LEFT OF CENTRE: Time to play much bigger role
If 70 per cent of the potential working force of developing countries make their livelihood in the informal sector, then the informal sector must command the attention of all forward-thinking economic planners in this country.
The informal sector is a sector of self-employment, and self-employment is just labour enjoying the full profit of its own economic effort.
While the formal sector tends to be controlled by capital, the informal tends to be controlled by labour.
In a world recession, capital will become constricted as instinctively its major holders, who make up the formal sector, move to protect their capital.
The reduction of their labour force is one of the methods they most frequently use to do so and in uncertain times such as these there is little incentive for large investors to make further capital risk.
What we will find in Barbados is that many who have lost their jobs in the formal sector will now be gravitating to the informal and what little capital they bring, having little to lose but all to gain, they will risk it.
This risked capital will more often than not generate economic activity at the bottom. From the bottom, labour and capital will be grown while economic activity at the top will continue to contract.
Owing to the adaptive nature of the informal sector, we may very well find also that comparatively it has sustained a minimal loss of jobs. Not many vendors will be disappearing from our highways and you can be pretty sure that on your next scheduled shopping day, your favourite wayside vendor, smiles and all, will be there to serve you.
Along with employment generation, the capital-creating role of the informal sector is probably well documented, certainly more so than its welfare role.
The welfare role that the informal sector plays through the shopkeeper, through the school, street and itinerant vendor may not be found in the binders of any economics manual but is indelibly on the hearts of those of us grateful enough never to forget.
From whom could we “trust” something to eat, something to wear, something for the house?
It cannot be that hard to convince Barbadians, many of whom were the recipients of the generosity of those who work in the informal sector, that they should not only have been in the vanguard of the sector’s protection but should help to bring it into the mainstream of commerce.
In every difficult economic period, the informal sector has been a social and economic safety net. However, the time for it to play a much bigger role has come.
The recent Budgetary Proposals have identified the common denominator running through the suggestions of all that have called for a new economy, and it is the need for a paradigm shift in traditional notions of capital formation, management and distribution.
A paradigm shift in the economy cannot come from the formal sector; it has to come from the informal sector.