Informal Employment

There is a fifth sector but it not recognised in the official figures produced by governments. This is called the informal sector, also referred to as the 'black economy' in the sense that it is unofficial and unregulated. This sector employes millions of people across the world, mainly in LICs.

In LICs today large numbers of people are migrating from rural to urban areas. The quality of life is better in towns and cities.







Characteristics

Might involve selling matches or shoelaces on the street, ice-cream vending, shoe shining, rubbish collecting or scavenging bottles, cans and other types of waste recycling. Some are do desperate as to resort to begging, petty crime or prostitution. Common features of LIC urban areas are shanty towns.

An interesting group of informal activities fall under the heading of Paratransit. these arise because of the inadequate official transport in LIC towns and cities. They usually take the form of minibuses, hand-drawn and motorised rickshaws, scooters and pedicabs (tricycles used as taxi's).They add to the problems of congestion, on already busy, overloaded roads. These informal activities have some benefits. they provide a wide range of cheap goods and services that would otherwise be out of reach of many people. They provide the poor with a means of survival. Because earning are low, informal activities do nothing to break the cycle of poverty in LIC urban areas. Other costs with the informal sector include:

• no health care or unemployed benefits
• a high exposure to work-related risks
• an uncertain legal status

The involvement of children in economic activity:

In Dhaka, the capital of Bangladesh, it is estimated that there are half a million children in the informal sector, most of them work from dusk to dawn earning on average of 50 cents a day to help them support their families. The jobs range from begging and scavenging. These children work in vulnerable conditions, exposed to hazards such as street crime, violence, drugs, sexual abuse, toxic fumes and carrying excessive loads. The children suffer poor health in theses conditions.

Case Study: Sector shifts as seen in 3 countries

Ethiopia- a poor LIC


Ranked 170 out of 177 countries in terms of its level of development. This make it one of the poorest and least developed countries in the world. Located on the sub-Saharan regions of Africa. Few crops are grown for sale and possible export. Most important is coffee. However, recurrent droughts and a long-running war with its neighbour Eritrea have caused coffee production to vary greatly from one year to the next.


Over 75% of Ethiopians live in rural areas. Cities are few and far between. This explains why there is so little employment in the tertiary sector. A poor, largely rural population has little need of urban services, it lacks money. The secondary sector plays little part in Ethiopia's present economy. The country lacks mineral resources and the capital necessary for processing.

China- a rapidly emerging economy


2nd largest economy in the world. Lower, middle -income country. The wealth created by industry is already beginning to encourage growth in the tertiary sector.



















UK- a post-industry economy


The world's first industrial nation.  It led the Industrial Revolution.  50 years ago manufacturing produced 40% of the country's economic wealth and employed one third of the workforce.  Today it only produces 24% of the wealth and employs 18% of the workforce.  As a result of the global shift in manufacturing the country has experienced de-industrialisation.  Many of the goods once manufactured in the UK are now made in China, India and other countries. 


Tertiary sector provides jobs for 80% of UK workers, it creates 75% of the national economic wealth.  UK farming produces about 60% of the countries food supply.  The low labour percentage reflects the high level of mechanisation while a low GDP percentage reflects the low price of farm products relative to manufactured goods and services.

Economic activity and energy

Economic sectors

 

Primary- extraction of raw materials to be supplied to other industries e.g farming

Secondary- where raw materials are assembled or manufactured to produce finished goods e.g food processing 

Tertiary- jobs which involve providing goods and services for the public e.g transport 

Quaternary- include people who provide specialist information and expertise to all the above sectors  e.g research 

As a county develops, the proportion employed in the primary sector decreases and the proportion in the secondary and tertiary sectors increases. As the economic activity develops even further,the number in the primary an secondary sectors fall further. After the tertiary sector becomes the largest employer, so the quaternary sector begins to emerge.





This is showing how the sectors change over three phrases. The critical phrase is the industrial one. This is when manufacturing becomes more important that the primary sector, employment and contribution to GDP.


The 3 phrases are:


Pre-industrial phase- the primary sector leads to economy and may employ more than 2/3s of the working population. Agriculture is by far the most important activity.


Industrial phase- the secondary and tertiary increase in productivity. The secondary sector rarely provide jobs for more than half of the workforce.


Post-industrial phase- the tertiary sector is clearly the most important sector. The primary and secondary begin to decline so the quaternary sector begins to appear.


The development pathway- starts at as agriculture becomes mechanised, more commercial and shifts away from the subsistence farming. This releases labour to take on other forms of work. People are free to move to the countryside and into urban settlements. Gradually the range of services available to people expands.


The quaternary sector appears when leading countries, and major cities within those countries, find that in order to keep ahead of the pack, they need to invest in higher education, research and development and new technologies. As countries move up the development staircase, there is a rise of the overall standard of living and in the level of urbanisation.


Low-income countries (LICs)- occur largely in Central Africa and in South and Southeast Asia
Lower and Upper Middle-income countries (MICs)- most common in South America, North and South Africa, parts of the Middle East, Eastern Europe and Asia
High-income countries (HICs)- mainly in North America, Western Europe and Australia


Primary sector most important in LIC's, secondary in MIC's and tertiary in HIC's