Rethinking Informal Economy in Rio de Janeiro Slums

 

Jane Souto de Oliveira[1]

Denise Britz do Nascimento Silva1

José Matias de Lima1

Sandra Furtado de Oliveira1

 

Economic transformations that have taken place throughout the world over the last few decades have set the theme of informal economy back on the drawing board. Nowadays, debates further the semantic widening of informal economy, embracing the notion not only of a specific field or sector of activities (embodied by a set of non-capitalistic production methods), but also that of informal employment (characterised by progressive distancing from work relations linked to the total job model and the regulatory apparatus of State).

 

In such debates, major importance is given to the articulation between poverty and informality, enquiring of whether the informal sector is the repository of labour considered under-skilled or unskilled for the formal sector as well as the degree in which independent production can be viewed as an option or, inversely, as a lack of option for those involved.

 

In an attempt to contribute to the debate, the current article analyses the characteristics of small production units (or establishments) operating in the slums of Rio de Janeiro (Brazil). It also focuses on the reasons why this work force has taken up such business activities and the perspectives that lie ahead, based on the results of a socio-economic survey which took place in 51 slums.

 

The Low Income Community Survey - LICS, funded by the Municipal Labour Department of the Rio de Janeiro City Hall, was carried out in 51 slums between 1998-1999. It is a multi-purpose survey system that delves into the socio-economic characteristics of the slum population (the survey target population comprised roughly 260,000 dwellers). The LICS is comprised of independent probabilistic samples of households selected from each slum. On a par with the social survey, it also contemplates a census of business establishments (4,453 units) to investigate the economic activities held in the slums.

 

The study examines some of the results propitiated by the “economic focus” of this survey, comparing them to those from the Survey on Informal Urban Economy which was run by IBGE (the Brazilian Central Statistical Office) on regional and national levels in 1997. Of the results garnered in this research, one would have to draw attention to the following:

 

(i)                 the identity between the business and the entrepreneur (roughly 70% of establishments are run exclusively by the proprietor(s)/partner(s);

(ii)               the domestic nature of the businesses (72.5% of businesses with two or more occupied persons rely on the help of at least one relative of the proprietor(s)/partner(s);

(iii)             concentration of activities, the service sector represents 57.4% of total establishments;

(iv)              greater relative weight of women working in slum establishments (46.8% women and 53.1% men) than of the total of working slum residents (40.2% women and 59.8% men);

(v)                the participation of the elderly (aged 60 and over) is greater in slum businesses than that of the entire group of working slum residents (9.7% against 3.9%), that of the young people (aged 15 to 24) presents the inverse situation (14.6% against 22.5%);

(vi)              average earnings of about 2.2 minimum salaries for the total of people working in these establishments, with expressive differentials by gender, position at work and educational background of agents;

(vii)            optimistic expectation of owners/partners as to the future, with approximately 85.6% planning to invest in, maintain or diversify their businesses.

 

The proposed article is composed of three parts, of which the first presents the aims, methodology and coverage of survey.  Next, the profile of productive units is analysed as to size, individual/family characteristics of the enterprise, period of time in operation, nature of the work organisation and main branches of activity, levels of occupation and profitability. In addition, and based on attributes such as gender, age, educational background of people engaged in work, as well as on prior work experience and future perspective as regards one’s own business, many issues are discussed.

           

These range from whether informal economy is merely the repository of labourers unwanted by formal employment, whether it uses up men and women, the aged and the young, all in undifferentiated manner, and whether it favours certain types of business activities.

References

 

 

Economia informal urbana 1997. Rio de Janeiro: IBGE, 1999. 6 v.

SILVA, D.B.N, LIMA, J.M. AND QUINTSLR, P.L.S. A socio-economic survey for job and income development in Rio de Janeiro Slums. In: Proceedings of the Joint IASS/IAOS Conference - Statistics for Economic and Social Development. Aguascalientes: INEGI, 1998.

SILVA, D.B.N., LIMA, J.M. e QUINSTLR, P.L.S. Pesquisa Socioeconômica das Comunidades de Baixa Renda do Município do Rio de Janeiro. In: O Mercado de trabalho do Rio de Janeiro - conjuntura e análise, ano 2, n. 3, agosto/98. Publicação Quadrimestral da Secretaria Municipal do Trabalho/ IPEA/ ANPEC.

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TOWNSEND, Peter. Poverty in the United Kingdom: a survey of household resources and standards of living. London, 1979.