The modern welfare state or to be more precise the remnants of it as we know it today was established in the post-World War II era. The fall of the Bretton Woods regime and the infamous marriage of Thatcher and Nixon heralded the beginning of an aggressive move to systematically to dismantle the welfare state. This would lead to rising inequality in the world with the developing countries experiencing the highest rates of inequality. The repercussions of the rise of the Neoliberal reforms has never been greatly felt as we do now during the Covid-19 pandemic.
As a I pen this, it has been almost 3 weeks since the President of Botswana declared a State of Public Emergency (SOPE) and having his wish for the State of Public Emergency to run for the maximum prescribed period rubberstamped by the BDP dominated parliament. I say ‘rubberstamped’ because we all know it was just a constitutional formality. However, this is not about the politics of the SOPE but I wish to confine myself to an issue that has not been adequately by the powers that be. This article is cry for help for the informal sector.
In my previous blog post I had indicated that the informal sector seems to have been neglected by government when drawing an economic response policy to mitigate against the effects of the Covid-19 pandemic. For the last two weeks I have been listening and reading with keen interest to see if a well-articulated plan or policy would be brought to the fore. The rationale for protecting the informal sector should be obvious for any developing country as most people find themselves ‘employed’ in this sector. We must not forget that informality has also been making its way into the formal sector. For developing countries, the informal economy is key. However, Botswana much like its neoliberal kin has found a bulk of its response package going to the ultra-rich and the SMEs picking up crumbs while the informal economy or sector is largely neglected. All this a result of the neoliberal economic structuring of the means of production. The inadequacies we see are embedded in the Washington Consensus economic mechanics.
It is my belief that the failure by the Masisi administration to respond adequately is born out of ignorance of what constitutes informality. I have listened time and time again as Ministers and some government officials alike tried to respond to questions regarding the informal sector. What I discerned was a confused understanding of Small and Medium Enterprises and the informal worker or sector. One would have thought that just the word informal, without going into technical definitions, would have brought light in a dark house but that would not be the case. In a televised interview, the Secretary of the Covid-19 fund and the BURS representative were at pains explaining how the fund would help the informal sector. Constant references to possible beneficiaries needing to be tax law and companies act complaint was, for me, a clear indicator of their lack of understanding of the subject matter.
Who then are informal workers? According to the ILO these are all workers (regardless of where they worked), if their employment relations were not subject to controls, conditions set by labour legislation regarding taxation, social security contributions and social protection (holidays, work-related illnesses, redundancy payments, etc.). These workers are faced with precarious work and their work is most often undeclared. Remember the guy who your employer engages to wash his cars once in a while? That the informal worker. These are the people who are at the fringes of the formal economy even though in some cases they serve as suppliers of the formal economy (Please consider visiting the ILO literature for an in-depth discussion).
The point I am making in this piece, is that owing to the economic structure of our country which is meant to prioritise big business over the ordinary Jack and Jill many people fall through the cracks. The dismantling of the welfare state not only shrunk the fiscal provisions for social protection but increased labour market deregulation plunging many into informality. For developing countries, financial aid (loans or grants) often come with conditions that require reform (deregulation) plunging those countries into further crises. As a consequence of our neoliberal posturing our economic rescue packages often neglects the most vulnerable. Don’t get me wrong, Botswana has social protection mechanisms in place which I recognise. Be that as it may, the do very little to address peculiar needs of the informal worker and of the informal economy.
Even with my observations as stated above I refuse to believe that an entire government would lack the understanding of what the informal economy is. I refuse to believe that they don’t have the requisite expertise. Even if they didn’t, I believe that the University of Botswana has a few labour economists who would have lent them their expertise. The economic system is designed, methinks, to be cavalier to the needs of informal economy.
To adequately address the singular and peculiar needs of the informal economy, our government first needs to appreciate the importance of this part of the economy. Countries like India have developed elaborate policies aimed at developing this part of the economy. We can’t afford to have the informal economy to be reduced to a paragraph in national development plans (e.g NDP11) and national visions while there is no marked effort to provide the requisite support for those employed in the informal economy. The Covid-19 pandemic has exposed our lack of support of the informal economy and informal workers. We should do better.