Employment Compensation Act (ECA) 2010, for example, ensures employees are duly compensated for accidents in and out of the workplace. The Act also covers medical and rehabilitation treatments as well as compensation for disabilities and death. Tragically, most labourers in the informal sector are either self-employed or utilised by bosses who do not have the reserves required to provide employees with financial assistance and as such can't comply with the labour standards.
This means that if you are unable to work, and don't have a social network to support you, you are On Your Own (OYO). Naturally, many people choose to remain in some form of employment by any means, one contributor to the low wages in the country.
Here, the absence of taxation within the informal sector acts as a double-edged sword. The government needs to tax to generate revenues to enforce social security rights for informal workers, and workers who do not pay tax or are not captured by government data are unable to demand labour rights from the government.
The plight of a female worker
Women, the most vulnerable actors in the sector, make up 46% of the informal economy. Informal employment is attractive to women because it gives them flexibility. The sector empowers women to combine their productive and reproductive roles efficiently, because of the adaptability in working hours, empowering them to designate time to tend to their kids. At the same time, others have suffered; many young females have been pulled back from school to help their moms or guardians in their informal employment.
“Women are often subject to harassment and exploitation from local government and local council development authorities.” - Dr Adejumo Gbadebo Olubunmi (2013)
Interestingly, women have tried to combat the lack of social security in the informal sector by creating informal unions and groups to protect their interests, as well as customary funds and credit plans to offer sources of capital for themselves. For instance, the National Union of Textile, Garment & Tailoring Workers of Nigeria (NUTGTW), which seeks to protect the rights of informal workers within the textile industry, stated in their recent press release the importance of women in the informal sector and their importance in NUTGTW. The union plays an active in national debates, enabling its members to lend their voices to policies that affect them. Recent campaigns by the union such as 'decent work day' looked to raise awareness on both the accepted hours of work and the importance of a conducive working environment. The campaign was successful in its aims to create awareness; however, not much luck can be seen in its translation to legislation.
Ultimately, the informal sector presents many opportunities for development but too often, social security rights come as the price. Considering this, it is imperative that we discover how to entrench social security rights even in the informal sector, as only then can we truly begin to raise living standards in the country.
Follow @Afrocheri on Twitter for more of her insights. Subscribe to read more Stears Business articles here.