Importance and Context of the Question: Can education and training assist the informal sector?
The heightened interest in the informal sector that is very noticeable in the early 1990s is closely linked to a complex set of factors. These are putting basic education under renewed pressure rapidly to expand, are providing a knock-on effect for technical training from ever larger school numbers, and yet can do little to expand jobs in the formal sector of the economy. Indeed the latter is actually shrinking in a number of the countries hit hardest by adjustment, the debt crisis or civil strife.
Awareness of these factors has led governments to take much more interest in the informal sector than was the case when it first received significant attention two decades ago. A new awareness amongst Southern governments of the size, diversity and sheer tenacity of the workers and owners in the informal sector should also be seen in conjunction with greater stress on market forces and entrepreneurship emanating from the North, and mediated by the development assistance community. The conjuncture of these two influences has led to a very different view of the potential of the informal sector and of possible policies towards it than prevailed in earlier years.
Where previously the development and formation of informal sector actors were invisible and unplanned from the perspective of the state and its education and training systems, these same systems with their traditional formal sector focus are now expected increasingly to play a major role in preparation for the informal sector. Thus, state education and training systems are meant now to intervene and assist in planning for what was traditionally unplanned. This is to be seen both in the new methodologies and new clienteles suggested for the informal sector.
Responses to the new challenges are highly diverse, inevitably reflecting the existing systems of education and training, and the economic and political realities of each state. Such diversity makes it impossible to make grand generalisations about ideal types of interventions. Recommendations for the adoption of initiatives or approaches such as "the dual system", "the Grameen Bank model", or "the traditional apprenticeship system" can only be considered more generally if the specific (and often very localised) contexts of their present success are thoroughly understood.
Definitions of the Informal Sector
The concept of the informal sector itself is not amenable to generalisation. The lack of a widely-accepted definition of the informal sector does not connote a lack of adequate theorising. Rather, it reflects the range and diversity of meanings attached to the informal or micro-enterprise economy. Throughout this report we have employed a rather broad distinction between two tiers of the informal sector and types of self-employment: subsistence self-employment and entrepreneurship self-employment. This division can be described as the difference between the upper echelons or the upper tier of the informal sector where the self-employed may be thought of as micro-entrepreneurs and the much large, lower reaches or lower tier of the self-employed, where they may also be termed the casual poor, disadvantaged groups, or, in a word, populations that are in reality surviving rather than developing through self-employment.
This distinction can be useful in contrasting the different clienteles or target groups for both national and donor interventions in the informal sector. It is in no way intended, however, to suggest that there is no movement between the two segments. Moreover, this rough guide to approaching the existing differentiation within the sector is no substitute for a rigorous analysis of the nature of the particular local context of the informal sector prior to any specific development or intervention.
Need for Care in Interpretation of Present Data
In addition to the need for careful analysis of the nature of the particular informal sector where some impact from schooling or training is expected to take place, the study also highlights the need for further examination of many of the regional and global macroeconomic trends affecting interventions in the informal sector.
The study is based on a large and continually expanding literature, as can be seen from the bibliography. Our data base is, nevertheless, one which has limitations in terms of both coverage and methodology. A large number of our illustrations are taken from countries, such as those in Commonwealth Africa, where English is the language of wider communication. Even though our team can work in French, Spanish and Portuguese, we have tended in several other regions, e.g. francophone Africa or South and Central America, to point the reader to work that is available in English. However, our associates in India and Chile have certainly drawn on materials in languages other than English, and their studies have influenced very directly our present work We would still want to acknowledge that our findings and the large number of case studies we have quoted from have been drawn more from countries where English is a first international language than from the Arab world, francophone Africa or Latin America.
Moreover, many projects, programmes and theories to which we refer may have been originally analysed or interpreted without a specific informal sector target. They may have been concerned to make a more general point about vocational schooling, or the labour market. As a result, we have sometimes been forced to infer about the likely informal sector impact of programmes that have been designed without an explicit informal sector focus. In extrapolating from more general programmes their relevance for the informal sector, we have on occasions been deducing the likely results of policies and of research that were not designed or executed with the informal sector principally in mind.
Considerable attention in the OECD countries (and in some developing countries such as South Africa) has been focused recently on the effects of new technologies on economic structures. The implications of such debates, and the realities behind them, for the development of policies regarding the informal sector in the developing world are as yet largely unconsidered. This too is a major research priority.
The need for further evidence on a wide range of the issues this report considers leads us often to a formulation of questions that must be addressed prior to interventions rather than to strong recommendations for action.
Formal Education
The central issue in curriculum development world-wide is the balance between academic and vocational subjects. Recent years have seen a strong "back to basics" call which stresses the need to build education for all on a firm foundation of literacy, numeracy and science and technology. This eminently sensible call, however, has been accompanied in some quarters by criticisms of vocational education in the basic cycle that are of questionable relevance to the wide range of cases to which they are applied. At the same time, governments faced with the apparent failure of articulation between academic schooling and work have looked for an answer through some degree of vocational input. How a general education can be constructed that takes account of both global experience and local reality remains the central issue here.
One problem with such a debate in relation to the informal sector is that the evidence and logic marshalled in defence of both academic and vocational education are predicated upon the traditional vocation of the school to prepare its charges for the formal sector. The attempt to take account of new labour market realities is something to which the growing call for enterprise education and different versions of a general education appear to be well suited. However, our research suggests that here too the debate is far from concluded.
Curriculum matters are often those most eagerly debated. However, we argue that they cannot be considered without reference to a variety of other issues regarding the governance of education. Curriculum change is a highly challenging process, and issues such as the attitudinal and technical preparation of teachers to deal with new materials and methodologies must be accorded considerable priority. This issue, furthermore, cannot be divorced from the debate surrounding the pursuit of cost-effectiveness in education. The complex relationship between factors such as class size, teacher salary, teacher attitudes and curriculum implementation at the classroom level appears to be in need of further exploration in the context of making formal education a better preparation for the informal sector.
Post- and out-of-School Training
At the time that the informal sector debate first appeared there was considerable interest in nonformal educational innovations and possible 'delivery systems'. There is a need to reconsider the role and relevance of the highly diversified field of nonformal education in the many plans preparing for the informal sector in the very different context of the 1990s. One of the principal lessons of the earlier era of interest in nonformal education is that it not be construed as an inferior opportunity to formal education. Today's schemes of nonformal education for the informal sector are anxious to stress that such provision is as demanding or even more demanding than the traditional pathways. And it is frequently emphasised that the rewards of entrepreneurial self-employment may well be greater than finding an apparently secure job in the formal sector.
As with the formal education system, the national training system was traditionally little concerned with the informal sector. However, pressures towards a greater role for market forces have combined with the new recognition of the size and strength of the informal sector to bring about a reappraisal of the possibility of a link. Here too there are more questions than answers at the present moment.
The push towards a greater market role in training may be expected to lead to a reduction in the rigidities and over-capacity that have sometimes characterised the state-run vocational training institutes (VTIs). Nonetheless, we believe that there is a danger in overstressing the ability and willingness of proprietary (for profit) training or private enterprise to provide training that is optimal for either the firm or the economy as a whole. The problematic experience of the role and limitations of private sector training initiatives in the U.K. is just one of many reasons for caution. In the small, fragile state-dominated economies of much of the South (and indeed of the new countries of Eastern Europe and of the former Soviet Union), fears about the ability of the private sector appear even better founded. The suitable model of training provision for each country cannot be read off a single blueprint for greater market orientation, but must be a judicious blend based on local and global realities.
The likely trend towards reduced state involvement in training provision is unlikely in most cases to lead to a complete withering away of state VTIs. The current existence of such institutions per se is likely to help secure their future existence. However, debate is intensifying regarding the nature of the VTI of the future. There is considerable pressure on VTIs to reorient themselves to the needs of the informal sector. Nonetheless, as with formal education systems there are a complex series of questions arising with respect to their ability to achieve such a reorientation. Furthermore, as with formal schools, there is certain to remain an influential role for state training institutions to prepare small but significant numbers for the formal sector.
Considerable attention has been focused on the issue of enterprise in VTIs. Here too, there is a need for further investigation of the theoretical claims made and the implications in terms of implementation.
In many countries training systems in rural and urban areas have had very different characteristics. Formal training in the urban areas was for urban-based, formal sector employment. In the rural areas, however, much training provision was explicitly aimed at developing better artisans and agriculturalists as part of a promotion of rural development. There is a clear danger in such differentiated systems that one form of training (rural) will be seen as inferior, especially if it runs counter to the aspirations of the clientele. Thus there has been an increasing tendency for the less formal rural employment-oriented training provision in the countryside to take on the characteristics of urban training systems. One of the major issues in planning a national training system remains the question of how to provide rural-based training facilities which are appropriate to the likely labour market destinations of their clientele, yet are not, nor are seen to be, inferior to that form of provision which obtains in urban areas. In reality, this challenge is inseparable from the question of raising agricultural prices and farm incomes, and the development in consequence of small but dynamic enterprises in rural centres and rural towns.
As well as initial skills training provided by the state, many countries have had significant traditions of proprietary and NGO training provision. Often promising developments within these have been brought within the state system. However, the current trend appears to be in the opposite direction, with the state ceding responsibility for provision back to NGOs in favour of a regulatory function. The organisation and operation of these new dispensations is another key issue. Many of the most successful of such NGO programmes built their success on a reputation for targetting those in the lower segments of the informal sector and preparing them to compete successfully for formal sector employment. It is less clear, however, in some cases whether these programmes can really be successful in preparing individuals for sustainable self-employment. This is an issue which has up till now attracted insufficient attention. This situation is in urgent need of rectification given the increased importance attached to such programmes, and the pressure for innovative NGO programmer to be scaled up from a local to a national coverage.
On-the-Job Training
Important though they are, the above questions are concerned with a small fraction of those who acquire skills for either wage or self-employment. The current stress on the market and the considerable evidence regarding the vitality of enterprise based training have led to a widespread belief in the superiority of this mode of training. Nonetheless, on-the job training is not unproblematic. For the formal sector, we have already questioned its performance in the U.K. and its potential elsewhere. Indeed, whether such training takes place in formal or informal enterprises there is a serious issue regarding the level of trade theory that should be required, and how it should be delivered. In both formal and informal sectors the ability of producers to make sense of technological change and adapt their production and training successfully is far from assured.
It is difficult to see how interventions in formal sector enterprise based training can be arranged to have a direct impact on the informal sector. Whilst there is considerable technological diffusion and movement of labour from formal to informal, through a variety of mechanisms, these remain highly complex and poorly understood. It is difficult to plan for a situation which involves experienced formal sector labour transferring to self-employment perhaps after fifteen or twenty years' experience. It is likely, therefore, that changes in formal sector training will be directed at the needs of that sector alone.
Whilst interventions in enterprise based training within the informal sector itself can hope to have a more direct impact, they are still not without problems. It should not be assumed that because such training takes place within the informal sector that it is unorganised. In some regions the existing systems of training within the informal sector are in reality highly formalised. One of the many strengths of such provision is its degree of self-reliance. External interventions run the risk of destroying this. Nevertheless, there do appear to be areas (e.g. technology, trade theory and marketing) in which informal sector training could be enhanced. The central question, therefore, is how such interventions can be devised in such a way as to build on the existing strengths of the sector. A further issue of considerable importance concerns the type of agency best suited for such interventions.
Women in the Informal Sector
There are many reasons why a consideration of the education and training needs of the informal sector cannot take place without an examination of the particular role of women in this type of work. Women are more likely to be found in the informal rather than formal sector, and they are more likely to appear at the lower and less profitable levels of the informal sector. Formal education and training systems have tended to disadvantage rather than empower women, whilst many nonformal systems have tended to treat their position in society as unproblematic, and so to reinforce their subordination.
In all the reform processes outlined above the debates must take on a gender dimension. The gender differentiated impact of many of the existing programmes discussed in this report have not yet been adequately addressed. Similarly, many of the proposed reforms are gender blind. In the current preoccupation with the informal sector, it cannot simply be assumed that women will be the first to benefit from new opportunities. Despite their dominant, numerical role in the lower reaches of the sector, new opportunities for development could easily pass them by.
Non-Trade-Training Needs of the Informal Sector
This report has been concerned with the ways in which education and training do presently and can in the future prepare individuals for sustainable informal sector activities. However, education and training are far from the only possible interventions. There has been considerable debate surrounding the possible identification of a single best intervention from the many factors that are not directly related to education and training. These would include low cost credit, new and improved technologies, and a whole host of factors linked to what has been called the enabling environment for micro-enterprise. In keeping with the rest of this report we do not find in favour of such an approach. Rather, there seems to be much to commend an approach which seeks to identify the specific needs of the specific target group in the specific context. Nevertheless, such contextualising should be informed by international experience both with particular inputs and with packages. A great deal has been learnt about the operation of low cost credit schemes, technology upgrading, and about formalising the location of the informal sector. But here too the quantity and quality of relevant and available policy conclusions are still insufficient at present.
There may well be circumstances in which all that is required is a single input, such as credit or technology. However, real life is frequently more complicated. The argument that a single-focus agency is a more efficient provider of a service than a multiple-focus agency should not be lost sight of. In the light of this there appears to be a strong case for the development of strategic alliances of agencies possessing expertise in various aspects of an overall package rather than the present situation in which countless small initiatives are scattered across the informal sector. Major issues remain to be resolved, however. These include the question of who will be involved in such alliances and who will coordinate them. Here attitudes may be as significant as aptitudes. Where such alliances are constructed another major question will be concerned with the sequencing of the different interventions.
We have talked about packages of interventions. However, recent concern with the concept of an enabling environment is also of relevance here. In certain cases the biggest difficulty faced by informal sector actors is a working context which is strongly disabling. Nonetheless, even in such cases it is likely that the development of an enabling environment would be a necessary rather than a sufficient condition in the development of a sustainable self-employment niche. Such an enabling environment may best be seen as creating the context for the successful implementation of a package of interventions. Increasingly such a package will be seen to draw on inputs from education and training systems as well as from non-education and training resources. Such a development will tend to be successful only to the extent that it resonates directly with innovations and initiatives from within the informal sector itself, and is thus a formal sector support and an adding of value to a direction that has already been taken by a sector that has never expected or waited for formal sector assistance.
