Development Co-operation Report 2020

Building the everyday economy from the ground up: a crisis resilience strategy

Sally Roever,
WIEGO & Poonsap Tulaphan, Foundation for Labour and Employment Promotion/HomeNet Thailand

Abstract

Emergency food assistance and cash grants are blunting some of the devastating impacts of COVID-19 on informal workers. But ensuring that the informal economy will provide sustainable livelihoods requires investment and innovation. This case study highlights how grassroots workers’ organisations are building partnerships with authorities in Thailand to rebuild economic linkages to make informal work more resilient to crises.

•  While most continued working during the pandemic, informal workers in Thailand worked fewer days, earned much less and were selling assets, borrowing and spending savings, with women in informal employment faring far worse than men.

•  Recovery requires investment, from governments and development co-operation providers, in the micro- and nano-level activities of people and households at the broad base of the economic pyramid.

•  The experience of Thailand shows that informal workers’ organisations can play a key role in public-private partnerships to support sustainable livelihoods and rebuild economic links between low-income providers and consumers.

The international community’s commitment to reduce poverty and inequality is severely complicated by COVID-19’s mass disruption to livelihoods in the informal economy, which accounts for 61% of global employment (ILO, 2018[1]). Yet, by focusing renewed attention on the provision of essential goods and services – how to get food to people, for example – the pandemic has created an opportunity to better understand the systems underlying this provision and the people who make it happen every day.

In middle-income countries like Thailand, where 55.8% of total employment is informal (Poonsab, Vanek and Carré, 2019[2]), both formal and informal workers are involved in the provision of essential goods and services. With the pandemic’s disproportionate impact on informal workers (Gerdin and Kolev, 2020[3]), most of whom lack labour and social protections, governments are faced with the challenge of how to design employment support policies that are both effective and sustainable.

With broken economic linkages at the grassroots level and an associated reduction in working hours and earnings, informal economy workers are borrowing money, drawing down savings and selling off assets.

Initial evidence from Thailand and elsewhere shows that even where many informal workers have continued to work and received early government support in the form of cash grants and/or food assistance, human development gains are being reversed. With broken economic linkages at the grassroots level and an associated reduction in working hours and earnings, informal economy workers are borrowing money, drawing down savings and selling off assets. To avoid further damage, governments and their development co-operation partners need to rethink the informal economy component of essential goods and services provision.

Informal workers are selling assets, borrowing and spending savings to survive the crisis

To assess the early impact of the pandemic on informal economy workers, Women in Informal Employment: Globalizing and Organizing (WIEGO) and partners in 12 cities conducted a mixed-method study between June and September 2020 (Reed and Ogando, 2020[4]). The sample of 302 respondents in the Bangkok study, which HomeNet Thailand co-ordinated locally with members of the Federation of Informal Workers, includes domestic workers, home-based workers, street vendors, waste pickers, motorcycle taxi drivers and masseuses.

The study found that, in contrast to many other cities where work disappeared with lockdowns, 52% of workers interviewed kept working during Thailand’s initial lockdown and 88% were working as of July. Additionally, 80% or more of respondents among all groups except domestic workers received government cash grants, and over half of home-based workers, waste pickers and motorcycle taxi drivers received food assistance.

Nevertheless, the findings point to a longer term problem. All groups except waste pickers reported working fewer days in July 2020 than in December 2019, and average daily earnings in July were far lower than they were in December for both women and men. Among those who were not working in July, three‑quarters said the reason was market or supply chain disruptions. Nearly half (47.4%) of all respondents reported that they had drawn down savings, over one-third said they had borrowed money and nearly a fifth said they had pawned assets for cash in the past month. These coping strategies reflect a worrisome trend towards asset erosion. According to HomeNet Thailand, they reflect pandemic-related supply and demand disruptions at the grassroots level – such as closed markets, transport and raw material shortages, and new public space restrictions – that will be slow to recover without government intervention.

The trend is especially concerning for women in informal employment. Not only were women’s average daily earnings far lower than men’s, both before and after the lockdown, but women also described having a cascade of bills due and needs unmet.

Coalitions, partnerships and building from the grassroots: Applying lessons learnt from the 2008 crisis

HomeNet Thailand’s experience in the 2008 global financial crisis led it to form alliances with government authorities at local and national levels that are being leveraged today to rebuild supply and demand linkages in markets accessible to low-income workers. Three examples, each with a distinct entry point, illustrate this approach. Each of these examples features three key attributes that build on learning from previous crises:

• coalitions between informal workers’ organisations, civil society partners and government authorities that formed over time through ongoing, structured dialogue

• a rethinking of the concept of public-private partnerships centred on informal workers’ organisations

• the development of models for recovery and innovation that build from the grassroots level up.

Public space: Public space is a critical economic asset for informal economy workers. To help rebuild linkages at the grassroots level, HomeNet Thailand is working with the Bangkok Metropolitan Authority, the National Health Commission Office and local universities to identify pilot sites where street vendors, residential associations and pedestrians can co-design public space as a livelihood asset where street vendors, transport workers and others have been displaced as a result of the crisis.

Food delivery systems: There is still demand for delivery drivers in Bangkok, but large companies with e-platforms and government support dominate the market, leaving behind low-income drivers and consumers. Bangkok’s motorcycle taxi drivers’ association has developed new models linking its members to street food vendors via a low-tech, WhatsApp-style interface that low-income providers and consumers can use and that targets a handful of neighbourhoods to pilot the approach. Government partnerships could help scale these models to reach a wider population.

Local garment production: Home-based workers in Thailand’s garment sector have been affected by the loss of international tourism and orders from global brands. Without digital marketing skills or other livelihood alternatives, these workers require both technical and policy support at the national level to generate demand for their products. Here the approach is to formulate a policy that has government officials wearing traditional garments two days per week and sourcing 30% of these garments from local, home-based producer groups. The aim is to provide an economic bridge while these workers are trained in Internet marketing and/or reskilled into jobs that do not depend on tourism.

Development co-operation can help rebuild and fortify economic linkages for more crisis-resilient, sustainable livelihoods

Neither temporary relief measures at the policy level nor selling off assets at the household level is a sustainable solution. In addition to long-term social and labour protections, respondents indicated that they need economic linkages to be rebuilt from the ground up so that their livelihoods can sustain them. If recovery is to reach the everyday economy, development co-operation will need to be redirected towards social spending and investments in the micro- and nano-level activities of people and households at the broad base of the economic pyramid.

References

[3] Gerdin, A. and A. Kolev (2020), “Why protecting informal economy workers is so critical in time of COVID-19”, OECD Development Matters blog, OECD, Paris, https://oecd-development-matters.org/2020/04/17/why-protecting-informal-economy-workers-is-so-critical-in-time-of-covid-19 (accessed on 7 October 2020).

[1] ILO (2018), Women and Men in the Informal Economy: A Statistical Picture, International Labour Office, Geneva, https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_626831.pdf (accessed on 7 October 2020).

[2] Poonsab, W., J. Vanek and F. Carré (2019), “Informal workers in urban Thailand: A statistical snapshot”, WIEGO Statistical Brief, No. 20, Women in Informal Employment: Globalizing and Organizing, Manchester, UK, https://www.wiego.org/sites/default/files/publications/file/Informal%20Workers%20in%20Urban%20Thailand%20WIEGO%20SB%2020_1.pdf (accessed on 7 October 2020).

[4] Reed, S. and A. Ogando (2020), “We need to listen to the workers: WIEGO partners conduct COVID-19 Global Impact Study”, WIEGO blog, https://www.wiego.org/blog/we-need-listen-workers-wiego-partners-conduct-covid-19-global-impact-study.