Informal Economy Session 3 PDF

Session 3. Informal economy and precarity Course: Business and Social Change Prof Maria Teresa Uribe Jaramillo 1 Course plan Sessi Topic Reading Student work on 1...

Session 3. Informal economy and precarity Course: Business and Social Change Prof Maria Teresa Uribe Jaramillo 1 Course plan Sessi Topic Reading Student work on 1 Socio-technical Geels, F.W. (2002). Technological transitions as evolutionary Meeting groups transition reconfiguration processes: a multi-level perspective and a case-study. 2 Social movements Anguelovski, I. and Martínez Alier, J. (2014). The Quiz and business ‘Environmentalism of the Poor’ revisited Case 1 - Blood diamonds Case 2 - Single-use plastics 3 Informal economy Lazar, S., Sanchez, A. (2019). Understanding labour politics in Quiz and precarity an age of precarity Case 3 - Gig economy Case 4 – Sharing economy 4 Inequality and McKinsey (2022) What is diversity, equity, and inclusion? Quiz business https://www.mckinsey.com/featured-insights/mckinsey- Case 5 – Trans rights explainers/what-is-diversity-equity-and-inclusion Case 6 - Neurodiversity 5 Group videos and Revision of topics, update on final assignment Quiz revision Group work 2 presentations videos Session outline Quiz on session 2 topic Informal economy Student presentations Group discussion on creating shared value Time for collective report Quiz Go to Learn Go to Assessment folder Open link on Quiz for session 2 topic Answer 10 questions Informal economy Informal activities (unregistered and unregulated business activities) often fall outside of formal legal frameworks, lacking government oversight, taxation, and labor protection, but remain very important part of the local economy. Examples: Street Vendors: Typically do not have business licenses, pay taxes, or adhere to formal labor laws, yet they form a vital part of the local economy, informal marketplaces are hubs of economic activity. Construction Workers in NYC: According to McGahan, 90% of New York City's construction subtrades operate informally. Many workers are hired on a casual basis for cash payments, often lacking formal employment contracts or protection. App-based Gig Work: While platform-based work (such as Uber drivers or Airbnb hosts) is considered formal in some ways, the gig workers’ status as independent contractors places them in a grey area. Many gig workers lack social security, health insurance, or unemployment benefits, despite contributing to formal economic sectors like transport and tourism. Informal Waste Collectors: Despite the significant environmental benefits of their work, they do so without formal employment status, health benefits, or occupational safety. Informal Software developers: creating apps and programs without formal employment with major firms, often working on freelancing platforms like Upwork or even outside formal platforms, are critical to the tech ecosystem. Informal economy Informal economy may account for about 60 % of global workforce (World Bank, 2022) Growth of the firm may be linked to intra-firm informality and relative attractiveness of informal arrangements available in certain industries such as construction, transport, tourism. Paradox of informal economy: It may be free from government regulation and oversight but it can be highly structured. What is precarity? Precarity is a societal process of increasingly insecure employment and generalized uncertainty. Applied for social exclusion, marginality and informal sector. Precarity (Butler 2009:25): the politically induced condition in which certain populations suffer from failing social and economic networks of support and become differentially exposed to injury, violence, and death. Precarity (During, 2015, p. 58) includes “all those who live without reliable and adequate income...as well as those with no, or unstable, access to the institutions and communities best able to provide legitimacy, recognition and solidarity” Precarious jobs are often temporary, part-time, or freelance. Workers face income volatility, job insecurity, and lack of benefits like health insurance or paid leave. Precarity is common in sectors like gig work, seasonal labor, and domestic workers. How widespread is precarity as a condition? EU-Labour Force Survey A survey was conducted for the first time in 2022 by Ipsos – the European Barometer of Precariousness and Poverty Survey. It aims to observe the social situation, as well as the opinions and concerns of the inhabitants of six European countries (i.e., France, United Kingdom, Germany, Greece, Italy and Poland) (Mercier et al. 2022) More than 1 in 4 (27%) say they are in a precarious situation, with an unexpected expense that could push them into poverty. Particularly in Greece (51% of respondents). Prices are rising and their purchasing power is decreasing. Europeans now say they see people in unstable situations everywhere: in their neighbourhoods, at their workplace, and even in their own families and circles of friends In your neighbourhood – Many (41%), Few (49%), None (10%) Among your family and friends – Many (30%), Few (52%), None (18%) At your place of work – Many (30%), Few (41%), None (29%) Mercier E, Latrille P, Quétier-Parent S (2022) European Barometer on poverty and precariousness. Ipsos. In your country, which of the following populations are currently the most affected by financial instability and poverty? Elderly – 50% Single parents of children under 18 – 35% Young people – 33% People with no qualifications or training - 31% Disabled people - 29% Illegal immigrants – 21% For British people it is more single-parent families, while for Italians and Greeks, it is more young people. Mercier E, Latrille P, Quétier-Parent S (2022) European Barometer on poverty and precariousness. Ipsos. Effects of precarity on households The vast majority of Europeans have had to make challenging decisions due to a difficult financial situation: restricting travels, not heating their homes enough, calling on relatives for help, or even working additional jobs. Mercier E, Latrille P, Quétier-Parent S (2022) European Barometer on poverty and precariousness. Ipsos. Precarious employment Specific new forms of employment (temporary, part-time, insecure, and atypical amongst others) and certain social groups often defined as vulnerable groups (youth, women, ethnic minorities) (Symeonaki et al., 2023). Labour markets have witnessed a transition where new and more flexible forms of employment are replacing so- called "standard" forms of employment, generally associated with full-time, long-term, and secure jobs with entitlement to benefits. “New” mode of work include workplace freedoms and worker flexibility. The presumed occupational autonomy engendered by free and flexible work is not without cost – it comes with a certain level of precarity. “Radical responsibilization” – whereby a person is fully and solely responsible for all the costs and benefits associated with being an economic actor (Fleming, 2017). Benefits of flexible work Flexibility for a firm refers to labour market flexible working hours and short-term contracts, among others that shifts the burden of care to the worker. Firms are increasingly looking towards flexible work for the sake of recruiting talent, increasing productivity, enhancing competitiveness, and reducing cost (Mulcahy, 2017). Flexibility for the firm then connotes a disposable labour force that can be hired and fired at will. Flexibility from workers’ perspectives means their ability to define and control their working hours, place of work, pace, and scheduling of work – all important aspects of job quality (Kalleberg, 2013). The individual’s freedom is escalated while freedom of association and collective bargaining is diminished. Dangers of Precarious Employment Threat to health and well-being of workers and their families Associated with mental and physical health Occupational injury risk Contract renewal unpredictability Income volatility Lack of rights and protection Kreshpaj et al. (2020) Dimensions and themes of precarious employment Kreshpaj et al. (2020) Precarious employment and the pandemic The effects of Covid (lockdowns, social distancing) has severely affected those who are in precarious employment Governments had to develop schemes to address the needs to the population who were losing jobs due to the pandemic restrictions Working from home after Covid pandemic Employee well-being Retention & talent acquisition Decrease in employer cost Increase in productivity But concerns: Prioritize efficiency and well-being Communication and collaboration Balance: personal and working life Stress and emotional well-being Future of work factors: technological development, changing demographics, evolving workplace Remote and Hybrid Work conditions Automation and AI: creation of new job categories + need for upskilling or reskilling Continuous Learning: Need to adapt to rapid technological changes Freelancing: Flexible talent pools to access specialized skills for short-term projects Focus on Well-being and Mental Health: Flexible schedules, mental health support, emphasis on work-life balance Environmental sustainability Student presentations: Case Gig Economy Case Sharing Economy  Precarity in the Global South Some business responses: Creating shared value and BOP The “new” precarity in the West, however, has long been the norm in the Global South. Precarious represent about 86% of all jobs in Africa, with many surviving on meagre daily incomes (ILO, 2018; Ngameni, 2020).  Shared Value Policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the social and economic conditions in the communities in which it operates.”(Porte and Kramer, 2011) According to Porter and Kramer, incorporating societal issues into strategy and operations is the next major transformation in management thinking. Shared value and informal economy Porter and Kramer (2011) suggest that corporations can resolve questions about balance and relative contribution by creating shared value that enhances the total value available for all claimants in a supply chain through three principal mechanisms: reconceiving products and markets, redefining productivity, and enabling local cluster development. The broad mechanism involves collaborating to create new platforms and infrastructure that advance the organization's long-term prospects by enhancing the impact and economic prosperity of parties to the firm. Corporation as primarily chartered to generate returns on invested capital; the argument for creating shared value is an argument for growing the total pie so the bite for investors is maximized without diminishing the amount available for other stakeholders Bottom of the Pyramid Corporations improve the lot of the poot by developing products and services at the bottom of the pyramid (Prahalad, 2004) For well over a billion people — roughly one-eith of humanity per capita income is less than $2 per day. Consumers in the bottom of the pyramid (BoP) Most tier 4 live in rural villages or urban slums. They usually do not hold legal title or deed to their assets (e.g., dwellings, farms, businesses). They have little or no formal education Hard to reach via conventional distribution, credit, and communications. The quality and quantity of products and services available in Tier 4 is generally low. Titre du document - page 24 Innovation for the BOP https://www.financialexpress.com/opinion/the-fortune-at-the-bottom-of- pyramid/1174864/ Grameen-Danone partnership Grameen Bank’s program is designed to addresses the problems of extending credit to lowest-income customers — lack of collateral, high credit risk, and contractual enforcement. With 1,170 branches, Grameen Bank today provides microcredit services in more than 40,000 villages, more than half the total number in Bangladesh. Partnership with Danone to create a yogurt drink (Shokti) for kids that are sold at low prices by local vendors Shokti yogurt The company sells Shokti + yogurt - designed to cover 30% of daily needs for iron, zinc, vitamin A and iodine - at an affordable price, thanks to a very dense distribution system serving both urban and rural populations. On the supplier side, the company supports small local farmers by purchasing their milk. On the distributor side it empowers women "Grameen Ladies", who sell GDFL products in rural areas. Grameen Danone Foods also supports 100 van pullers by giving them insurance, sales training, and revenue stability. Impact To put it all into numbers, Grameen Danone reaches 300,000 children in Bangladesh, brought stable income to 500 farmers, 200 “Grameen ladies” and 117 ambulant drivers who distribute the products By supporting local traders, employing local professionals and offering food products necessary for the prosperity of the local communities in Bangladesh (in terms of energy / calories and accessible at low prices) Danone is a clear example within eco-socio responsible initiatives in global economy at the moment. Exercise in groups Taking into account the Grameen-Danone example, think about another example of a company creating shared value in the bottom of the pyramid. 1. What does the company do for creating share value? How do they advance the social and economic conditions in the communities in which it operate? 2. Do they have an impact to improve informal economy and precarity? How? 3. Who do they partner with for creating social value? Prepare 1 slide and send it to [email protected]. One person of the group will present it shortly to the class. References Apouey, B., Roulet, A., Solal, I. and Stabile, M., 2020. Gig workers during the COVID-19 crisis in France: financial precarity and mental well-being. Journal of Urban Health, 97(6), pp.776-795. Kreshpaj B, Orellana C, Burström B, Davis L, Hemmingsson T, Johansson G, Kjellberg K, Jonnson J, Wegman DH, Bodin T (2020). What is precarious employment? A systematic review of definitions and operationalizations from quantitative and qualitative studies, Scand J Work Environ Health, doi:10.5271/sjweh.3875 Lazar, S., Sanchez, A. (2019). Understanding labour politics in an age of precarity. Dialectical Anthropology, 43, 3–14. https://doi.org/10.1007/s10624-019-09544-7 McGahan, A.M., 2012. Challenges of the informal economy for the field of management. Academy of Management Perspectives, 26(3), pp.12-21. Mercier E, Latrille P, Quétier-Parent S (2022) European Barometer on poverty and precariousness. Ipsos. https://www.ipsos.com/en/european-barometer-poverty-2022 Symeonaki, M., Stamatopoulou, G. & Parsanoglou, D. Measuring the unmeasurable: defining and rating precarity with the aid of EU-LFS data. SN Soc Sci 3, 67 (2023). https://doi.org/10.1007/s43545-023-00651-5 Next session Session 4 Topic – Inequality and business Student presentations Case 5 Trans rights and Case 6 Neurodiversity Time for individual report  Time for Group Work 2 Group report and video (30%) Any Questions? 33