It is more connected to the broader economy than we realise and should be supported
South Africa’s joblessness woes are getting worse by the day, leaving many people to eke out a living on the margins of the formal economy. Barely two months into 2020 five companies announced planned job cuts that will affect more than 9 000 people. This adds to the thousands of jobs lost in 2019, which saw the unemployment rate climb to a level last seen 17 years ago.
As the economy struggles to create jobs and undergoes structural transformation, people will turn to the informal sector or small businesses. Informal employment and enterprises are regarded as a crucial activity for absorbing those who cannot find jobs in the formal economy. Informal employment as a proportion of total employment constitutes about 78% to 82% in Sub-Saharan African and South Asia in comparison with South Africa’s 36%.
It is common practice to find law enforcement authorities, sometimes under pressure from private property owners, impounding the goods of informal street traders for violating trading licence requirements. Many street traders found themselves on the receiving end of the law during a Jo’burg metropolitan municipality operation in which unlicensed traders’ stock was confiscated, including that of a young man who created a job for himself by selling sandwiches at a popular Sandton intersection.
Informal trading and employment activities are more diverse and some have a certain level of sophistication to complement the seemingly exclusive upmarket office and shopping corridors. Sophisticated or innovative informal activities not only offer opportunities for employment creation and decent wages, but present prospects for the businesses to formalise and later occupy vacant office and shopping spaces in the city centres.
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