Informal Economy; Under Participation Trap; Added Worker Effect
This paper will look at the gender issues by focusing more on female side.
Women in Informal Economy
Worldwide, women’s involvement in the informal economy has increased since the early 1980s, as economic restructuring reduced job opportunities in the formal sector, increased the flexibility and casualness of labor markets, and increased the need for additional family income. There is a strong association between women’s employment and production for exports with the liberalization of the economy in Turkey. The number of women engaged in informal activities grown dramatically with the increasing influence of economic liberalization and flexible working conditions. Women’s work in exporting industries has been a center of major interest since the early 1980s women emerged as an important labor supply especially for the garment industry, but their integration into the production has remained informal and mostly made invisible through the utilization of familial relations in small-scale workshops. It also brings harsh working condition and low wages which allow these sectors to become competitive.
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Unregistered economy refers to the legal economic activities which are not recorded officially to reduce production cost and aim tax evasion. Workplaces in unregistered economy are generally smaller in terms of scale; low wages are given to workers. There is an arbitrariness to recruit or fire workers. In rural area, TUÄ°K considers a category of unpaid family worker as employed and the majority of women, who are not registered to any social security institution, work as unpaid family worker. If we consider non-agriculture area, women mostly work as a regular employee and casual employee in unregistered economy. Self employment means that their payments depend on the profit of directly produced goods. They can make decision over operational activities. We can consider traditional handicraft activities under this category. Women who get specific order for dressmaking or handicraft works. They can decide about the finishing time of work and their payments after work. Other home-based work includes the piecework for subcontractor or another mediator. From 2004 to 2013, 5,19% of women on average work at the home.
They arrive the conclusion that women are not willingly accept these jobs but they are forced to accept. Due to gender-related point of view, women workers are more prone to be abused by their employers. They work for below official minimum wage and face with harsh conditions at work. They feel helpless and despair due to the behaviors of employers and treatment in the working place.
Under Participation Trap
To define what the under participation trap means, we should look at the different factors which create this trap in relation to each other. Firstly, we consider the women with low levels of education. Most of them are likely to work in the informal sector with low wages that are lesser than the payment given to domestic workers to do housework or childcare. Labor supply turns into be very low considering these issues. With the belief that girls will not have a chance to participate in labor market with high wages, families may want to invest lesser for the educations of girls. At this point, it creates a cycle, known as the under participation trap, that girls education contributes to keeping wages low so that it will keep labor supply low. (World Bank Report 2009, 21)
If we look at segmentation of labor market, we can see that formal sectors have higher productivity than informal sector and offer slightly above minimum wages. Returns to both education and experience are higher in formal sector again. However, the choice of working in informal sectors occurs due to exclusion of low educated women in formal sectors. Very low wages in informal sector lead to low levels of labor supply. There are also very little transaction of low educated women from informal sector to formal sector. Women who work in informal economy face with the lack of social security problem which force them to quit job. There are employment possibilities which offer limited range of work in textile industry, domestic service or retail activities for low educated women.
When we look at TUIK data for the reasons of being out of labor force among women, the most important reason is that majority of them are busy with household works along the day. However, when we turn our interest to men, there is no percentage given to household works. The retirement or being students become the important reason for being out of labor force for men. Women are considered as housewives who have more time to dedicate for care giving and house works. This perception also brings some disadvantages to women such as dependence to men, lack of social security, or low self esteem. In the patriarchal family setting, men also see their household activity as an easy job with more spare time at home.
Poorly educated women face with the cultural as well as economic barriers which prevent them to participate in the labor market. Former barrier includes the women’s role as care givers and family pressure. Latter barrier includes women’s participation in informal sector with low salaries and long working hours. Mothering and childcare are also other important determinants for female labor force participation. Mothers do not want to leave their kids alone so they need to stay at home to take care of them. In addition to this, they cannot afford to hire someone as a babysitter. “Participants mentioned they would need to pay at least 500 TL monthly to hire somebody to take care of their children. To afford this, they would need to find a job that would pay them more than 1,500 TL,…, was beyond what they could earn given their skills and education level.” (World Bank Report 2009, 20)
Added Worker Effect & Discouraged Worker Effect after Crisis
Added worker effect means that if the unemployment of one spouse leads other spouse to increase his/her labor supply. We need to focus whether women have an incentive to participate in labor force when their husbands involuntarily lose their jobs. Due to the fact that my focus is on the crisis period, family members may also lose their hopes to find job which creates discouraged worker effect. The discouraged worker effects leads to hidden unemployment of the people who want to work but do not look for a job. Therefore, the actual unemployment rates can be underestimated with the dominance of this latter effect. (BaÅŸlevent and Onaran 2003, 441)
To analyze how women react to crisis period in Turkey, Cem BaÅŸlevent and Özlem Onaran looked at the Turkish Household Survey data from October rounds of 1988 and 1994 period. In 1994, crisis period, Turkish lira was depreciated by more than 50 per cent and by the end of the year, Turkish economy is contracted approximately 6 per cent. (BaÅŸlevent and Onaran 2003, 441) They analyze difference between two years and compare outcomes according to the effect of economic crisis in 1994. They use the regression of female labor force participation (FLFP) on different groups’ unemployment rates and the other factors. They look at the variables such as education, number of children, and age of women to understand the relationship between these variables and dependent variable FLFP. The number of children has a significant negative effect on the FLFP although it has no significant effect on male labor force participation. Only exception for the effect on MLFP is that if children’s ages are between 6 and 14, then employment rate of husbands increased due to the expenses of school age children. If married women have fewer children, they have a tendency to participate in labor force. Their conclusion is derived from the fact that while there is no significant correlation between 1988 data for added worker effect and discouraged worker affect, they find statistically significant result for added worker affect of the married women in currency crisis in 1994 which had negative correlation with discouraged worker effect. In other words, it can be concluded that the added worker effects dominates the discouraged worker effect by looking at 1994 crisis. Their expectation, not analyzed in their research, is that added worker effect could be more dominant than discouraged worker effect for women due to the positive influence of female employment trends as well as getting more accustomed to working life.
Ä°pek Ä°lkkaracan and Serkan DeÄŸirmenci look at the years between 2004 and 2010. They also include single female into their analysis. They focus on the fact that added worker effect creates pressure on the labor market which has already contracted due to crisis. In addition to this, active labor market participants may give up looking and withdraw their labor force from labor market. They make emphasis on particular characteristics of the women such as their age, marital status, and education level. Household unemployment shock increases the participation of university graduates who are between 20 and 45 age group by up to 34 per cent while the percentage drops to 17% for high school graduates. (Ä°lkkaracan,and DeÄŸirmenci 2013,1) The effect of migration from rural to urban areas shifts the agricultural labor power of women from unpaid family workers to unpaid household workers while men shifts from agricultural worker to industrial or service workers in the urban areas. With the financial liberation, which started in 1980s, women have encountered with harsh working conditions, long working hours with low wages under poor labor market demand. Therefore, expected returns from female labor force participation are lower and structural constraint such as lack of child or elderly service weakens the added worker affects. (Ä°lkkaracan and DeÄŸirmenci 2013, 31) They make a conclusion that added worker effect in Turkey appears as a coping strategy to deal with economic downturns but it again refers to smaller effects like 8-10 percent of working age female become labor force participant with job loss of their husbands.
If we look at 2008 crisis, Turkey faced with productivity loss as well as economic instability which pave the way to unemployment.
“According to the Institute of LaborLaw (2009), the Turkish unemployment rate in January 2009 was 15.1 percent, which roughly corresponded to 3,600,000 individuals being out of jobs. Based on the data of the Turkish Institute of Statistics (TURKSTAT) (2009), the labor unions declared that the highest rate of unemployment since the foundation of the Turkish Republic was during the period of the 2007–2008 economic crisis, when between 13.6–16.3 percent of all workers lost their jobs (Tes-Ä°ÅŸ 2009, 30). Almost nine million of these people now work without being covered by any social security insurance.”page98- unregisterd worker….
Lack of child care service for the pre-school age and elderly care services, which constitutes structural constraints, leads women to stay at home in order to provide the needs of these family members. The majority of women do not take more than secondary education so that they are offered by these poor employment opportunities. Without any public service, they have to use their labor power for domestic workload and if they start to work, they will face with harsh conditions without satisfactory payments in the workplace. In addition to this, women who are employed in the informal sector suffer from the poor access of maternity leave which affects the labor supply of women.
We estimate the marginal effect of the unemployment shock on labor market transition probability for the overall sample as well as for different groups of women, and hence demonstrate that the effect varies widely depending on the particular characteristics of the woman—for example, her education level, age, urban/rural residence, and marital and parental status.
–Creating job opportunities for first time job seekers
— Affordable child care
—Sustaining investments on education
In 2012, a cash transfer program targeted to give social security coverage for the poor widowed women because these women without men are seen as impoverished and vulnerable group to maintain living of their household by themselves. Distinction across welfare regimes is important to understand how social welfare is produced and allocated between state, market, and family. We should also take the criticism about welfare regime into account that this “welfare regime” approach is “gender blind” or in other words, there is gender bias toward women without men. (Özar and Yakut-Çakar 2013, 25)
Women are not capable of continuing their working lives because they have drop-outs with marriages or child born. Care services cannot be affordable for those women so that they turn their home again.
Women without men ( a male breadwinner) can less likely to find job in the formal sector due to lack of experience and considerable break between working time and staying at home. They will not face with job opportunities in the formal sector so that they need to accept uninsured and low-waged works in informal sector. Characteristics of unregistered jobs create unstable and volatile situation for women due to its duration and wage level. To maintain their daily livings, sometimes women take informal support from the relatives or neighborhoods but it turns out to be inadequate again.”By providing support to only widowed women, that is,
those women falling outside family involuntarily upon the death of the spouse, the welfare regime in Turkey continues to assume women within the boundaries of family and punishes
those that fall outside these boundaries.”32 spouse, the welfare regime in Turkey continues to
assume women within the boundaries of family and punishes
those that fall outside these boundaries
BaÅŸlevent, L. and Onaran, O. 2003. “Are married women in Turkey more likely to become added or discouraged workers?” Labour, 17, 439–58.
DeÄŸirmenci, S., & Ilkkaracan, I. (2013). Economic Crises and the Added Worker Effect in the Turkish Labor Market. Levy Economics Institute of Bard College, 774, 1-47.
KümbetoÄŸlu, B., & AkpÄ±nar, A. (2010). Unregistered Women Workers in the Globalized Economy: A Qualitative Study in Turkey. Feminist Formations,22(3), 96-123.
Unfolding the invisibility of women without men in the case
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Türkiye’de Ev-Eksenli ÇalÄ±ÅŸma, UzmanlÄ±k Tezi, T.C. BaÅŸbakanlÄ±k KadÄ±nÄ±n Statüsü Genel
TurkStat (Turkish Statistical Agency) (2012) Household labor force survey, Online. Available HTTP: <http://www.tuik.gov.tr/VeriBilgi.do?alt_id=25> (accessed 23 May 2013).
World Bank Report 48508-TR (2009). “Female Labor Force Participation in Turkey: Trends
Determinants and Policy Framework”. Human Development Sector Unit Europe and Central
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participation in Turkey: Trends, determinants and policy framework.
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BirleÅŸik Metal Ä°ÅŸçileri SendikasÄ±
Ev-eksenli ÇalÄ±ÅŸan KadÄ±nlar ÇalÄ±ÅŸma Grubu’nun
Ä°stanbul, Mart 2003