Formalizing the Informal Economy for Employment and Growth: A Seminar Summary

On August 23, 2023, the Mark Strasse Civic Centre in Richards Bay played host to the Informal Economy seminar. Attendees, including traders, municipalities, government departments, and distinguished speakers, convened to discuss the critical topic of formalizing the informal sector. Advocate Fikiswa Mncanca-Bede, the Chief Director for Inspection and Enforcement Services’ Statutory and Advocacy Services, highlighted the need for formalization, emphasizing that the sector contributes significantly to the country’s economy.

The Current State of the Informal Sector

Despite the informal sector’s substantial contribution to the economy, it remains plagued by unstable employment and inadequate working conditions. The unemployment rate in the country is staggering, standing at 32.6 percent. Recognizing and integrating informal jobs into the formal economy could help decrease unemployment rates.

The Need for Formalization

The devastating impact of Covid-19 on businesses highlighted the stark contrast between the formal and informal sectors when it came to relief measures. The registered businesses were financially supported through the UIF Covid-19 Temporary Employer/Employee Relief Scheme, while the informal sector was left to fend for itself. This disparity underscores the need for a transition to formalization, which would offer invaluable benefits to workers and businesses alike.

Inter-Departmental Cooperation

Mncanca-Bede emphasized the need for inter-departmental cooperation to realize the vision of formalizing the informal sector. Partnerships between traders, municipalities, and government departments are essential to ensure that the transformation is effective and sustainable.

Benefits of Formalization

Formalizing the informal sector would help decrease unemployment and provide workers with much-needed protection. Once an informal business is formalized, it can be covered for work-related injuries and diseases. Employees would then be eligible to receive coverage from the Compensation Fund, which would take care of their hospitalization expenses. The transition to formal employment would also empower informal businesses and self-employed individuals, offering them the benefits and rights of the formal economy.

The Future of the Informal Sector

The Informal Economy seminar sought to inspire a shift in the way people perceive the informal sector and pave the way for a more just and equitable economy. Events like this serve as powerful reminders of the importance of embracing change for the betterment of society at large.

The road to formalizing the informal sector may be long and challenging, but the potential rewards are immense. The Informal Economy seminar demonstrated that the first step in this transformative journey is open dialogue and collaboration among stakeholders. As we strive towards a future where decent employment is accessible to all, events like this play a crucial role in bringing about change.