ILO challenges local informal sector to upgrade technical skills

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Zimbabwe is said to have an informal sector of around 60,6 percent

Livingstone Marufu
The International Labour Organisation (ILO) has challenged the country’s informal sector to upgrade technical skills in an effort to ensure the sector creates innovative ways to more productive and decent jobs.

This follows findings from the labour organisation that more than 61 percent of the global workforce earns their livelihoods in the informal sector, with no social protection, rights at work and decent working conditions. Majority of these (85,8 percent) are in emerging and developing economies in Africa.

The findings are revealed in a new report by the International Labour Organisation — ILO titled Women and Men in the informal economy: A statistical picture. The study also provides comparable estimates on the size of the informal economy and a statistical profile of the sector, using criteria from more than 100 countries.

According to a recent International Monetary Fund (IMF) survey, Zimbabwe has the second largest informal economy as a percentage of its total economy in the world, after Bolivia. In a working paper titled: “Shadow Economies Around the World”, Zimbabwe is said to have an informal sector of around 60,6 percent, second to Bolivia at 62,3 percent.

ILO’s Skills for Employment Policy Brief latest report reads: “This policy brief focuses on the opportunities offered by informal apprenticeship systems for improving skill provision in the informal economy to offer young people, especially in developing countries, ways to be more productive and decent jobs.

“The ILO Skills and Employability Department is working with constituents to upgrade and expand informal apprenticeship systems through technical co-operation projects in Bangladesh, Benin, Burkina Faso, Niger, Tanzania and Zimbabwe.”

According to ILO, the main challenge for the transition to the formal economy is finding the right policy mix that corresponds to the diversity of characteristics and drivers of informality

The development comes at a time when the Zimbabwean Government and other international aid groups are buffering the continued closure and down scaling of several formal sector industries due to the general distress and recapitalisation problems besetting local industries, to ensure the economy continues to grow through the informal sector.

ILO said: “Country-level research on how the system works, on stakeholders’ experience, and on innovations already under way or planned has been conducted in more than 15 countries.

“Informal apprenticeship is an important training system in many urban and rural informal economies.”

ILO said the policy is based on a training agreement between an apprentice and a master craftsperson.

In this agreement, which may be written or oral, the master craftsperson commits to training the apprentice in all the skills relevant to his or her trade over a significant period of time, usually between one and four years, while the apprentice commits to contributing productively to the work of the business.

Training is integrated into the production process to help the local Small to Medium Enterprises (SMEs) to develop them into bigger enterprise.

IMF admitted that shadow economies, which are known by various names around the world, among them hidden economy, grey economy, black economy or lack economy, cash economy or informal economy, were difficult to measure.

Meanwhile, a 2012 Finscope Survey projected the value of informal sector in Zimbabwe at $7 billion of untapped wealth which can be formalised to meaningfully contribute to country’s economy growth.

However, analysts argue that the general discomfort hitting the formal business sector has culminated in the obscene statistics of unemployment with economists pegging unemployment at 70 percent while the ZimStat Census 2012 National report pegged it at 11 percent.

The discomfort, the experts have noted, has extended to upstream and downstream sectors which has resulted in the shrinkage of revenue collection of significant national institutions such as the Zimbabwe Revenue Authority (Zimra).

Analysts note the verity of importance is that the said facts of high unemployment are entrenched on statistics being obtained from the formal employment sector.

This has in turn relegated viable segments within the informal sector to the dustbin.
The informal sector is arguably employing the bulk of the country’s productive population.
A Finscope Micro and Small Medium Enterprises (MSMEs) survey carried out in 2012 indicated that the informal sector has managed to create a total of 5,7 million jobs in the country.

The survey also indicated that there are close to 2,8 million small business owners and 3,5 million small businesses around Zimbabwe.

However, apart from these impressive statistics, this sector (which is touted as the future of the local industry) is failing to significantly remit meaningful contributions to the national fiscus.

Meanwhile, the ILO report also found that informal employment is a greater source of jobs for men (63 percent) than for women (58,1 percent).

“Out of the two billion workers in informal employment worldwide, just over 740 million are women,” said ILO, noting that they are mostly in informal employment in most low- and lower-middle income countries and are more often found to be the most vulnerable.

Rafael Diez de Medina, the Director of ILO’s Department of Statistics says that the report is timely, given the momentum created by the Transition from the Informal to the Formal Economy Recommendation, 2015, and the Sustainable Development Goals that includes a specific statistical indicator on informal employment.

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