By Bernard Bwoni
In Zimbabwe the
actual unemployment rate is in the region of 10.5% contrary to some sensational
figures of 85-90% as carelessly proposed and paraded by some economists. The
majority of people in the country are economically active and as long as a
person does an hour’s work per day or per week they are employed. This is the
criteria used by the International Conference of Labour Statisticians (ICLS)
when defining employment. The definition means having done some ‘work’ over the
past day or week and anyone who has worked at least one hour over the day or
week is in fact employed. This is in no way meant to understate the economic
challenges impacting on the majority of the people in the country. However an
understanding of the country’s informal sector is relevant to addressing some
of the economic challenges which continue to burden the country.
According to the ICLS ‘the concept of
informal employment is considered to be relevant not only for developing and
transition countries, but also for developed countries, for many of which the
concept of the informal sector is of limited relevance’. In the developed world
the informal employment is synonymous with self-employment. In the developing
world there is formal and informal employment and in the UK they use employed
and self-employed and is the same in most industrialised countries. So in the
context of labour statisticians’ definition any ‘work’ including those engaged
in the production of goods and services are in fact employment. In Zimbabwe the
distinction between employed and ‘employed’ is not clear. Only formal
employment often makes it to the statistics records whilst informal employment
is neglected. But it is partly due to the informal sector that the country is
still on its feet in the face of the ‘economic’ sanctions against Zimbabwe. A
young man who heads cattle in the rural areas on behalf of a family in Harare
and at the end of the month earns $140. Is that young man employed or
unemployed? A lady who sells her wares at the market every day and at the end
of the week takes home $500 and has been doing that for over 15 years. Is that
lady unemployed? A gentleman who is rearing chicken in his back garden earns
$2000-$3000 a month from his project. Is that gentleman unemployed? What of the
newly resettled farmer who suddenly realised $20000 from the tobacco auction
floors? The list is endless and most of the proceeds from these informal set up
do not make it in the formal monetary system. This is an untapped tax revenue
base that is ready for harnessing.
In Zimbabwe you have people who have not
known formal employment some by choice others not for a very long time and
engaged in a number of informal work activities. Many have excelled as informal
sector workers and employers. These individuals are economically active and ‘gainfully’
employed and if we are to measure ‘gainful’ with property ownership and possessions
many have acquired properties, cars and other tangible assets. The issue in
Zimbabwe is that most people would only consider themselves as employed if they
are in a formal work setting and hence the distorted employment and
unemployment statistics. There are many people in the country who work in the
informal sector who earn more than those who are formally employed and how can
we justify saying such persons are unemployed? This is not to downplay the fact
that more people in the informal sector or self-employed might point to some
weaknesses in the labour market. However it cannot be ignored that those
engaged in the informal sector are indeed economically active.
The unemployment rate measures the
number of people actively seeking work or for a job as a percentage of the
labour force. The statisticians in their definition treat all those who ‘work’
as employed. There is informal and formal work, informal and formal employment,
employed and self-employed depending on where you are. According to the
Organisation for Economic Co-operation and Development (OECD) the unemployment
rate gives the number of unemployed persons as a percentage of the labour force
that is the total number of people employed plus unemployed. The ICLS
recognises all economic activity as ‘work’ and thus include people engaged in
activities such as farming whether commercial or communal and all those who
work in the informal sector. According to the Zimbabwe National Statistical
Agency 50 percent of the country’s population was employed in
the agricultural sector, 42 percent were classified as communal farmers or
communal farm workers and the rest of the employed figure was 58 percent. From
the data on activity for Zimbabwe from the 2012 population census the
economically active population was 67%, the unemployed population was 11% and
the figure for those employed was 89%.
In Canada 2.67
million people are self-employed which represents around 15.4% of all employed
workers in the country’s economy. In the UK 4.5 million are self-employed which
accounts to more than 15% of the entire country’s labour force. In the USA 15.3
million are self-employed, both incorporated and unincorporated and that is 1
in 9 people are self-employed. In many countries throughout the world
self-employed figures are incorporated into national statistics. In South
Africa 10% of the workforce is self-employed that is a figure of 1.3 million
self-employed. In Zimbabwe around 60% of the country’s economy is informal and
hence why you often hear of the staggering figures of 80% or 90% unemployment.
That is because it does not factor in the self-employed statistics and the
informal economy of the country.
The national
unemployment and GDP figures in Zimbabwe do not reflect the highly informalised
economy in the country. Once the country starts formalising the informal sector
and start incorporating the figures into GDP and employment statistics this
will reveal a solid economy on a sound backdrop of an economically empowered
indigenous majority. The trickledown effect of an economy propped up by
indigenous stakeholders is that they have a higher propensity to invest back
into the country unlike erstwhile minority investors and multinationals who
abandoned Zimbabwe in her most time of need following the necessary and highly
successful land reform.
It is imperative that formal studies are carried out to gauge the actual size of the Zimbabwe informal economy and GDP in nominal terms. If you look at trade in the country it happens mostly informally at flea-markets, market traders, in homes, flourishing greenhouses, the chicken rearing in the back gardens, fish-farming in the backyards you name it and these are the figures that are not reflected in the national GDP and national economy. The country currently has a negative trade balance as a whole with more imports than exports as Minister Chinamasa recently lamented. But a closer look would reveal that informally the exports that are happening on a cash basis are also not reflected in national trade figures. All that money is not filtering into the formal banking systems and hence the distorted trade balance figures.
The solution is to carry out that study to find out the exact figures of the informal economy, getting the self-employed to incorporate their activities, registration and means of follow up and action plans. A huge task and ask but it is something that needs to be done. Incorporating the informal sector figures Zimbabwe’s GDP would more than double. This is not to suggest that this is the panacea to all the country’s economic challenges but the informal sector is a major source of revenue that the country is missing out on. The big question is how much is the informal economy worth in Zimbabwe? If we are saying over 60% of the economy is informal, a tax revenue base not realised by government what would be the country’s GDP if the revenue from the informal sector is harnessed? As always these are merely questions being posed and not meant in any way to undermine and antagonise.
It is imperative that formal studies are carried out to gauge the actual size of the Zimbabwe informal economy and GDP in nominal terms. If you look at trade in the country it happens mostly informally at flea-markets, market traders, in homes, flourishing greenhouses, the chicken rearing in the back gardens, fish-farming in the backyards you name it and these are the figures that are not reflected in the national GDP and national economy. The country currently has a negative trade balance as a whole with more imports than exports as Minister Chinamasa recently lamented. But a closer look would reveal that informally the exports that are happening on a cash basis are also not reflected in national trade figures. All that money is not filtering into the formal banking systems and hence the distorted trade balance figures.
The solution is to carry out that study to find out the exact figures of the informal economy, getting the self-employed to incorporate their activities, registration and means of follow up and action plans. A huge task and ask but it is something that needs to be done. Incorporating the informal sector figures Zimbabwe’s GDP would more than double. This is not to suggest that this is the panacea to all the country’s economic challenges but the informal sector is a major source of revenue that the country is missing out on. The big question is how much is the informal economy worth in Zimbabwe? If we are saying over 60% of the economy is informal, a tax revenue base not realised by government what would be the country’s GDP if the revenue from the informal sector is harnessed? As always these are merely questions being posed and not meant in any way to undermine and antagonise.
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