This document discusses South Africa's informal sector. It begins by outlining the learning objectives which are to understand the concepts and characteristics of informal employment, reasons for high informal employment in South Africa, and case studies and challenges facing the sector. It then provides definitions and examples of formal vs informal employment. Statistics are presented showing around 3 million or 25% of the labor force work informally. Case studies from Manguang and of an individual named Howard provide specific examples of informal employment. Key challenges facing the sector are irregular income, lack of growth opportunities, and lack of access to resources. Overall the summary highlights that South Africa has a large informal sector due to unemployment and lack of skills/education.

1. Learning objectives
Informal Sector
Concepts and characteristics of informal sector
employment.
Reasons for high informal sector employment in South
Africa
Case studies from three informal sector contexts
Challenges facing South Africa’s informal sector

2. What are the formal and informal sectors?
Most LEDC cities have grown rapidly and the number of people is
often far greater than the jobs that are available.
People therefore have to find
work for themselves. This is
called the informal sector of
employment.
The formal sector is
controlled by the
government and large
companies.

3. Formal and informal employment
Source: Boardworks software

4. Formal and informal employment
Source: Boardworks software

5. Industry in LEDCs quiz
Source: Boardworks software

6. Key ideas
Industry in LEDCs
The informal sector of employment is created by people
finding work for themselves. This is usually due to the
rapid growth of LEDC cities. Some examples of jobs are
scrap collectors, street entertainers and shoeshiners.
The formal sector of employment is controlled by the
government and large companies. Some examples of
jobs are factory workers, shop assistants and nurses.

7. Characteristics of informal Sector
Source: Via Afrika Geography

8. Learning objectives
Informal Sector
Concepts and characteristics of informal sector
employment.
Reasons for high informal sector employment in
South Africa
Case studies from three informal sector contexts
Challenges facing South Africa’s informal sector

9. Statistics on high Informal Employment
• It is estimated that about 3 million out of a
labour force of about 13 million are in the
informal sector and is growing at 8% per year.
• It accounts for between 5 – 10 percent of GDP.
• The official present unemployment rate is
25%.
• South Africa has the 69th biggest informal
sector in the world just after Greece(68th) and
before Poland(70th)

10. Graphs
It is evident that the informal sector makes up
a large part of the economy. Close to 1 in 5 workers were
involved in the informal sector in 2003 and I’m sure by
now it is definitely 1 in every 5.

11. Why are these stats so high?
• Under apartheid, black people were denied entry
to much of the economy except as unskilled or
semi-skilled labourers. With many of these people
unable to get education they enter into the
informal sector.
• As unemployment increases, so does the informal
sector.
• Many informal jobs are carried out by non-South
Africans. A lot of Zimbabweans as they are often
denied formal employment.

12. Learning objectives
Informal Sector
Concepts and characteristics of informal sector
employment.
Reasons for high informal sector employment in South
Africa
Case studies from three informal sector contexts
Challenges facing South Africa’s informal sector

13. Informal Trading in Manguang
• A survey was conducted in the Manguang municipality in the Free
State.
• It found that:
• 30% of traders were women
• Age range was 18 – 64
• 31% had no secondary education
• 21% were also employed in the formal sector
• There was a wide range of occupations
• The traders earn an average of R5 300 per month but this varies
considerably.
• The highest earner was a shebeen operator who made R90 000 a
month.

14. Manguang Informal Traders
• Agriculture is aided by informal traders, as
hawkers buy nearly half of the potatoes traded
on markets and a quarter of all market produce
in Manguang. This share is growing by 2%.
• 40% of a certain cool drink’s sales in South
Africa are generated by informal traders.

15. Division of Informal jobs
hawker
shebeen
hairdresser
tyres and steel
herbalist/sangoma
fast food
spaza shop
transport
car attendant
others

16. Michael enters Informal Sector
• Michael is a young South African male that is
currently employed in the informal sector.
• He was born into a poor family in a squattercamp just outside of Benoni and was unable to
afford any form of education or training.
• He did not have the skills to be employed in
the formal sector of the country and had to find
a way to earn an income.

17. Problem
• There are too many people in our country that
do not have the skills and qualifications to get
proper jobs in the formal sector which is why
the informal sector is growing.
• South Africa as a country needs to reduce the
amount of people that enter into the formal
sector.

18. Howard comes to South Africa
• A man named Howard Fled Zim in 1999 for
‘greener pastures’
• He was educated at Prince Edward School
where he obtained 7 O levels.
• He achieved a 4-year diploma in mechanical
engineering from the Harare Polytech.
• He now sells wire structures and catapults
outside a shopping centre.
• Good day – R600 Average R300

19. Why is Howard not in the Formal sector?
• As a Zimbabwean he suffers discrimination from local
residents as they feel he is steeling their jobs.
• Howard has not been as badly affected as some Zimbabweans
who have had their shops looted and burnt down.
• He has friends in the informal sector, most of whom are also
Zimbabwean.
• Howard one day hopes to return to Zimbabwe like many other
foreigners working in the informal sector in South Africa.
• Howard is lucky as he has been granted residence status and
legally lives in SA.

20. Time to Think
• Why do you think it is very hard to obtain
accurate statistics about the informal sector?

21. Learning objectives
Informal Sector
Concepts and characteristics of informal sector
employment.
Reasons for high informal sector employment in South
Africa
Case studies from three informal sector contexts
Challenges facing South Africa’s informal sector

22. Challenges facing the Informal Sector
•
•
•
•
•
People earn less income, which is irregular and variable.
Businesses lack the potential for growth.
Limited access to raw materials and funding.
Usually outdoors no matter the conditions.
People have little time or incentive to improve their education or
training.
• Many have diseases, and as work gets tougher they start to struggle.
• Many foods and goods are sold off the pavement which is extremely
unhygienic and unhealthy.
• Many of the informal workers are subject to xenophobia because
they are foreign.

23. Challenges facing the Informal Sector
• Many people in the informal sector have no other
choice, they have no money or can’t find a job
anywhere for numerous reasons and so have to
work in the informal sector.
• Many of the foreigners that come to South Africa
for brighter futures end up in the informal sector
because nobody will give them a job.
• The sector is continuously growing and needs to
be halted.

24. Video
• Video on the informal sector, concerning Mali,
which is also a part of Africa.
• http://www.youtube.com/watch?v=hyIFI5tHzj
g

25. Time to think
How can we make an influence in helping people in
the informal sector receive proper education and training
or give them the opportunity to fairly apply for a job in
the formal sector?