Wednesday, August 16, 2006
[IWS] ILO: Wage fixing in the informal economy: Evidence from Brazil, India, Indonesia and South Africa (2006)
IWS Documented News Service
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
ILO
Conditions of Work and Employment Programme,
Social Protection Sector.
Conditions of Work and Employment Series No.16
Wage fixing in the informal economy: Evidence from Brazil, India, Indonesia and South Africa (2006),
by Catherine Saget
http://www.ilo.org/public/english/protection/condtrav/publ/16cwe.htm
or
http://www.ilo.org/public/english/protection/condtrav/pdf/16cws.pdf
[full-text, 99 pages]
There is little information on working conditions in general and wage fixing in particular in the informal economy. It is often assumed that informal wages are fixed according to the law of the demand and supply of labour. It is also stated that income from participation in the informal economy is a major source of income for poor people. However, how wages are actually fixed at the concrete level of the informal employer remains a kind of black hole.
Based on data analysis and surveys of firms in Brazil, India, Indonesia and South Africa, this paper shows that wage fixing in the informal economy is a much more complex and elaborated process than often thought. In particular, the provision of a number of diversified allowances and benefits, as well as at least in some countries the reference to the minimum wage, are common.
The paper also provides information on working hours in informal firms, which are found to be very long in India and Indonesia, and much less in the other two countries. In a number of cases, no rest day is allowed.
Finally, the paper concludes that labour laws can, to a certain extent, reach the informal economy, providing that they are formulated in a simple and realistic way and adapted to the social and economic realities of countries.
List of tables
Page
Table 1: Definition of formal and informal wage employment in four countries............................. 4
Table 2: Structure of employment in India in 1999-2000................................................................. 4
Table 3: Structure of employment in Brazil (percentage of total employment)................................ 5
Table 4: Structure of employment in Indonesia................................................................................ 5
Table 5: Floor-level minimum wage in India.................................................................................... 10
Table 6: Main challenges of minimum wages systems with respect to the informal economy ........ 15
Table 7: The level of the minimum wage in 2004 (monthly levels, except daily for India) ............. 15
Table 8: Daily minimum wages in three occupations between 1 July 1999 and 30 June 2000 (National Sample Survey time; in rupees).............. 17
Table 9: Daily wages between 1 July 1999 and 30 June 2000 for casual workers (in rupees) ......... 17
Table 10: Percentage of casual workers at the minimum wage in 1999-2000.................................. 18
Table 11: Percentage of male casual workers in agriculture, construction, and hotels and restaurants at the minimum wage, 1999-2000................ 18
Table 12: Percentage of female workers in agriculture, construction, and hotel and restaurants at the minimum wage, 1999-2000................................. 19
Table 13: Median wages of male casual workers in agriculture and construction ........................... 20
Table 14: Median wages of female casual workers in agriculture and construction (rupees per day)......... 20
Table 15: Percentage of daily casual workers earning below the minimum wage they are entitled to.......................... 20
Table 16: Relation between the level of the minimum wage and its impact..................................... 20
Table 17: Monthly rates of minimum wage and median wages in Indonesia at the survey time (2004)................. 21
Table 18: Average wage in the six provinces.................................................................................... 21
Table 19: Percentage of wage workers at the minimum wage in six Indonesian provinces ............. 22
Table 20: Percentage of wage workers below the minimum wage in six Indonesian provinces ...... 22
Table 21: Percentage of wage workers below the minimum wage in the province of Bangka Belitung.................... 23
Table 22: Minimum wages for farm and domestic workers (March 2003)....................................... 23
Table 23: Percentage of workers earning the minimum wage.......................................................... 24
Table 24: Mean and median wages for domestic and farm workers (in Rand)................................. 24
Table 25: Percentage of workers earning less than the minimum wage they are entitled to ............. 25
Table 26: Summary statistics of monthly wages in Brazil in 2003 (in R$)....................................... 25
Table 27: Percentage of workers earning the minimum wage and below in 2003............................ 26
Table 28: Existing pay practices across different enterprises............................................................ 28
Table 29: Comparison of statutory minimum wages and actual wages (per day)............................. 32
Table 30: Pay practice in the surveyed firms.................................................................................... 36
Table 31: Working time in the surveyed firms.................................................................................. 38
Table 32: Type of enterprise and the number of regular and irregular workers................................ 39
Table 33: Enterprises and their wage rates........................................................................................ 42
Table 34: Wage-fixing factors........................................................................................................... 44
Table 35: Wage increase factors....................................................................................................... 45
Table 36: Wage practice in the firms surveyed................................................................................. 46
Table 37: Characteristics of the firms: Days of operation and working conditions.......................... 46
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
ILO
Conditions of Work and Employment Programme,
Social Protection Sector.
Conditions of Work and Employment Series No.16
Wage fixing in the informal economy: Evidence from Brazil, India, Indonesia and South Africa (2006),
by Catherine Saget
http://www.ilo.org/public/english/protection/condtrav/publ/16cwe.htm
or
http://www.ilo.org/public/english/protection/condtrav/pdf/16cws.pdf
[full-text, 99 pages]
There is little information on working conditions in general and wage fixing in particular in the informal economy. It is often assumed that informal wages are fixed according to the law of the demand and supply of labour. It is also stated that income from participation in the informal economy is a major source of income for poor people. However, how wages are actually fixed at the concrete level of the informal employer remains a kind of black hole.
Based on data analysis and surveys of firms in Brazil, India, Indonesia and South Africa, this paper shows that wage fixing in the informal economy is a much more complex and elaborated process than often thought. In particular, the provision of a number of diversified allowances and benefits, as well as at least in some countries the reference to the minimum wage, are common.
The paper also provides information on working hours in informal firms, which are found to be very long in India and Indonesia, and much less in the other two countries. In a number of cases, no rest day is allowed.
Finally, the paper concludes that labour laws can, to a certain extent, reach the informal economy, providing that they are formulated in a simple and realistic way and adapted to the social and economic realities of countries.
List of tables
Page
Table 1: Definition of formal and informal wage employment in four countries............................. 4
Table 2: Structure of employment in India in 1999-2000................................................................. 4
Table 3: Structure of employment in Brazil (percentage of total employment)................................ 5
Table 4: Structure of employment in Indonesia................................................................................ 5
Table 5: Floor-level minimum wage in India.................................................................................... 10
Table 6: Main challenges of minimum wages systems with respect to the informal economy ........ 15
Table 7: The level of the minimum wage in 2004 (monthly levels, except daily for India) ............. 15
Table 8: Daily minimum wages in three occupations between 1 July 1999 and 30 June 2000 (National Sample Survey time; in rupees).............. 17
Table 9: Daily wages between 1 July 1999 and 30 June 2000 for casual workers (in rupees) ......... 17
Table 10: Percentage of casual workers at the minimum wage in 1999-2000.................................. 18
Table 11: Percentage of male casual workers in agriculture, construction, and hotels and restaurants at the minimum wage, 1999-2000................ 18
Table 12: Percentage of female workers in agriculture, construction, and hotel and restaurants at the minimum wage, 1999-2000................................. 19
Table 13: Median wages of male casual workers in agriculture and construction ........................... 20
Table 14: Median wages of female casual workers in agriculture and construction (rupees per day)......... 20
Table 15: Percentage of daily casual workers earning below the minimum wage they are entitled to.......................... 20
Table 16: Relation between the level of the minimum wage and its impact..................................... 20
Table 17: Monthly rates of minimum wage and median wages in Indonesia at the survey time (2004)................. 21
Table 18: Average wage in the six provinces.................................................................................... 21
Table 19: Percentage of wage workers at the minimum wage in six Indonesian provinces ............. 22
Table 20: Percentage of wage workers below the minimum wage in six Indonesian provinces ...... 22
Table 21: Percentage of wage workers below the minimum wage in the province of Bangka Belitung.................... 23
Table 22: Minimum wages for farm and domestic workers (March 2003)....................................... 23
Table 23: Percentage of workers earning the minimum wage.......................................................... 24
Table 24: Mean and median wages for domestic and farm workers (in Rand)................................. 24
Table 25: Percentage of workers earning less than the minimum wage they are entitled to ............. 25
Table 26: Summary statistics of monthly wages in Brazil in 2003 (in R$)....................................... 25
Table 27: Percentage of workers earning the minimum wage and below in 2003............................ 26
Table 28: Existing pay practices across different enterprises............................................................ 28
Table 29: Comparison of statutory minimum wages and actual wages (per day)............................. 32
Table 30: Pay practice in the surveyed firms.................................................................................... 36
Table 31: Working time in the surveyed firms.................................................................................. 38
Table 32: Type of enterprise and the number of regular and irregular workers................................ 39
Table 33: Enterprises and their wage rates........................................................................................ 42
Table 34: Wage-fixing factors........................................................................................................... 44
Table 35: Wage increase factors....................................................................................................... 45
Table 36: Wage practice in the firms surveyed................................................................................. 46
Table 37: Characteristics of the firms: Days of operation and working conditions.......................... 46
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
# posted by SBasefsky : 12:05 PM
