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Citation Information

Type Working Paper - NIDS-CRAM Working Paper
Title Differences between formal and informal workers’ outcomes during the COVID-19 crisis lockdown in South Africa
Author(s)
Issue 2
Publication (Day/Month/Year) 2020
URL https://cramsurvey.org/wp-content/uploads/2020/09/2.-Benhura-M.-_-Magejo-P.-2020-Differences-between​-formal-and-informal-workers’-outcomes-during-the-COVID-19-crisis-lockdown-in-South-Africa.pdf
Abstract
Many governments around the world have responded to the COVID-19 pandemic through a suite of social distancing measures (lockdown). However, this has had unintended consequences on labour markets, with informal workers disproportionately affected. South Africa’s lockdowns commenced with stringent directives (level 5) some of which were chronologically relaxed in subsequent lockdowns (level 4 to level 2). This paper explores changes in labour market outcomes (wages and hours worked) of formal/informal workers in South Africa, between April (lockdown level 5) and June (lockdown level 3). We employ a DID estimator and data from the first 2 waves of NIDS-CRAM data. Our results show a wage decrease of the same order for both formal and informal workers. Across subgroups, wages decreased more for men and urban workers who are informally employed, relative to their formally employed counterparts. We also find higher decreases in hours worked among men and women in informal work relative to those in formal work. This is also the case for informal workers in urban areas. Based on these results, we recommend for government interventions that set all workers on a recovery path. These can be targeted at enabling recovery of time spent at work which in turn boost productivity and wages. The government also needs to consider extending coverage of social relief to informal workers, as well as stabilise the broader economy for informal sector enterprises to thrive.

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