Street economies

He is your newspaper boy, your fruit dealer, your peanut or fishball peddler, your cigarette vendor, your junk collector, the man who serves you your favorite "flavor of the road" ice cream, the shoeshine guy and many more. They thrive in the midst of a crowd. Come rain or come shine, they brave the streets and sidewalks to earn their way through the day in order to feed themselves or their family.

They belong to, or sometimes pejoratively referred to as members of the "underground economy" or formally, the informal economy. Since their income cannot be accounted for or their proliferation is hard to regulate, economists debate as to whether or not the exchanges happening therein can be categorized in the league of the black market (those that sell contrabands such as drugs, stolen goods, smuggled articles, fake currency and etc.) 

Nevertheless, in all the ambiguity of its connotations, this sector constitutes a major structural feature of our society and if estimates were to be accepted, the informal economy contributes around 43 percent of the country's GDP -- and yet they virtually lack or have no representation in policy making. And, being largely subsistence earners, the hazards of their trade often put them under the mercy of preying usurers in times of emergency and calamities.

Government find more urgency to the needs of legitimate businesses as the informal sector pay no taxes nor have the legal identity to do business with its agencies. But what's the difference, aren’t they paying indirect taxes, too, everytime they buy a can of sardines or a pack noodles? Do their legal identities only citify only during elections?     

In my recent visit in the country's oldest street, Colon, I have casually interviewed a few sidewalk vendors to find out how they feel about formalizing themselves that is, getting a permit and pay some form of taxation so as to sell their wares or stuff legitimately. To my surprise only a few answered the lack of money as the main reason to forego any form of registration.      

There were unique answers though. Ramir, who sells steamed sweet corn said "I did not even finish fourth grade so how do you expect me to understand how these things work?" For Myrna, a "kwek kwek" vendor, returned "We are very small compared to the big establishments here. It wouldn't make our livelihood any easier or better even if we could afford to pay for our registration. Rosalio, who hawks newspapers, candies and and cigarettes, was rather surprised of the interview and said, "It's a crazy idea. I roam many cities to earn a living. So where do I get a permit from? For Dindo, "It is ridiculous to imagine paying all these permits and expect our government to help us. They even want to get rid of us here."

To register, seems to me, is not an issue after all. It is animosity or the seeming blindness of government agencies to at least look into their basic concerns that thwarts their integration to the formal sector. If we really come to think of it, government can derive revenue from the informal sector and return such revenue to empower their members to compete legitimately in a form of cooperatives.

The informal sector can play a major role in providing alternative income when the private or public sector cannot accommodate the oversupply of urban labor. It is, in fact, the informal economy that provides jobs or livelihood to many southeast Asian countries which is estimated to be 50-60 percent of their total workforce.   

If we are really serious to providing jobs to the jobless population we need to look into the most feasible alternatives, that is, self-employment generated by the informal sector. To do this is to first recognize their economic potential and assess the level of support given in terms of direct legislation and economic intervention.

Next is to address their basic social needs. According to the United Nations Economic and Social Council (UNESCO) the informal sector enjoy little social protection against illness, disability, old age or the death of a main income earner. Credit difficulty is one of the major constraints faced by members of the informal sector. "As a result, informal sector workers are forced to use hand-driven tools and outdated machinery, which keeps their productivity low. Due to a lack of working capital, they cannot purchase raw materials in bulk at lower prices and take their goods to market, where they can attract better prices. The productivity of informal workers can be enhanced by improving their efficiency and providing capital goods and working capital.

Aside social and capital intervention government should empower its members by providing education and skills training; improving access to physical infrastructure; encouraging and assisting in the formation of self-help groups and business and workers associations; strengthening linkages with the formal sector; creating special measures of assistance for women and enhancing awareness of available programmes for the benefit of the informal sector.

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