In economic downturns and crises, many policy makers assume that the informal economy can cope with or adjust to the shocks. What kind of “cushion” does the informal economy offer during crises, and to whom? Answering these questions became a matter of urgency during the 2008-2009 global economic crisis.
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In mid-2009, WIEGO and its partners in the Inclusive Cities Project conducted interviews with home-based workers, street vendors and waste pickers in 14 urban locales in 10 countries across Africa, Asia and Latin America. A year later, we conducted a second round of research to assess whether there were delayed impacts from recession and/or signs of recovery for participating workers. Worker organizations used the study findings to develop common demands and advocated for more and better support for workers in informal employment.
The research found that informal enterprises and wage workers were affected in many of the same ways as their formal counterparts. But those working informally had no cushion to fall back on. Respondents reported being forced to work longer hours, take additional risks, cut back on expenditure (including on food and health care), and still saw their incomes decline. The evidence showed that the global recession pushed workers in informal employment and their families further into impoverishment.
Building on the findings of and methods used in the study on the impact of the global recession, WIEGO and its Inclusive Cities partners undertook a 10-city, multi-partner Informal Economy Monitoring Study in 2012 on what drives change in the urban informal economy and how workers cope and adapt. In 2020, when the COVID-19 pandemic hit, WIEGO undertook the COVID-19 Crisis and the Informal Economy Study in 11 cities across five continents.