The Importance of Gender in the Informal Economy

Women constitute an important category of both the labour force and the vulnerable groups in the Kenyan economy. In the recent past, the informal sector has become an increasingly important employer of the female labour force in the country. Despite this development, The Kenya Economic Update 2016 estimates that more than one quarter of all urban active women are unemployed. The unemployment rate reaches 40 percent for young women. This presents an opportunity to stakeholders in the policy making institutions to enhance the drive to improve the quality of employment and working conditions for women engaged in this sector.

Women are major actors in the informal sector of the Kenyan economy and although sex-disaggregated data are not available, the ILO estimates that women own almost half (48 percent) of micro-, small-, and medium-size enterprises (MSMEs) in Kenya. 85 percent of female-owned MSMEs are in the informal sector and two-thirds are located in rural areas. Thus many women are stuck running micro, small and medium sized enterprises (MSMEs) in the informal economy. One of the factors informing the dominant presence of women in the MSME informal sector is that women tend to be ‘time-poor’, combining family duties with running their businesses, and they have limited access to financial resources. The time and cost involved in the registration process may literally make registration impossible for many women. Further, most women cannot afford lawyers or other professionals to handle procedures such as registration, tax and other legal requirements expected of businesses in the formal sector.

Research conducted by the Women in Informal Employment Globalizing and Organizing (WIEGO) found that in terms of non-agricultural urban work, 34percent of the workers are formal and 61 percent informal, leaving 4 percent who cannot be classified as formal or informal. There are marked gender differences in that, 40 percent of men are formal workers, compared to 26 percent of women, 58 percent of men are informal workers compared to 66 percent of women. The remaining 2 percent of employed men and 8 percent of women do not have enough information to classify them as formal or informal. Overall, 38 percent of all urban informal non-agricultural workers are in trade, 25 percent in non-domestic private services, while 10 percent do domestic work. Again there are marked gender differences. Nearly half (48 percent) of women informal workers in urban areas are in trade, compared to 30 percent of men.

Again according to WIEGO, in terms of earnings, the overall monthly reported average in the country was a little under KES 12,000. However the average for men is one and a half times the average for women. Urban non-agricultural work has a higher overall average at over KES 18,500, but the average for men is 1.6 times the average for women. Earnings for informal urban non-agricultural work are less than half the average for all urban non-agricultural work, including both formal and informal with men earning 1.7 times the average for women. Given these insights, there is increased recognition that women tend to be concentrated in the more precarious forms of informal employment. It is also clear that from a gender perspective, there still exists a broad disparity when it comes to the levels of remunerations.

Policy makers need to focus their strategies on supporting working poor women in the informal economy seeing as they form a majority of those engaged in this sector. By doing so, a huge step will have been taken in the right direction in as far as reducing poverty and gender inequality is concerned.

litualex@gmail.com
Informal Economy Analyst 

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