Informality and Covid-19 in Pakistan

25 April 2021

Umair Javed

#Covid-19 #Inequality #Poverty #Social Inclusion

About 60 percent of the world’s labour force works in the informal sector, typically outside the net of formal institutionalised relationships between workers, states and companies. This means that informal workers are often excluded from state-led social protection programmes and the various formal channels that disseminate public information, such as workplaces and registered labour unions.

Increasingly, evidence has piled up that informal workers have been particularly vulnerable during the Covid-19 pandemic. They often have been most affected by lockdowns and closures, have fewer savings and formal social protection networks to draw on, and have been excluded by crisis support and relief programs, which largely rely on formal intersections between states, businesses and workers (e.g. formal tax reliefs, cash transfers through existing social protection programmes).

These issues intersect with a deeper legacy of antagonism that often exists between state actors and various types of informal sector workers, visible in the forced demolitions of informal workplaces such as market vending stalls and extractive types of taxation and revenue impositions. Such conflicts characterize state-society relationships within the informal sector as loaded with mistrust and resentment. Early evidence on the experience of informal workers during Covid-19 has supported this, highlighting both the prevalence of misinformation and conspiracy theories and a lack of information or suspicion about state aid programs among informal workers.

The pandemic-specific, and broader developmental, implications of these legacies deserve greater consideration, as they are intimately tied to how vulnerable populations in the informal sector perceive state-led information campaigns, how they access social protection, and how they condition their own health-seeking behaviour. The last in particular will gain considerable importance as vaccine roll-outs become more common across the Global South in the latter half of 2021.

The global context of both pervasive informality and antagonistic state-society relations outlined here categorically resonates with the reality found in major urban centres across Pakistan. Labour force data estimates show that approximately 70% of all non-farm workers in Pakistan are associated with the informal economy as waged or own-account workers, across a variety of sectors. In Lahore alone, the size of the informal sector workforce amounts to nearly 2 million workers. As is the case in comparable cities of the Global South, informal retail, subcontracted home-based manufacturing, construction, transportation, and domestic and community work cumulatively account for the bulk (nearly 80%) of such workers.

A deep-dive into the regulatory and political landscape around various sectors reveals a problematic legacy. The history of modalities of the state’s engagement with the informal economy operates outside any codified framework of regulation. Local municipal and policing authorities, as well as functionaries from higher tiers of government, practice both coercion and forbearance, driven by sectoral factors and a range of economic and political considerations. Domestic workers, for example, mostly encounter coercive policing practices in high-end residential neighbourhoods, and are routinely harassed as ‘usual suspects’ in property crimes or even for simply occupying public spaces.

Similarly informal retail sector workers, such as market vendors and hawkers, are targeted by anti-encroachment operations on account of aesthetic and material gentrification processes. Since 2010, there have been at least 10 large-scale operations seeking to remove street vending ‘encroachments’ and informal transport solution providers in various parts of the city of Lahore, with similar numbers launched in Islamabad and Karachi. These operations are carried out by local municipal administration officers, in heavily securitized form, and involve the seizure of rickshaws, vendor push-carts and demolition of any temporary structures put up by vendors. Seized equipment is usually returned through political intermediation and/or the payment of a bribe to local officials.

A baseline urban context marked by pervasive informality and social and political antagonisms is of considerable importance going forward. For starters, government relief efforts around the pandemic have not been fully cognizant of the requirements of such vulnerable populations. Despite BISP and its significant expansion during the pandemic as the Ehsaas cash transfer program, the Pakistan government’s response has highlighted persisting gaps in the visibility and importance granted to informal workers. Ehsaas primarily targeted rural women and relied on existing household poverty data based on asset ownership, which failed to capture the sudden dislocation and loss of income experienced by urban informal workers due to emergency public-health related lockdowns imposed in major urban centres. Belated efforts to expand coverage to urban centres relied on social security and welfare department data that is skewed towards formal sector workers.

The second round of the Centre for Economic Research in Pakistan (CERP) economic vulnerability assessment, carried out in September and October 2020, showed that just under 12% of urban households in the province of Punjab received cash or in-kind governmental support to address pandemic-related vulnerabilities. More worryingly, this number was only 22% for those who earned just under the minimum wage in urban centres, hinting at large exclusion errors likely on account of the informal and transient nature of work undertaken by many in the labour force.

Inadequacies in addressing vulnerability challenges during the pandemic adds to pre-existing antagonisms and poses fresh challenges for state-society trust relations. As mentioned earlier, these will have spill-overs for the state as it attempts to shape citizen health-seeking norms and behaviour around Covid-19 vaccines – a task that it has struggled with in similar medical interventions around diseases such as polio.

There remain, however, plausible pathways out of this sub-optimal situation, which involve greater efforts on part of the state to develop visibility and engage informal sector workers more productively. Outreach towards civil society organizations and associational networks that work within the informal sector can prove to be an important solution. Using locally embedded actors to launch communication campaigns, document existing vulnerabilities, and capture variations across different types of informal work can be crucial steps in this process.

For example, workers in the informal transport sector are reasonably well organized. There are city-wide and province-wide associations representing minivan, wagon, rickshaw, and qinqji operators, such as the the Awami Rickshaw Union, the Qingqi (motorcycle rickshaw) Federation of Pakistan, and various Wagon Owners Association, that can capitalize on existing trust relations and enhance outreach towards constituent members. Similarly, in Punjab the Domestic Workers’ Unions was registered by the Department of Labour Punjab under the Punjab Industrial Relations Act in 2014. While its current organizational density is quite low, increased recognition and support by public authorities would allow it to enhance its outreach and provide an important channel of communication between the state and a large segment of workers. Such steps will ultimately prove to be beneficial in terms of removing long-term issues of mistrust as well as address the immediate public health aspirations induced by the Covid-19 pandemic.

This blog channels ongoing research from the ‘Trust and Informality in the times of Covid-19’ project at the Mahbub-ul-Haq Research Centre, run by investigators Shandana Mohmand, Max Gallien, Vanessa van den Boogard, Deepta Chopra, and Umair Javed.

Umair Javed is Assistant Professor of Politics and Sociology at the Lahore University of Management Sciences.