The Promise and Predicament of Labor Formalization for Women

Book Review: Informal Women Workers in the Global South: Policies and Practices for the Formalization of Women’s Employment in Developing Economies, edited by Jayati Ghosh (Routledge 2021)

Informal employment is pervasive in low-income countries, with more than 90 per cent of people working in the informal sector. Informal jobs are often precarious: they can be remunerative or non-remunerative and are not covered by labor laws, income tax, or employment benefits such as secure employment contracts, social protection, the right to unionize, or paid annual or sick leave.

It is often assumed that as economies grow, the share of formal employment will also increase, but this trend has not held up in many countries. For example, South Asia experienced consistently high growth rates (between 5 and 7.5 per cent) between 2010 and 2019, but the level of informality increased in Pakistan and Bangladesh and remained at the same level in India.

At the same time, even in highly formalized economies, there is a shift towards informalization with an increase in types of jobs that are unstable or have no benefits and protections. This shift from formal to informal expresses itself through outsourcing, precarious working conditions, contracting, part-time work, labor broking, and moonlighting.

Formalization has remained a desirable goal. Countries all over the world have taken initiatives to reduce informality. Some countries have focused on providing “formal sector type” benefits such as employment contracts, social security, paid leave, maternity leave, etc. Such provisions tend to be inadequate as they deal with only one aspect of work rather than the totality of work conditions.

For example, since 2018, domestic workers in South Africa have fallen under the National Minimum Wage Act 2018. Still, there are no other protections and safeguards to make their workplaces safe, such as freedom from harassment or abuse by recruiters or employers, inspection of workplaces (mostly private homes) or the right to time off, overtime pay, sick leave, health insurance or pensions.  While access to minimum wage is a win for domestic workers, it does little to improve these other important elements of work life.

Informal Women Workers in the Global South: Policies and Practices for the Formalization of Women’s Employment in Developing Economies is an excellent collection of case studies from India, South Africa, Ghana, Morocco, and Thailand that explore the direct and indirect impact of formalization policies on female informal workers.

The case studies in this book underscore the fact that most of the existing labor laws and regulations cover only formal sector workers. Hence, any effort to improve the existing labor code will only benefit a small proportion of the workforce and will exclude those who most likely need these protections the most because of the precarity of informal sector jobs.

This focus on the formal sector also particularly hurts women, as women in low—and middle-income countries are more likely to be in the informal sector than men. This is in contrast with the global average, where men are more likely to be in the informal sector.

Despite these obstacles, governments can be innovative with the existing institutions and regulations to include the informal workers. This point is highlighted in the chapter on Morocco: the Moroccan labor code covers only the formal sector workers, but the government has developed a system of labor inspections, which covers both formal and informal employment. Such inspections are supposed to ensure that workplaces comply with labor protections enshrined in the country’s labor code. Legally, this provision is only applicable to formal sector establishments; it now also gets enforced on informal sector establishments.  While such measures are no substitute for de jure rights and protections, at least they address some of the gaps in the existing system.

Another theme that runs across chapters is even those policies that on the surface may come across as “gender blind” often reinforce gender inequality. Since labor markets and paid work are traditionally male-dominated, the default approach tends to ignore what women experience on a daily basis, including limited mobility, low wages, the double burden forced on them by traditional gender roles, higher risk of sexual violence, and lack or limited access to education, finance, and unions. Policies must account for these specific constraints and conditions to have a meaningful impact on women’s work.

In some cases, governments have realized that policies cannot always be gender-blind. However, the way it manifests in practice often ignores the lived reality of female workers. The chapters on India and Thailand refer to maternity leave and benefits laws to highlight how laws are often oblivious to women’s experience in the labor market. India’s Maternity Benefit Act (1961) covers only female workers in establishments with more than ten female workers. Hence, it excludes daily wage workers, casual workers, self-employed workers, and unregistered wage workers.

In Thailand, maternity benefits are provided only to those workers and their spouses who have contributed at least seven months in the preceding 15-month period. This disregards that women’s decision to participate in the labor market is heavily influenced by the demands of care work where they are often the primary caregivers. Thus, they are more likely to move in and out of the labour force. Gender roles cannot be changed overnight, but rules and regulations can acknowledge these constraints and facilitate women’s participation. In these examples in India and Thailand, policies, in fact, do the opposite, actively excluding more women from social protection.

The book also contains several engaging discussions on regulating predominantly female sectors such as waste picking, domestic work, and street vending. These case studies highlight constraints that women face in accessing and navigating these regulations and the associated institutional setup. To illustrate, in Ghana, India, and South Africa, governments have tried to formalize street vending, a predominantly female sector, through licensing requirements and restriction of vending to specific locations (i.e., zoning).

Consequently, women must engage with bureaucracies, which requires a level of mobility and literacy that informal female workers often lack. These bureaucracies are also male-dominated, which increases the incidence of sexual harassment. At the same time, zoning decisions seldom consider factors such as proximity to public taps, toilets, and safe transportation. The results are often unhelpful to women workers and, worse, can expose them to a higher risk of sexual assault.

This disregard for the impact of these seemingly harmless policies on women’s experience in the labor market has always been a blind spot in state regulation of labor. Increasing female participation in decision-making is one step in the right direction. India attempted this in 2014 by mandating the formation of Town Vending Committees to give (mostly female) street vendors a say in the decision-making process while also protecting them from eviction. These committees are responsible for issuing vending certificates and preparing the town vending plan, which includes earmarking vending zones and ensuring the availability of adequate space and infrastructure for each vendor.

However, most street vendors are unaware of this Act and continue to face exclusion from decision-making. This demonstrates that granting a formal right to participate is inadequate and will have to be accompanied by proactive communication and recruitment strategies to encourage women to participate in such processes.  

Women are less likely to be aware of their rights or to be part of labor unions. This affects how women navigate their relationships with employers and assert their rights. The chapter on India refers to the survey of informal workers in Delhi that showed that 50 per cent of the female respondents were receiving below the minimum wage, with a majority not even aware of the legal minimum wage level. However, women who were part of a union were more aware of their rights. Unfortunately, female union membership remains low.

For any formalization effort to successfully improve working conditions for women, it is important to acknowledge women’s current position in the labour market, where their work is valued less in terms of monetary compensation and prestige. In this way, the current economic system is skewed against women, and any effort to formalize it will perpetuate these inequalities if it is not accompanied by measures to change the perception and value of women’s work.

While the book does an excellent job of documenting and explaining the direct and indirect impact of government interventions to formalize female workers, it remains silent on two areas. One, it does not give a sufficient analysis of how gender-specific policies can impact the hiring process—and, in some instances, incentivize gender discrimination. For example, Jordan tried to incentivize female workforce participation by requiring employers to establish an onsite childcare facility if there were at least 20 female employees.

However, this created a perverse incentive by imposing costs specifically on employers who hired women. An amendment in 2019 removed this condition. Now, the obligation to provide such services is triggered when the employees (irrespective of gender) cumulatively have at least 15 children under the age of 5. An analysis of how similar dynamics have played out in the countries analyzed in this volume would be helpful.

Second, the book fails to engage with the more general trend of informal female workers lacking faith in legal and regulatory institutions in all the countries studied in the volume. This mistrust manifests in very distinct circumstances, from South African female miners’ failure to report rampant sexual coercion to the reluctance of domestic workers everywhere to sign contracts formalizing their status.

In many cases, these institutions remain inaccessible to women due to literacy, mobility, and awareness constraints. Still, there are reasons to doubt that these institutions will serve the interests of women.  In this context, if the enforcement of regulations depends on the aggrieved individual filing a complaint, it is not likely to deliver justice. The institutions will have to play a more proactive role by setting up mechanisms, such as regular inspections, that can identify violations and hold the violators accountable.

This volume is an invaluable contribution to this underexplored subject, one which impacts the lives of hundreds of millions, perhaps more, around the world. The conversations it starts can guide further research and promote policy changes that make a safer, more prosperous, and less exploitative future for the women who do so much to keep the world running.


Zaineb Majoka grew up in Pakistan and now lives in Washington DC. Her work focuses on social protection, labor markets, and social norms. She has a particular interest in understanding how gender norms and labor market outcomes shape each other, especially in the Global South. She is also a cofounder of Bol Coop, a worker-owned cooperative bookstore in DC.