A study by Rhodes University's Professor Michael Rogan in collaboration with University of Cape Town’s Caroline Skinner of the African Centre for Cities on the effects of the COVID-19 pandemic on the informal economy has found that the typical earnings for women in informal self-employment decreased by nearly 70% between February and April 2020.
"Women should be better supported as they were the most vulnerable and the most severely affected group during the COVID-19 outbreak," said Prof Rogan.
Prof Rogan alongside Nelson Mandela University’s Professor Nomalanga Mkhize presented and discussed this and other findings of the study at a webinar hosted by Professor Cyril Nhlanhla Mbatha from Rhodes University's Institute of Social and Economic Research (ISER) recently. In attendance were 90 participants from various institutions of higher learning, government departments, private organisations and members of the media.
Following the announcement of the national lockdown by the President of the Republic of South Africa, Cyril Ramaphosa, most workplaces were forced to halt all operations, leaving many South Africans without jobs. This was the motivation for the study titled: The COVID-19 crisis and the impact on South Africa’s Informal Economy. "Around March and April, it was clear that we did not have much data on the impact COVID-19 would have on households and the labour market in South Africa. A project to collect non-medical data on the impact of the pandemic was initiated by researchers from Stellenbosch University (https://cramsurvey.org/ ). I submitted a proposal for an analysis and policy paper on the impacts of the pandemic on the South African informal economy," Prof Rogan explained.
The research uses the South African National Income Dynamics Study Coronavirus Rapid Mobile Survey (NIDS-CRAM) data, a broadly national representative survey. The survey team conducted telephonic interviews with more than 7,000 individuals between May and June 2020. The questionnaire covered multiple themes, but since it was designed to not take more than 20 minutes of the respondents’ time, only a few employment-related questions were possible. Despite the limited length of the survey, the NIDS-CRAM data allowed for the analysis of three groups of informal workers namely: the self-employed (in the informal sector), informal employees (both inside and outside of the informal sector), and casual workers. It also allowed for important analysis by gender and, for those who did not lose their livelihoods entirely between February and April, for comparisons between formal and informal employment. However, Prof Rogan said the data did not allow for the identification of total job losses in the informal economy between February and April, nor the impacts by industry or place of work (e.g. households).
Other key findings of the study include:
- Just under a third (31%) of informal workers who did not lose their livelihoods were completely ‘locked out’ of employment in April - compared with 26% of those in the formal employment sector.
- About 37% of the informally self-employed reported zero earnings in April.
- On average, for those who were informally employed in both February and April, average hours worked per week decreased by 32%.
- For the typical informal worker that was employed in both February and April, the hours worked per week decreased by as much as 50%.
- Women in the informal economy saw a decrease of 49% in the typical hours worked in April, while men in informal employment saw a 25% decrease in typical hours.
Prof Mkhize said the research results were alarming. "The picture painted by the research is very scary and it is not so much because of COVID-19 but it is because of the very bad socio-economic situation we live in. We need to learn from this because in the Eastern Cape we have young Black men who are not given a chance to be part of a formal process to become responsible citizens of the country. The COVID-19 crisis has forced us to be locally intelligent so we can save people’s lives. We need localised targeted interventions that can support not just the local economy but the social fabric of the country," she said.
She also emphasised that the pandemic exposed the damage to livelihoods people are facing on the ground. "Whether there is a pandemic or not, there is a serious socio-economic crisis facing many unemployed people in South Africa. The government should look at making food parcels and the R350 COVID-19 relief aid permanent," she added.
Professor Rogan recommended that as the most vulnerable and severely affected group during the pandemic, women should be supported as follows:
- the Child Support Grant allocation should be increased for each child ;
- there must be an increase in the amounts of grants in line with international norms;
- the government must reframe the special COVID-19 grant. Two-thirds of the 2.7 million recipients (by end of June) were men;
- the government must reform its Unemployed Insurance Fund as very few domestic workers have received claims and;
- in the longer-term, the government needs rethink the role of the informal economy.
The research was funded by Allan and Gill Gray philanthropy, FEM Education Foundation and the Michael & Susan Dell Foundation. The research team also shared the findings of the study with government and engaged on issues of employment, hunger and food security. The national departments of Planning, Monitoring and Evaluation; Treasury, Health and the National Planning Commission in the Office of the Presidency were part of the study.
Prof Rogan said this was the first round of research and four more rounds of surveys were planned to take place throughout 2020 where the additional rounds would aim to determine which workers and households have recovered from the initial economic shock of the pandemic and lockdown. The data is open source and is available to future researchers/collaborators.
This is an ongoing discussion and people can follow along via the ISER webpage: https://www.ru.ac.za/iser/
Prof Rogan donated the honorarium he received from the research project to the Rhodes University COVID-19 Relief Fund.