The Informal Sector
What is the informal sector?
The informal sector refers to those workers who are self employed, or who work for those who are self employed. People who earn a living through self employment in most cases are not on payrolls, and thus are not taxed. Many informal workers do their businesses in unprotected and unsecured places.
Do we have the informal sector in Malawi?
In Malawi the majority of people plying their trade are in the informal sector. Some are in this sector because of retrenchments or downsizing; others school leavers or widows seeking to make a living; and some are entrepreneurs who have built up their own businesses.
Examples of the informal sector
In Malawi the informal sector can include vendors, such as people selling various merchandise such as vegetables. The workers in this sector also include hawkers, marketers, vendors, artisans, small veranda (khondes) businesses and cross border traders.
Does the informal sector have a union?
Yes. There is the Malawi Union of the Informal Sector, which was established in 2000. The Malawi Union for Informal Sector is the organisation established to organise, promote, protect, and negotiate issues dealing with the rights of informal economy workers and business training.
What are the group’s vision and mission?
The vision of the group is to look at decent standards of living for all Malawians in a stable economy and to transform informal businesses into viable corporate establishments.
Its mission is to organise informal economy traders and alleviate poverty through transformation of informal economy into mainstream businesses, and empower informal traders in order to improve their business through training, access to credit, dialogue with local authorities and relevant organisations on appropriate laws/by laws and policies that bring to an end of harassment and discrimination against informal economy workers.
Who is eligible?
Vendors, hawkers, marketers, cross border traders and any informal traders can become members of the group through their branches in the country. The membership is at 10 000 but potential is estimated at over two million people.
According to the Malawi report, the subscription fee is two hundred kwacha (K200.00) per annum which is paid to national headquarters, and a monthly contribution of fifty kwacha paid to one’s branch (K50.00).This is intended to be kept at the member’s branch for the purpose of the servicing the branch itself.
Is there progress in the informal sector?
A recent study conducted by the Malawi Congress of Trade Union (MCTU), which is the national body on Malawi’s informal sector, revealed serious challenges that workers in the sector are facing. The report reveals that workers in the informal sector face problems that range from lack of security to harassment by public officials. It also says that the workers in the informal sector are subjected to appalling and dangerous working conditions that result in ill-health. However, MCTU director of research Paliani Chinguwo says all the challenges that workers in the informal sector face emanate from lack of co-ordination and harmonisation of policies.
Ministry of Trade and Industry Chief Testing Officer Wesley Muwalo says the informal sector, if well organised, can complement government’s efforts in alleviating poverty levels and develop the country.
Southern Africa Trade Union Coordinator Council (Satucc) Executive Secretary Austin Muneku notes that most players in the informal sector in the Sadc region are struggling as there are no fixed working hours and no minimum wages. He calls on Sadc to give attention to the challenges as well as transformation of the informal economy to formality to ensure its positive contribution to decent work.
Find out more about Minimum Wages in Malawi.