Experiences of Exclusion from the Formal Economy
“The law is sometimes too tough for us.”
These may sound like the words of a criminal, encountering the workings of due justice. In fact, they are the words of a woman who runs an Educare centre in Ivory Park, Johannesburg, but struggles to achieve compliance with all the regulatory criteria. This woman, anonymised for her safety, was moved to start an Educare when she saw street-children in her area going hungry. She has correctly registered her Educare with government as a non-profit organisation, yet she receives no assistance from them and has to borrow money or use her pension to buy food for the children in her care. Although her Educare centre is rooted in her goodwill towards her community, it is also her only source of income – so the failure of “the law” to support her is a problem for her.
In response to the need of people struggling on the economic margins for livelihoods, the Sustainable Livelihoods Foundation is launching a series of blogs titled ‘Livelihood Struggles’. The series will feature lived encounters with economic struggle, such as experienced by the Educare owner introduced above. Some blogs will be written by participants of the informal economy themselves, others by SLF researchers and collaborators. The series highlights the great difficulty poor South Africans face in gaining access to the formal economy and attaining regulatory compliance. Poor people face a range of challenges in accessing formal markets and building livelihoods for themselves: these challenges include legal restrictions around where businesses can operate, high fees for trading licences, lack of start-up finance options, unchecked crime, and unhelpful or corrupt officials. Often, when people attempt to work through these challenges legally, they are stone-walled by bureaucracy or red tape. If they bypass these challenges extra-legally, for example through trading without a licence, they face high risks of police harassment and criminalisation. But what options do unemployed persons have in an environment where there are few jobs in general and even fewer for persons lacking skills?
From years of research with the communities who face these challenges, the Foundation has come to understand that the difficulties faced by poor people in accessing the formal economy are neither random, nor befall only the unlucky. The obstacles are systemic. Economic exclusion is widespread; an outcome of a government which works better for the rich than for the poor. Thousands of South Africans are marginalised and prevented from building sustainable livelihoods because of government policies which make gaining access to the formal economy from a position of poverty almost impossible. This blog series will spotlight a handful of cases which come from communities surviving at the economic margins, where “the law is too tough for us” is indeed a personal truth for many. Highlighting the systemic nature of this truth, rather than the individual details of each case, is the purpose if this series. We hope that through these insights we can impress the need to strengthen rights for the poor to pursue livelihoods through informal economic activities in a way that promotes economic inclusion as a priority development objective.
Read the first blog in this series, ‘Economic Exclusion in Action’, here.