Rethinking the Informal Economy

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*RETHINKING THE INFORMAL ECONOMY IN *THE * *NEO-LIBERALIST PHASE TABLE OF CONTENTS *RETHINKING THE INFORMAL *ECONOMY IN THE * *NEO-LIBERALIST PHASE Introduction : The labour markets in developing countries is markedly different from that in the developed countries. The most striking feature of labour markets in the developing countries is its non-homogeneous character. The status of the vast majority of workers in the developed countries is of wage and salary earners. Whereas in the developing countries there is a predominance of self-employment. This non-homogeneous character of labour markets in developing countries also implies that the nature of employment and the manner in which it is created is different in the two world’s. In the developing countries the vast majority of the population is left to fend for itself and create employment out of its own ingenuity, skills and capital. This leads to vast differences in the nature of employment and the creation of dualistic structure of ‘formal’and ‘informal’ components of the labour market. A large proportion of the workforce is in the unorganised or informal sector. These workers are engaged in economic activities with lower productivity resulting in lower incomes. They are also engaged in activities with less stable employment contracts (including the self-employed) and fewer social security benefits. While the wages and salaries of the formal sector workers are periodically revised to counter inflation. No such benefits accrue to the large proportion of workers in the unorganised sector. Inspite of growing literature on the informal sector, there are several gaps not only with respect to the data on the size of the sector, but also with respect to the concept and definition of informal sector, characteristics of the sector, its contribution to the national economy and the areas for…...

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