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UNITED
NATIONS
Distr.
GENERAL
E/CN.6/1994/2
2 February 1994
ORIGINAL: ENGLISH
COMMISSION ON THE STATUS OF WOMEN
Thirty-eighth session
New York, 7-18 March 1994
Item 5 (a) of the provisional agenda*
PRIORITY THEMES:
EQUALITY: EQUAL PAY FOR WORK OF EQUAL VALUE, INCLUDING
METHODOLOGIES FOR MEASUREMENT OF PAY INEQUITIES AND
WORK IN THE INFORMAL SECTOR
Report of the Secretary-General
SUMMARY
The Commission on the Status of Women, at its thirty-fourth
session, selected the issue of "Equal pay for work of equal
value, including methodologies for measurement of pay inequities
and work in the informal sector" as the priority theme in the
area of equality to be considered at its thirty-eighth session.
On the basis of a study by the International Labour Organization,
which is contained in the annex, the present report describes
recent developments concerning the subject and makes
recommendations for further action.
* E/CN.6/1994/1.
CONTENTS
Paragraphs Page
I. INTRODUCTION ............................. 1 - 4 3
II. CONCLUSIONS AND RECOMMENDATIONS .......... 5 - 23 3
Annex. Study by the International Labour Organization..... 8
I. INTRODUCTION
1. On the recommendation of the Commission on the Status of
Women, the Economic and Social Council, in its resolution
1990/15, decided that the Commission should consider, as a
priority theme in the area of equality, the question "Equal pay
for work of equal value, including methodologies for measurement
of pay inequities and work in the informal sector". In the annex
to that resolution, entitled "Recommendations and conclusions
arising from the first review and appraisal of the Nairobi
Forward-looking Strategies for the Advancement of Women", the
Council stated that Governments and other appropriate parties
should renew their efforts to close the gap between women's and
men's pay, possibly by 1995, and should take special measures to
address the principle of equal pay for work of equal value, and
the United Nations system should complete its work on the
methodological aspects of measuring pay inequities between women
and men (recommendation V).
2. The Convention on the Elimination of All Forms of
Discrimination against Women refers to the principle of equal
remuneration, with its multiple and complex links to the position
and status of women and men in employment and society. In
particular, the States Parties to the Convention are to take all
appropriate measures to ensure the right of women to equal
benefits and equal treatment in respect of work of equal value,
as well as the right to equality of treatment in the evaluation
of the quality of work (article 11 (d)).
3. The principle of equal remuneration is also included in
various conventions and recommendations of the International
Labour Organization (ILO). The Equal Remuneration Convention of
1951 (No. 100) and Recommendation (No. 90) focus on
discrimination based on sex and call for equal remuneration for
men and women workers for work of equal value with initial
application to the public sector. The Discrimination (Employment
and Occupation) Convention of 1958 and Recommendation (No. 111)
deal with all forms of discrimination in various aspects of
employment and are not restricted to the public sector. The
Workers with Family Responsibilities Convention of 1981 and
Recommendation (No. 156) address discrimination and restriction
to employment due to family responsibilities.
4. Long-standing work on the issue has placed the ILO at the
forefront of United Nations activities in the area of equal pay
for women. For that reason, ILO was requested to undertake the
study which is contained in the annex to the present report.
II. CONCLUSIONS AND RECOMMENDATIONS
5. Historically, legislation on the issue of pay equity has
evolved from an initial emphasis on equal pay for equal work to
an emphasis on equal pay for work of equal or comparable value.
To begin with, equal work legislation attempted to correct
gender-based pay inequalities between identical jobs held by
women and men. It would be illegal to pay female engineers less
than male engineers but quite legal to pay female nurses less
than male truck drivers.
6. Subsequently, equal value legislation went a step further to
correct pay inequalities between men's and women's jobs that were
substantially different but that could be compared in terms of
four criteria of skill, effort, responsibility and working
conditions. That step became necessary because experience showed
that the major factor in wage differentials between women and men
was not unequal pay for the same jobs.
7. While the level of inequality varies from place to place,
the pattern of unequal remuneration still persists all over the
world. Women everywhere, on average, are paid less than men. In
addition, men are more likely to have regular full-time work and
receive greater seniority and benefits.
8. In the general discourse about development, there is
increasing consensus that without achieving equality between men
and women it will not be possible to achieve development
objectives: closing the wage gap is a development issue as well
as an important mechanism for achieving equality.
9. The pattern of unequal remuneration has its roots in a
gender-based division of labour according to which women and men
are assigned to perform different tasks in the household, the
labour market or the community and the value accorded to those
activities is different. The value placed on their respective
roles affects the status of men and women in society in terms of
their differential access to and control over such resources as
income and decision-making power.
10. Although women's work patterns have changed during recent
years, employers still assume that women are merely temporary
workers who will leave the labour force upon marriage and that
their income is a secondary supplement to the family economy. It
has been assumed that a man's wage is a family wage, which is
supposed to be sufficient to support a male worker and his wife
and children. The concept of a family wage has had serious and
paradoxical consequences for women. As an ideal, it assumed the
validity of the middle-class image of the female role as a
housewife, devoted to home and children and removed from
productive, market-oriented labour. It thus undermined the wage
demands of women in the labour force and also strengthened
barriers against female access to more highly skilled craft
occupations. In addition, the growth in the proportion of
households that are female-headed has multiplied the numbers of
women seeking jobs; since they bear the main financial
responsibility for children and other dependents, inadequate
wages have serious consequences for such women.
11. The association between women's paid labour and their unpaid
work in the home has served to provide further justification for
the very low pay found in professions whose members are
predominantly women. The rule in operation in occupations which
are segregated by gender often becomes the basis of new forms of
constraints in the form of differential vocational or
professional training. Where women and men have been educated or
trained differentially, discriminatory employment becomes
rational from the employer's point of view. Through such
mechanisms, the sexual division of labour is transformed into an
apparently technical division of labour, resistant to the more
obvious anti-discrimination strategies.
12. The overall gender-based organization of labour tends to
concentrate economic benefits in one direction and economic
losses in another. Although not all women are losers, the
overall benefits and opportunities lost are sufficiently large to
merit attention.
13. At a basic level, equal pay for work of equal or comparable
value proposes a revision of the ways women and the work
associated with them have been valued by the society. It
challenges both a purely market-based definition of value (i.e.,
the value of the good or service is whatever the market will pay
for it) and deeply rooted cultural assumptions about the value of
women's labour within and outside the home.
14. The introduction of policies based on comparable worth
promises a potentially fundamental transformation of women's
lives by enhancing their capacity to support themselves and their
dependants in a time of deepening female poverty. Women's
economic autonomy is important, however, not only because it
would relieve the burden of low incomes but also because it would
allow women to make life choices more freely (education, work,
marriage.) It must be recognized that economic independence is
the foundation for full citizenship and participation in the
broader community. Political rights have little meaning unless
women have the resources to act independently and to shoulder
their share of communal responsibilities.
15. In that respect, the issue of equal pay for work of equal
value - comparable worth - extends beyond a question of
employment. The underlying question is the extent to which
individuals can control their own destinies and the extent to
which those destinies are the result of larger social forces as
they play themselves out in individual lives and through
individual choices. As an issue, comparable worth encompasses
deep divisions of opinion not only about what workers should be
paid and thus how they will live but also about how society will
determine what workers should be paid and thus how society
justifies the payment decisions. It asks how society values
men's and women's contributions and recognizes their respective
roles.
16. A major difficulty in achieving equal pay for work of equal
value is how to compare the value of jobs performed by men and
women. In comparing the value of different jobs, it is important
to employ methods and procedures capable of ensuring that the
criterion of sex is not directly or indirectly taken into account
in the comparison. Particular difficulties for job evaluation
are experienced in areas where men and women are in practice
segregated into different occupations, industries and specific
jobs within enterprises. The ILO study (see annex) describes the
steps involved in comparing jobs by means of job evaluations,
including the identification of gender-dominated occupations;
shows how to conduct a job evaluation; and indicates the
relationship between pay and point scores on job evaluation.
17. A second question is how to elaborate methods for
implementing the principle of equal remuneration. The
difficulties here arise from a lack of knowledge of the true
situation concerning inequalities in remuneration, which are
poorly researched and not well identified statistically. The ILO
study gives a world-wide picture of wage differentials between
men and women, explains why they exist and identifies the size,
scope and nature of such inequalities, considering historical
patterns of industrial development and cultural environment from
the point of view of gender.
18. The future situation regarding remuneration and equal pay
will be affected by global changes in the context of economic
restructuring. The past decade has seen considerable growth in
female participation in the labour force. Moreover, the
increasing globalization of production and the pursuit of
flexible forms of labour to retain or increase competitiveness,
as well as changing job structures in industrial enterprises,
favour the feminization of employment. As a result, women are
gaining an increased share of jobs at many levels. However, in
terms of wages, training and occupational segregation, they
remain disadvantaged in the new labour markets and the conditions
of non-regular employment, which are increasing among both men
and women, are still worse for women. 1/
19. Another factor which contributes to the feminization of the
global market is the growing proportion of women entering the
largely unregulated informal sector. In developing countries,
for example, the majority of jobs created in the export
manufacturing sector has gone to women. This is becoming a
reality not only for developing countries but for developed
countries as well, where the process has taken the form of
industrial restructuring and a shift from manufacturing to
services. 2/
20. In contrast to the formal sector, pay and working conditions
in the informal sector are unregulated by labour legislation. As
a result, the problem of equal pay for equal value in relation to
the informal sector becomes even more complicated and raises
difficult methodological issues, such as how to compare jobs
across establishments, how to define male- and female-dominated
occupations, how to avoid gender biases in job evaluation
schemes, and most important of all, how to redress inequities in
a sector where labour law and regulations are often either not
applied, or not enforced, or both.
21. The ILO study offers some thoughts on how it might be
possible to transfer the concept of equal pay for work of equal
value to occupations and establishments within the informal
sector through the use of job content assessments. Although
legal action and administrative measures for the most part have
no effect on the informal sector, assessments based on job
evaluation could provide a useful conceptual frame for analysing
and targeting policies aimed at improving women's earnings and
status in employment.
22. There is no longer any serious challenge to the notion that
women and men should receive equal treatment in employment.
Economic considerations, frequently put forward as an excuse for
postponing action, are less and less accepted as justifying the
perpetuation of injustice. The problem concerns both the
developed and the developing countries, although in the
developing countries the issue also requires that considerable
effort be made to ensure that women benefit from literacy
campaigns and basic education and training.
23. However, the problem of how to enforce the principle of
equal pay for work of equal value, especially in the informal
sector, requires additional consideration and should also take
into account emerging trends. In that respect, an expert group
meeting to consider the problem may be justified.
Notes
1/ See, for example, Guy Standing, "Cumulative
disadvantage? Women industrial workers in Malaysia and the
Philippines", paper presented at the UNU/WIDER Conference on
Trajectories of Patriarchy and Development, Helsinki, 6 and
7 July 1992.
2/ See Bluestone and Harrison, The Deindustrialization of
America (New York, Basic Books, 1982); and David Harvey, The
Condition of Postmodernity: An Enquiry into the Origins of
Cultural Change (London, Basil Blackwell, 1989).
Annex
STUDY BY THE INTERNATIONAL LABOUR ORGANIZATION
I. GENDER INEQUALITIES
1. Widespread gender inequalities in the labour market are
receiving increasing attention among researchers and policy
makers. The present report briefly considers attempts to explain
those outcomes, after first reviewing the evidence on
occupational segregation and wage differentials by gender. It
observes that patterns of occupational segregation change over
time and with industrialization, and are affected by demographic
and life-cycle factors, income levels, macroeconomic conditions
and institutional factors. There are enough similarities across
development levels to indicate that gender roles and the division
of labour have some commonalities in the world, while there are
enough anomalies to indicate that cultural biases are also
important.
A. Evidence of gender pay differentials and
occupational segregation
2. The ratio of female wages to male wages tends to be about 60
to 70 per cent in the western industrialized countries.
According to data for the manufacturing sector from the 1990 ILO
Yearbook of Labour Statistics, that ratio ranged from around .50
to .90 in 1990. a/
3. Occupational segregation varies greatly around the world
(see Anker and Hein, 1986; Barbezat, 1993; and Jose, 1987 for
reviews). The 1992 Yearbook of Labour Statistics provides
information on women's employment distribution by seven major
occupation groups: professional and technical; administrative
and managerial; clerical; sales; services; agriculture; and
production. Such aggregated occupational data reveal
considerable segregation by gender but also conceal much
segregation. Although there are wide variations globally, women
tend to be relatively concentrated in three of the seven groups:
clerical, services, and professional and technical workers. In
Chile, for example, where women made up 30.5 per cent of the
labour force in 1991, they comprised 51.3 per cent of services
workers. In Canada, where women represented 45.3 per cent of the
labour force in 1991, they comprised 55.7 per cent of
professional and technical workers, 80.7 per cent of clerical
workers and 56.6 per cent of those in services. By contrast,
women tend to be underrepresented in managerial and production-
related occupations.
4. A more disaggregated analysis shows even greater
occupational concentration of women in what are frequently less
attractive positions in terms of pay, status and opportunity for
professional and technical advance. For instance, nursing tends
to be a female-dominated profession, while the higher-paid and
more prestigious occupation of doctors tends to be a male-
dominated profession. Furthermore, a recent ILO study (Anker and
others, forthcoming) indicates that women are concentrated in a
narrower range of occupations than men, a fact that lessens their
chances for occupational mobility. For example, of 180
occupations in the Netherlands in 1990, over 50 per cent were
male-dominated (defined as at least 80 per cent male). By
contrast, less than 20 per cent were female-dominated (defined as
at least 80 per cent female), with over 70 per cent of the female
labour force employed in that narrow range of occupations. That
pattern is in evidence, to a greater or lesser degree, in both
developed and developing countries.
5. Other forms of segregation that reinforce women's low
earnings are concentration in small businesses, where women
employees often earn less than men for the same work, and
concentration in casual and part-time forms of employment. There
is also limited evidence to suggest that the male-female earnings
ratio initially worsens before improving the so-called U-shaped
relationship - as industrialization proceeds (Standing, 1982).
6. A study of Lima by MacEwen-Scott (1986) documents how
occupational segregation and lower pay for women continue even
after women attain higher educational levels than men. MacEwen-
Scott finds that almost all obstetricians are women, while there
is a slight female overrepresentation for chemists and laboratory
technicians. A study conducted by Cohen and House (1993) in
Khartoum estimates the proportion of the gender wage gap
attributable to occupational segregation at 16 per cent and that
attributable to wage discrimination for the same work at 21 per
cent, controlling for differences in human capital endowments.
Since working women tend to be more educated but also tend to be
younger than working men, it appears that experience commands
larger wage increments than education.
7. In the informal sector, findings are qualitatively similar,
with a concentration of women occurring in many cases, especially
in sub-Saharan Africa. Evidence, however, is still subject to
much debate, partly because of measurement issues (Anker and
others, forthcoming).
8. In Narsapur, India, home-based workers, who are generally
women, receive the lowest wages of all categories for work that
requires a great deal of skill, such as dressmaking and lace-
making (Bhatt, 1985). In West Bengal, India, Bardhan (1989)
reports that among casual workers, women receive about
50 per cent of men's daily wage, while among regular workers the
ratio is about 30 per cent. For housekeeping, the female to male
earnings ratio is 50 per cent for casual workers and 63 per cent
for regular workers. Earnings differentials increase with
educational level and family income. In fact, daily wages for
women with middle to secondary education are about the same as
that of illiterate casual male workers.
B. Determinants
9. Explaining wage differentials by gender has received much
attention in economics. Some economists stress non-labour-market
factors, while others stress factors originating in the labour
market, on either the supply side or the demand side. In
practice, however, those factors are difficult to separate
because of the feedback effects that operate between them.
1. Labour-market determinants
10. On the supply side, economists often emphasize differences
in human capital endowments. However, male-female differences in
educational attainment, timing and duration of work experience,
and labour force attachment only partially account for gender
wage differentials and gender segregation (Barbezat, 1993).
Furthermore, human capital factors themselves depend on expected
wages and discrimination in a vicious cycle. For instance, human
capital theories start with the assumption that women plan for
flexible work arrangements and work interruptions over the life-
cycle and therefore choose educational attainment and occupations
accordingly (self-selection), that is, they choose occupations
that require less education, provide relatively high starting
salaries, place a low premium on experience and do not seriously
penalize temporary withdrawals. However, that does not explain
the lower wages or occupational segregation of women who are well
educated and who do not plan any work interruptions.
11. On the demand side, several models compete for an
explanation: compensating differentials, efficiency wages,
segmented labour markets, occupational crowding and models of
discrimination per se. Compensating differential theories state
that workers are compensated for unattractive or dangerous
working conditions. Efficiency wage theories justify very high
rewards for work experience as a productivity-raising device:
people work harder to obtain a promotion and the rewards it
brings. In addition, since the penalty is high, costly labour
turnover and work interruptions are reduced.
12. Segmented labour-market theories distinguish between
internal labour markets consisting of progressive jobs - in which
efficiency wages prevail and vacancies are mainly filled through
internal promotions - and external labour markets characterized
by static jobs - mainly filled through external hiring, with high
turnovers, little reward for work experience, short promotion
ladders and short learning curves. Occupational crowding
theories argue that the outcome of women being segregated into a
limited number of occupations depresses wages in those
occupations because of the plentiful supply of labour that is
available.
13. Again such theories still fail to explain why women are
crowded into relatively few jobs, why women who do not plan any
work interruptions are not hired into the progressive jobs of
internal labour markets and do not receive either efficiency
wages or promotions, or why men are well compensated for
unpleasant working conditions they must tolerate while women are
not.
2. Theories of discrimination
14. Theories of discrimination distinguish different sources of
discrimination: employers, customers and co-workers. The final
result is the same, since the disutility associated with hiring a
non-traditional worker translates into lower wages for identical
levels of productivity in order to compensate for that "cost"
(models of personal prejudice are based on that presented in
Becker, 1971). That disutility, of a subjective nature, can
result in real costs to the extent that it affects the behaviour
of others. For instance, customers may choose to buy their
products from a competitor.
15. Another theory of discrimination states that employers
engage in statistical discrimination. Unlike the above-mentioned
case, in which hiring a non-traditional worker may result in
perceived (and real) disutility, in that case employers
discriminate because they lack information and hold preconceived
concepts concerning the characteristics of individual workers
from particular population subgroups. Hiring decisions depend on
screening applicants for average characteristics, such as
expected (presumably higher) labour turnover of women on average.
That has the effect of discriminating against all women, even
though many women are above average and perform better than many
men. Furthermore, such expectations have a tendency to become
self-fulfilling prophecies, since women who are denied promotions
and salaries commensurate with their performance and experience
may become discouraged and withdraw from the labour force. They
also ignore the possibility that many of the supposedly higher
costs of women workers to employers may simply not exist; for
example the supposedly higher labour turnover and greater number
of absences of women workers were not found to be significant in
a series of developing country studies, because the higher
turnover and greater number of absences of women workers due to
maternity, marriage ad child care was roughly offset by male
workers' great propensity to switch jobs and get drunk (Anker and
Hein, 1986).
3. Non-labour-market determinants
16. Non-labour-market determinants include demographic factors,
such as marriage and migration; fertility and related work
interruptions; the burden of household responsibilities;
education; health; and non-labour-market policies and
regulations. But many of those factors themselves depend on
expected wages, such as the preference given to boys in the
provision of education: there is a problem of circularity in
that line of reasoning.
17. It is necessary to acknowledge the role that stereotyping
and social norms play in valuing women's work. Psychological
factors, perceptions of the feminine and masculine identities,
and the association of women and men with such abstractions
(misinterpretations of archetypes) fail to recognize the
individuality of people. They also rob both men and women of the
freedom to choose their occupation based on their actual
capacities and personal identity. Research in psychology
challenges stereotypes concerning the alleged differences between
the sexes in behavioural patterns and innate aptitudes, and
questions to the extent to which such differences are genuinely
built in or are the result of socialization. There are greater
differences among the sexes than between them; stated
differently, there is much overlap. The challenge, then, is to
devise a more objective set of criteria for evaluating people's
work. Such an assessment could assist in planning for reducing
male-female pay differentials and hopefully in breaking the
circularity of self-fulfilling presumptions.
II. WHAT IS EQUAL PAY FOR WORK OF EQUAL VALUE?
18. Equal pay for work of equal value is a widely accepted
concept but it is a broader concept than equal pay for the same
work or equal pay for broadly similar work. The equal pay for
work of equal value concept allows for the comparison of what may
be quite different types of work, for example, that of
secretaries and that of truck drivers.
A. Equal value
19. The gender wage gap can be divided into four components:
(a) pay differential within job-cells, for identical work in the
same enterprise; (b) pay differentials within establishments, for
jobs that are comparable in terms of combinations of skill,
responsibility, physical effort and working conditions but, that
constitute different occupations; (c) differentials across
establishments for comparable work; and (d) different mixes of
occupations for men and women (women usually being segregated
into low-skill and low-wage occupations, sectors and small
firms).
20. Policies for ensuring equal pay for the same work within
job-cells have a rather limited potential for redressing the
gender wage gap in industrialized countries. One problem in
industrialized countries is that employers can get around
legislation by relabelling jobs. For instance, a woman might be
a secretary and a man a management assistant even though their
job content might be similar. In that case, within job-cell pay
differentials would be artificially reduced while differences
across occupations would be increased. In the less
industrialized countries, gender pay differentials for the same
work, both on average and within occupations, are sometimes
sizeable and therefore the potential for legislative redress
seems greater.
21. Comparable worth policies address pay differentials within
establishments, which in industrialized western countries are of
greater magnitude than pay differentials within job-cells. They
were first implemented in the State of Washington, United States
of America, although they have since found greater application in
Canada. In both countries, they are generally restricted to
comparisons between gender-dominated occupations within
establishments. Hence, all-female establishments or occupations
for which no male comparators of equal value can be found may
often be excluded from coverage (Gunderson, 1993).
22. Comparable worth policies, as applied in Canada and the
United States of America consist of comparing jobs in different
occupations based on job demands. Four steps are involved: (a)
choosing the occupations to be covered; (b) evaluating job
demands on employees by means of gender-neutral job evaluations
and assigning point scores (the usual criteria are skills,
physical effort, level of responsibility or accountability, and
working conditions); (c) imputing a pay value to the point scores
obtained from the job evaluations (estimating shadow wages); and
(d) adjusting pay across occupations so that jobs with the same
point scores have the same pay.
23. The job evaluation methods that are currently practised in
most businesses are often not suitable for comparable worth cases
because they are deliberately gender-biased. The evaluation
criteria and numerical ratings often used contain a built-in
gender bias, whereas the essence of comparable worth is to
evaluate men and women's jobs on the basis of a gender-neutral
system (Bergman, 1989). When a gender-neutral job evaluation is
used, large differences in the pay of male-dominated and female-
dominated jobs appear for similar point scores. For instance, in
one study a secretary was found to have twice as high a point
score as a delivery truck driver, yet she earned 20 per cent
less. The procedure raises several technical and methodological
difficulties, some of which are discussed in section IV below.
B. Equal employment opportunity and facilitating
policies
24. Opponents of wage-fixing policies argue that by interfering
with the market, inefficiencies result. They favour a second
group of policies that target different sources of discrimination
and seek to increase the demand for discriminated groups, hence
reducing occupational crowding (which lowers wages) in order to
bring about a more even distribution across sectors and
occupations.
25. Equal employment opportunity policies, including affirmative
action, seek to reduce occupational segregation by prohibiting
discrimination in the various phases of employment (recruitment,
hiring, training, promotion and dismissal). They also often
involve setting targets or quotas and changing hiring procedures.
Targets and quotas can be set either in general or with reference
to the relevant regional labour market (Gunderson, 1993), in
which case they do not correct overall segregation but only
relative segregation in one firm compared to others in the area.
An alternative approach is to give preference to women in hiring
and promotion, perhaps whenever they are about equal in
qualifications.
26. Facilitating policies are a third group of policies, which
can address a number of sources of discrimination, including non-
labour-market factors that result in pay inequalities, such as
access to education; credit; land ownership; birth control; and
other community services. Such policies are most relevant in the
context of the informal sector, although other policies are also
important.
27. The above-mentioned policies sometimes have limited
coverage; for example, they might be limited to comparable work
for public service employment in a state or provincial
government. Still, they can have a demonstration effect reaching
much further: comparable worth, once restricted to public
companies and rejected by private corporations in the United
States of America as unworkable and undesirable, is now quietly
being applied by such major private companies as AT&T, Bank of
America and Motorola. They are compelled not by law or by a
philosophical change of heart but by pragmatic realities
(Berstein, 1986).
III. EMPHASIS ON THE INFORMAL SECTOR AND DEFINITION
28. The remainder of the present paper focuses on the informal
sector, not because gender wage differentials are necessarily
greatest there (evidence to support that is sketchy), but because
many poor women are employed there, although it should be noted
that the earnings distribution of the formal and informal sectors
overlap each other. In fact, there is evidence that people move
between the two sectors, sometimes leaving the formal sector to
become successful entrepreneurs in the informal sector or moving
from the informal to the formal sector. Hence, the informal
sector can play a key role in the formation of human capital in
developing countries by providing a forum for both the
acquisition of skills and experience, and the growth and
development of entrepreneurship; it can also act as a residual
sector for poor individuals with no other opportunities.
Furthermore, large proportions of women and children work in the
informal sector and, depending on the definition used, in some
countries a majority of its workers are women. The informal
sector, particularly in the developing countries, should
therefore be the prime target of concern to relieve female
poverty, gain a more complete picture of male-female earnings
differentials and improve the status of women in the labour
market.
A. What is the informal sector?
29. There is considerable debate over the definition and
characterization of the informal sector. Everybody knows what it
is, but a precise definition that is applicable in all settings,
is difficult to make. One review study found 50 different
definitions (see Haan, 1989). Sethuraman (1981) has suggested
10 criteria. Key characteristics are flexibility and family
ownership. The sector is characterized by microenterprises that
have limited capital stocks, with much of the employment
consisting of self-employment. Informality characterizes several
but not all of their features, such as ownership, operation,
labour contracts and sources of capital, raw materials,
technology and skills). Yet there are numerous exceptions: some
enterprises are licensed and regulated; some use imported raw
materials; some are owned by educated persons; and some obtain a
loan from a formal source of credit.
30. The difficulty with defining and analysing the informal
sector arises mainly from its heterogeneity: various
distinctions must be drawn in order to give credit to its
complexity. The recent International Conference of Labour
Statisticians has made an important contribution to the process
of defining the informal sector.
B. Definition of the informal sector adopted by the
Fifteenth International Conference of Labour
Statisticians
31. The informal sector was broadly defined by the Fifteenth
International Conference of Labour Statisticians as consisting of
units engaged in the production of goods or services with the
primary objective of generating employment and incomes for the
persons concerned. Such units typically operate at a low level
of organization, with little or no division between labour and
capital as factors of production, and on a small scale. Labour
relations, if they exist, are mostly based on casual employment,
kinship or personal and social relations rather than on
contractual arrangements with formal guarantees.
32. The production unit - not the individual - is therefore
taken as a reference point. Production units are defined as
units engaged in economic activities as defined by the United
Nations System of National Accounts (SNA), that is, irrespective
of the number of individuals working in that unit, the type of
premises, whether fixed assets are owned, or the seasonality of
its activities. The definition places production units in the
subsector of the household economy.
33. The household sector consists of unincorporated, family-
owned production units. Assets and working capital are owned by
the household, not by the enterprises themselves (as are
corporations); liability is unlimited. From an accounting point
of view, they cannot be clearly separated from other activities
of the household to which they belong (no separate and complete
sets of accounts are available); otherwise they would be
considered as quasi-corporations and could no longer be
classified as belonging to the household sector. That
fungibility between the production unit and the household extends
to other areas as well, such as expenditures, the use of capital
goods and equipment (vehicles, tools, premises), financial
transactions and the taking out of loans. The Conference
definition replaces size standards (used for defining
microenterprises) with the criterion of fungibility. Thus, not
all microenterprises belong to the informal sector.
34. In the Conference definition, the informal sector excludes
domestic employees working on a regular basis in one or a few
households but includes self-employed domestic workers rendering
their services on an ad hoc basis to a large number of
households; it also excludes outworkers who are paid a wage for
hours of work (not a piece-rate). b/ As stated above, the
Conference takes as its reference not individuals but the
production unit and therefore excludes informal sector employees
as a production unit. Further excluded are units that are
exclusively engaged in subsistence and home production for their
own final use. However, if any part of that production is sold
on the market, such units belong in the informal sector,
irrespective of the regularity of such transactions or the
amounts involved. Agricultural activities are also excluded.
35. The Conference definition also covers secondary activities,
which it refers to not as enterprises but as establishments;
establishments are defined as being engaged in one principal
activity. Therefore, secondary activities carried out in the
same location (most detailed geographical area) as an enterprise,
unless they are similar to the principal activity, are considered
as forming a separate establishment within the enterprise.
Hence, a household may run several production units or
establishments.
IV. APPLICATION TO THE INFORMAL SECTOR
36. One way to objectively apply the concept of equal pay for
work of equal value is to perform job content analysis. The
present section covers the practical aspects of applying the
concept, with an emphasis on applying it in the informal sector.
As the area of application is new, some of the discussion is
speculative, although the consensus of the authors is that the
concept is transferable to the informal sector even if legal
implementation is not.
A. Identification of gender-dominated jobs and
selection of job classification system
37. The first step in the process of job content analysis is to
select the occupations that are to be covered. In the United
States of America and Canada, only gender-dominated jobs are
considered under comparable worth, the most common cut-off point
being a share of 70 per cent for one of the genders (Gunderson,
1993). In less industrialized countries, where the overall
participation of women in the labour force is quite low in some
cases, such a cut-off point would need to be replaced with a
relative scale. For example, an occupation with 20 per cent more
women than the overall labour force could be considered female-
dominated, while any occupation with 20 per cent less women could
be considered male-dominated (Barbezat, 1993). Or a scale of
50 per cent more and less than the average percentage of female
representation in the labour force could be used (Anker and
others, 1993).
38. To reduce the incidence of exclusion from coverage under
such arbitrary cut-off points, a scale may be further adjusted to
accommodate wide disparities in women's share of employment
across regions and industrial sectors in a country; it could
differ according to location (urban/rural), industrial sectors
(agriculture, manufacturing, etc.) or perhaps also by size of
enterprises, given that women tend to be concentrated in small
enterprises.
39. For application to the informal sector, which consists of
small enterprises, job evaluation comparisons must be made across
establishments c/ because in small enterprises there are by
definition only a few workers, which makes it impossible to find
comparator occupations and raises some difficult methodological
issues.
40. First, different enterprise characteristics may be
associated with differences in job content due to differentials
in productivity or in the quality of the goods and services
produced. Wage differentials associated with such differences in
job content are legitimate, a major reason why comparable worth
policies in the United States of America and Canada are usually
done for one company or government level. It is therefore
necessary to adjust existing occupational classifications for
comparison across establishments, as well as to differentiate the
type of markets served, such as neighbourhood/city and export
markets or poor/wealthier persons.
41. Second, in small enterprises jobs are often multi-purpose in
nature because too great a specialization is not possible, which
implies that it may be useful to designate multi-purpose
occupations.
B. Measuring income and work hours
42. A major difficulty, when surveying household enterprises, is
how to measure pay per unit of work-time in order to get an
equivalent measure of wage rate. For this, it is necessary to
measure both the net annual or monthly income and the number of
work hours. Unfortunately, conventional survey methods and
statistical concepts, such as "work" or "labour force", tend to
underestimate women's work. For instance, in a methods test
survey of rural households in the state of Uttar Pradesh in
India, the reported labour-force participation rate of women was
only 32 per cent when the concept of "market labour force" was
used, whereas the reported activity rate was 89 per cent when the
internationally accepted labour force definition was used.
Furthermore, the reporting of female labour-force activity was
found to be very sensitive to the types of questions asked, with
activity rates ranging from 16 per cent, when respondents were
asked about "main activity", to 48 per cent, when asked about
"work" and 89 per cent, when asked whether or not various
specific activities were performed (Anker, Khan and Gupta, 1988).
43. To measure activity rates and work hours, detailed time-use
surveys and activity listings are required. Otherwise, simple
questions are likely to lead to underreporting of female work
activity. Although time-use surveys based on recall are
generally less accurate than direct observation methods, they are
much easier and less costly to implement and appear to provide
time-use data with an acceptable degree of accuracy (Anker, Khan
and Gupta, 1988).
44. The length of the survey recall period and the number of
revisits required to control for seasonal variations in work also
need careful consideration when collecting time-use data; a
distinction should be made between changes in activities and
variations in work hours for the same activity. In practice,
there is also difficulty with the reporting of activities that
are performed at the same time, which is quite common for
informal sector work, especially in family businesses and home
production. For instance, women often watch their children while
producing goods and services for sale. The usual criteria for
assigning time when multiple activities are performed is to
distinguish between primary and secondary activities or to use a
priority criterion, such as giving priority to income-earning
activities. In the example of a woman shopkeeper who also
watches her children, both the primary activity and the priority
activity would be shopkeeping.
45. Next, some measure of net income must be obtained. Several
issues arise: (a) estimating the value of payments in kind (a
good or service in exchange); (b) adjusting for output that is
self-consumed yet none the less an income generated by the
business; (c) imputing costs to a production unit and separating
them from household expenditures; (d) assigning income from
household enterprises to each of the family members working in
the business; and (e) accounting for seasonal variations income.
46. For payments in kind, exchange work and unpaid family work,
the income equivalent of the work performed is usually assessed
by means of valuation methods that fall into two broad
categories: evaluating inputs (labour hours) or evaluating
outputs (goods and services produced), in both cases minus
production costs. Some of those production costs, including the
use of assets, must themselves be assigned a monetary value
(e.g., self-made tools and equipment). Sales, input costs and
self-consumption are usually measured to arrive at a net
enterprise income. However, those methods consider only the net
income of the enterprise. They do not disaggregate to the level
of the individual, as would be necessary in order to examine the
pay differentials between men and women. Hence, household
enterprise income needs to be divided among individual household
members. Hours of work would be a convenient criterion except
that it fails to account for differences in productivity and
quality of output. Other differences - in levels of
responsibility, tasks performed and working conditions - would
also be ignored if time inputs alone were used to allocate
household enterprise net income among working household members.
An alternative procedure would be to assign household income to
family members on the basis of point scores obtained from a job
evaluation, a considerable improvement over the cruder method of
counting only work hours. For example, if there are two persons
who work the same number of hours in a family business and one
person's point score is 30 per cent higher, she or he would be
assigned 30 per cent more of the net family income.
Unfortunately, however, that approach is generally not practical,
especially on a wider scale.
47. To obtain an accurate measure of value-added (net income)
generated by a business, expenditures need to be assigned to
either the production unit or the household; otherwise,
measurement will be inaccurate. For instance, if a vehicle is
used both for the business and for household consumption, its
price and cost of maintenance should be partitioned between the
two, perhaps based on the amount of time it is being used for
each purpose.
48. Again, income, like hours of work, is subject to seasonality
and therefore requires appropriate standardization and recording
over an extended period of time, although that period need not be
as long as a year, as is required for agricultural activities; a
one-month reference period is sufficient for most businesses in
the informal sector (Khan and others, 1992).
C. Job evaluation
49. The usual criteria for job evaluation are: skills, physical
effort, level of responsibility and working conditions. In
addition, it is important to consider labour relations,
especially when comparing jobs in very different settings and
enterprises in the informal sector; and gender biases in typical
job evaluations warrant special attention.
1. Skills
50. The definition of skills is frequently subject to gender
bias, resulting in lower pay for women because their skills are
not always recognized as such. Skills are usually defined as
acquired aptitudes that should be rewarded with higher pay,
whereas innate aptitudes are not usually thought to warrant
higher pay. But that distinction is generally difficult to make
in practice: most skills build on innate talents which can
themselves command higher salaries. The example often cited is
men's physical strength; though largely natural (i.e., innate),
it is considered and rewarded as a skill. In comparison, Heyzer
(1981) explains how many of women's so-called innate skills,
which are not well rewarded, are actually acquired through long
training at home beginning in early childhood. She mentions
dexterity in making laces and embroidery, a physical skill, but
one could also cite human relations skills, communication skills,
patience and the ability to perform simultaneous tasks and
sustain frequent interruptions. d/
51. A related issue concerns education, training and skills
accreditation. The labour market rewards skills that are
formally accredited and acquired. Yet women are much more likely
to acquire skills informally or to receive less formal education
than men are and in the informal sector such skills and education
are relatively important. In considering the skills required in
the informal sector, information on the tasks performed may be
sufficient, supplemented with questions on work history and how
long it takes workers to learn the job. However, some
information on productivity and the quality of the goods and
services produced is also important because certain jobs may seem
identical yet require quite different skills because of higher
quality standards and more sophisticated production techniques,
which would presumably be reflected in higher productivity.
2. Physical effort
52. The criterion of physical effort tends to be limited to
physical strength expended and is an area where there is
generally significant gender bias in job evaluations and
reward/pay structures in favour of men. However, a more complete
measure of physical demands would include the strain of
performing repetitive tasks; holding the body in constraining
positions, such as bending over all day to pick fruits or make
carpets; overexerting the eyes because of poor lighting or
exposure to glaring light, such as in checking eggs for cracks;
sitting all day behind computer screens; and doing minute work,
such as silk embroidery. Related dimensions of physical effort
include mental exertion, such as concentration and the need for
precision, and emotional exertion, such as responding to the need
of people requiring care or confronting frustrating work
situations (New Zealand, 1991). Such additional forms of
physical effort should be recognized and rewarded at least as
much as physical strength expended.
3. Responsibility
53. The level of responsibility is frequently measured in fiscal
terms, i.e., accountability and sums involved. However, in the
informal sector, the sums involved underrate the impact of error
on business survival. Other aspects of responsibility that could
be important include the ability to work independently without
supervision; responsibility for another person's well-being; and,
where the job holder has a supervisory responsibility, direct
responsibility for quality control, information and material
resources (New Zealand, 1991).
4. Working conditions
54. Working conditions are usually measured in terms of dirt,
extreme temperatures, noise levels and vibrations. Again gender
biases creep in: the kind of poor working conditions that women
are often asked to tolerate, such as in handling faeces, blood
and vomit in the case of nurses or in cleaning toilets and soiled
clothes in the case of maids, are often ignored (OECD, 1991);
moreover, such conditions also involve contact with infectious
diseases.
55. Many other criteria for gauging hazards and work environment
could be used for a more complete and relevant measure of working
conditions, particularly in the context of the informal sector,
including health hazards, sexual harassment, moral hazards, and
irregularity of unemployment and earnings; such conditions can
often be inferred by the status of labour relations and the
presence or absence of labour contracts.
56. It is clear that working conditions in the informal sector
vary greatly among different occupations and enterprises and can
be very detrimental to workers' health, future earnings capacity
and mental well-being.
5. Labour relations
57. Standing (1983) offers an interesting set of criteria to
distinguish various labour relations. e/ Such relations affect
the vulnerability of workers and hence the risks they must assume
and tolerate; they can also result in distorted wage levels. In
extreme cases, involving forced labour and bonded labour, the
relationship is akin to slavery.
58. The preceding discussion of suggested criteria for job
evaluation is by no means exhaustive. Job content varies so
greatly that other criteria are also relevant, while in certain
cases some of those indicated here could be redundant. Some
prior assessment could help devise a suitably detailed job
classification scheme and list of criteria.
D. Relationship between pay and score points
59. A monetary value can be assigned to point scores from a job
evaluation in two ways: either by comparing jobs with the same
total score points (the so-called point-by-point comparison), or
by fitting wage baselines. In both cases, a wage must be
selected as the norm in order to provide a standard, to which the
wage of the undervalued/underpaid female occupation can be
adjusted. For example, if nurses (female-dominated occupation)
and architects (male-dominated occupation) had the same point
score and architects earned 30 per cent more, then it would be
necessary to raise nurses' pay by 30 per cent (assuming that one
did not want to lower architects' pay and that such a measure was
enforceable).
60. A second, more accurate procedure consists in estimating
shadow wages by regressing point scores on observed (actual)
wages. When this is done separately for male and female-
dominated jobs, two wage baselines are obtained, which can then
be used for proportional comparisons. For instance, as mentioned
above, if no male comparator with the same total point scores was
available in a particular job evaluation (which would be required
for a point-by-point comparison) and a woman's job score was 60
per cent of a man's, then the woman's job could be assigned that
proportion of the man's pay. The appropriate value could be read
off the estimated wage baseline for male-dominated occupations.
61. Such proportional evaluations cannot be made using the first
method, point-by-point comparison; such comparisons must be
restricted to jobs with the same total point scores. Moreover,
if the male comparator job is itself underpaid relative to other
male-dominated occupations (below the wage baseline), then the
corresponding woman's job will also be undervalued.
V. STRATEGIES FOR REDUCING PAY DIFFERENTIALS BY
GENDER IN THE INFORMAL SECTOR
62. Within the framework of equal pay for work of equal value
policies, job evaluations set standards for remodelling wage
systems based on greater equity. Administrative measures and
legal action provide the tools for implementation. In the
context of the informal sector, however, there is limited scope
for such measures, if any at all, because it largely escapes
regulations and the poor have only limited access to legal
action. Nevertheless, job evaluations in the informal sector
could be useful tools for identifying which occupations are the
most undervalued and they could provide valuable information on
the sources of wage differentials. They might also help
challenge stereotypes by providing a more objective assessment of
people's work.
A. Supporting microenterprises and self-employed women
63. Many women are self-employed in the informal sector and many
others are interested in starting their own business. Such women
can be helped by providing an enabling environment in terms of
credit, regulations etc. as well as by providing direct
assistance, such as training, technical advice and loan
guarantees. f/ Policies and programmes to address the needs of
women operating in the informal sector could focus, inter alia,
on:
(a) Improving infrastructure, by, for example, providing
piped water, electricity, roads and transportation;
(b) Providing more supportive institutions and regulations,
by, for example, reducing police harassment and allowing women to
own property and take credit;
(c) Improving macroeconomic conditions, by, for example,
eliminating restrictions on access to import and export markets,
and reducing subsidies for the formal sector that put the
informal sector at a competitive disadvantage.
64. Such policies or programmes can be general, for the benefit
of all informal sector businesses, or they can be targeted on
informal sector businesses run by women. Direct assistance
should focus especially on training, including basic literacy for
women without education. Training should also cover key aspects
of running businesses, such as marketing, accounting and
purchasing. The ILO, for example, has run very successful
training programmes in the Czech Republic and in Slovakia for
women entrepreneurs; evaluation reports show that of the
10,000 women who attended a two-day course, 30 per cent were
still in business after six months (Paukert, 1993).
B. Organizing women
65. In many cases, women's wages are unduly low because women
lack bargaining power. Women generally work in sectors
characterized by a highly elastic supply of labour and highly
competitive firms themselves facing very intense competition,
conditions which do not favour their organization.
66. Nevertheless, there is some scope for organizing women. For
instance, Strassmann (1987) reports on a home-based enterprise in
Colombo, Sri Lanka. Another example is SEWA in India, which has
been successful in organizing home-based piece-rate workers,
setting up trade unions and obtaining legal protection through
the courts. Similar projects have been implemented by the ILO in
rural India (ILO, 1989).
67. Organizations for women workers can be a key player in
articulating women's needs in the informal sector and in many
cases they have acted as catalysts and focal points for self-help
initiatives. They can thus become useful bridges for channelling
assistance and pooling local resources.
C. Facilitating policies for improving access to employment
68. More generally, the earning capacity of women and their
access to employment can be enhanced in numerous ways by
facilitating policies that influence non-labour-market
determinants of pay in order to provide, inter alia,
(a) Access to education;
(b) Family planning, resulting in the reduction and spacing
of births;
(c) Improvements in health and nutrition;
(d) Transfer to the market of domestic chores that would
significantly relax time constraints on women, by such means as
the provision of day-care centres;
(e) Changes in laws, regulations and customs that constrain
women's physical movements.
69. Last but not least, much can be done to change perceptions
about gender roles and the stereotyping of jobs. Everyone is
affected - workers, employers, trade unions, Governments and the
public at large. Most people are not even aware that they use
double standards and gender stereotyping. All too often, jobs
and occupations are restricted to men either on the mistaken
assumption that women cannot take responsibility or are too weak,
or on the basis of some other erroneous stereotype. In that
respect, job evaluation can play a role in more objectively
assessing people's work and challenging such stereotypes. It can
also provide useful information about the sources of pay
differentials. Changing occupational stereotypes also raises
interesting questions about alternative ways of doing things,
alternative styles and their effectiveness; but those avenues can
be opened only by more information, sensitization and greater
tolerance.
VI. CONCLUSION
70. The present paper has been concerned with equal pay for work
of equal value, a widely accepted concept of equity included in
national laws and international standards, such as ILO Convention
100. That concept is broader in scope than the concept of equal
pay for the same or very similar work, in that it allows for the
comparison of pay across dissimilar occupations. That broader
scope is important because male-female pay differences for the
same or very similar work are now believed to be fairly
insignificant in the developed countries, although they
apparently remain significant in some developing countries.
71. Data have been presented demonstrating that there are large
gender differentials in the labour markets of all countries.
Women receive considerably lower pay than men on average. Also,
labour markets are highly segmented by gender in all regions of
the world, with many occupations more or less reserved for one
gender and unavailable to the other; at the same time, the choice
of occupations available to men is far larger and more attractive
in terms of remuneration and opportunity for promotion.
72. Those labour-market inequalities can be explained by various
economic and non-economic theories. One such economic theory is
the human capital model, which stresses the lower levels of human
capital that women both bring to the labour market (e.g., less
education) and acquire in the labour market (e.g., fewer years of
experience). That reasoning is used to explain and all too often
justify the lower pay that women receive and their segregation
into less skilled, lower paid jobs with few opportunities for
promotion. On the other hand, labour-market theories of
efficiency wages, bargaining power and compensating differentials
argue that the jobs that women hold pay less because women tend
to work in non-unionized and smaller-size enterprises. A third
line of reasoning is known as the occupation crowding theory: it
stresses that the restricted job opportunities available to women
crowds them into relatively few occupations, causing earnings in
those female-dominated occupations to be depressed. However,
notwithstanding those economic theories, there is little doubt
that non-economic theories related to societal and cultural
perceptions and standards are also very important. They help to
explain why so many occupations are considered to be "correct"
for one gender and not the other; why the labour market
apparently undervalues the skills that women acquire in the home;
why families and society under-invest in women's education and
training; and why family and household responsibilities, which
greatly constrain and burden working women, are not shared
equally by men.
73. Comparable worth policies, as applied in the United States
of America and Canada, have been described. Those policies have
resulted in sizeable settlements, typically involving wage
increases on the order of 20 per cent for workers in female-
dominated occupations; they have, however, been limited by
practical considerations, generally being restricted to large
enterprises and the public sector.
74. The paper then considered possible approaches to applying
the concept of equal pay for work of equal value to the informal
sector. Discussion began by describing how the recent Fifteenth
International Conference of Labour Statistics defined the
informal sector. It went on to discuss how four aspects of
comparable worth cases might be applied in the informal sector:
identifying gender-dominated jobs; measuring net annual income
and hours of work for the self-employed; performing job
evaluations to eliminate gender biases; and examining the
relationship between pay and job evaluation point scores. While
it is clearly impossible to apply job evaluations and comparable
worth policies in the informal sector in the way that they are
being implemented in the industrialized countries, since the
informal sector is not subject to regulatory mechanisms, those
procedures never the less offer useful measuring rods for
identifying especially undervalued informal sector occupations
and thus women in need of assistance.
75. Finally, the paper described some labour-market and non-
labour-market policies and programmes that can help improve the
position of women in the informal sector by improving women's
skills through training and education; assisting women
entrepreneurs through direct assistance, such as guaranteeing
loans, providing training and helping with regulatory obstacles;
organizing women workers and businesswomen in order to increase
their bargaining position; and providing facilitating services,
such as water, birth control, electricity and fuel, in order to
reduce women's additional burden of employment and family
responsibility.
76. Last but not least, there is a need to educate and sensitize
everyone - workers, Governments, employers, trade unions, and the
general public - in order to change traditional stereotypes about
what work women should and should not do and thereby help open up
the world of work to being more equal for men and women.
Notes
a/ A study by Horton (1993) for seven Asian countries
decomposes gender wage differentials into those which can and
cannot be ascribed to differences in human capital endowments.
There is no clear trend over time and the unexplained wage
differences are large, ranging from 127 per cent for urban
workers in the Philippines (1988) to -4.5 per cent for self-
employed workers in India (1989/90).
b/ The Conference recommended that domestic workers be
included in a separate subcategory to facilitate international
comparisons. Also, the decision whether or not to include self-
employed domestic workers in informal sector statistics was left
to the discretion of individual countries.
c/ Extending job evaluations to cover different
establishments also avoids the exclusion from coverage of all-
female and all-male establishments.
d/ See New Zealand (1991) for a job evaluation scheme
specifically aimed at providing gender neutral assessment of job
content.
e/ For labour contracts, Standing (1983) suggests a number
of detailed criteria, namely, duration: casual, daily, piece
work, fixed term, "permanent"; basis of payment: time rate
(hourly, etc.), piece rate, product share; frequency of payment:
at regular intervals, upon completion of job, irregular,
including timing of bonuses; medium of payment: cash, kind, meals
etc. (provision of a service, work, or favour); relative
autonomy: timing and amount of work, and intensity of
effort/productivity per-specified or not; freedom of employment
relations: ability to change employers, ability to combine with
other (work) activities; linkages with other contracts: credit,
land, employment of family members.
f/ The informal sector does not necessarily operate outside
existing regulations. In some countries, a sizeable proportion
of informal sector enterprises are registered or pay taxes (Haan,
1989). In theory, they are also required to observe safety and
health regulations, statutory minimum wages, working hours,
restrictions on child labour, and other labour-related
regulations (Tesfachew, 1992).
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