Livelihoods, Social Protectionism, and Thailand’s Precarious Labor Markets

The COVID-19 pandemic has significantly disrupted employment markets globally and nationally, posing unique challenges to Indonesia’s labor force. In response, the Indonesian government launched the Pre-Employment Card (PEC) as part of the National Economic Recovery (PEN) initiative to mitigate rising unemployment and facilitate transitions to sustainable employment. This study examines the effectiveness of Indonesia’s Pre-Employment Card (PEC) policy in facilitating employment transitions during the COVID-19 pandemic. The effectiveness of the PEC policy is measured through key indicators such as labor absorption rates, reduction in unemployment, and the likelihood of securing formal employment over informal alternatives. This study introduces a novel perspective by employing a dual labor market approach, which highlights the distinct roles and interactions of formal and informal sectors in Indonesia’s labor market. Specifically, it examines how the presence of informality affects job transitions and the effectiveness of the Pre-Employment Card (PEC) policy in facilitating movement toward formal sector employment. To analyze employment transitions, this research employs a multinomial logit model, selected for its ability to estimate the probability of multiple, categorical employment outcomes, making it especially suitable for evaluating the diverse pathways individuals might take from unemployment to formal or informal employment, and from informal to formal sectors. The findings reveal that the PEC policy significantly increases the likelihood of unemployed individuals securing formal sector jobs rather than informal ones, with participants who completed the initial PEC training showing a 30% higher probability of transitioning to formal employment compared to those without PEC support. Additionally, the policy supports transitions within the labor market by facilitating movement from the informal to the formal sector, with an observed 25% increase in formal employment uptake among informal workers participating in PEC. These results underscore the PEC policy’s effectiveness in promoting formal employment pathways, contributing to workforce stabilization amid economic recovery efforts.

The paper examines the socio-economic impact of informal financial sector and inclusive growth in north central –Nigeria. The notion behind inclusive growth entails analysis how employment opportunities arise and change with growth process with time. Economic growth can be accompanied by an increase in informal sector employment. Informal financial sector may support growth by reducing cost of borrowing, collateral, bureaucratic process and improving competitiveness. However, a well-functioning and regulated informal financial economy will be a critical prerequisite to achieve sustainable growth in north central-Nigeria. And also, a widespread informal financial sector with regard to employment, enterprise, and productive activities is frequently perceived as a barrier to full participation in the economy and as a hindrance to long-run economic development and poverty alleviation in this region. This is because the link between, informal financial sector, growth and inclusiveness is not fully understood. Inclusive growth has been defined as growth that takes place in a context in which economic opportunities-including employment opportunities expand, the poor’s access to these opportunities improves, and inequalities are reduced. This paper seeks to investigate the socio-economic impact of informal financial sector activities, inclusiveness’ and economic growth in north central - Nigeria. A systematic random sampling method was used to collect data from 500 informal financial sector operators in Abuja, kogi and Niger states. A multivariate panel logit model statistic was used to analyze the data in order to identify the perception of socio-economic impact of Informal financial sectors on economic growth in north central- Nigeria. The findings revealed that informal sector operators has a positive and significant impact on growth in the region; while poverty-mentality, illiteracy, high inflation, low infrastructure, access to credit, social safety nets and information dissemination are the major problems encountered by these institutions. The paper recommends among other things the education of the rural poor to embark on viable projects, infrastructural development and favorable government policies so as to regulate the sector becomes relevant

The concept of Economic growth can be accompanied by an increase in informal employment. Informality may support growth by reducing labor cost and improving competitiveness. However, a well-functioning and regulated informal economy will be a critical prerequisite to achieve sustainable growth. And also, a widespread informality with regard to employment, enterprise and productive activities is frequently perceived as a barrier to full participation in the economy and as a hindrance to long-run economic development and poverty alleviation. This is because the link between, informality, poverty alleviation and growth is not fully understood. This paper seeks to investigate the Relationship between informal financial sector activities and poverty alleviation in Nigeria. A multivariate panel data approach was used with data from 150 informal sector operators in Gwagwalada area council-FCT. Data was collected using structured questionnaire and analyzed with appropriate technique in order to identify the perception of socio-economic impact of Informal sectors on poverty alleviation in Nigeria. The findings revealed that informal financial sector operators has a positive and significant impact on poverty alleviation in Nigeria; while poverty-mentality, illiteracy, high inflation, low infrastructure, access to credit, social safety nets and information dissemination are the major problems encountered by these institutions. The paper recommends among other things the education of the rural poor to embark on viable projects, infrastructural development and favorable government policies so as to make the sector becomes relevant.

This Essay links a particular legal case study with a broader set of questions about the “family” in a global political and economic context. Part I clarifies the analytic links between the household, the market, and globalization. By studying Egypt, the Essay focuses on one part of this global sociolegal continuum and draws out the special significance of transnational background rules and conditions for the “developmental state.” Part II presents the legal framework affecting labor conditions of sub-Saharan African asylum-seekers who are migrant domestic workers in Egypt, and particularly the legal framework that affects their ability to bargain in securing livelihood strategies. Domestic and international law fail to provide adequate assistance and support for these efforts, but they inevitably construct the environments for them: “foreground” rules of employment and contract law (but not family law) affect the bargaining environment for migrant domestic workers; “background” rules, most importantly those related to sovereignty and immigration, also crucially influence the bargaining environment. Part III returns to the conceptual landscape, connecting this study with current quandaries in global governance studies and critical understandings of the “economic family.”

This chapter focuses on Thailand's foreign labor migration, which has played a critical role in the economic development of Thailand. Emphasizing both positive and negative effects of foreign migration to the Thai labor market, Thailand economy, and sustainability in economic development, this chapter separates foreign migrant workers into two types, legal and illegal, and analyzes the impact of each type of migrant worker on wages, labor market, Thai economy, innovation, and sustainability. While foreign skilled laborers, who usually receive formal work permits from the Thai government, as well as capital and native workers are complements, the unskilled or low-skilled workers, usually from neighbor countries, as well as capital and native workers, are substitutes. Furthermore, the impact of each group of foreign migrants on economic development and government reactions (as reflected in migration policies) is also elaborated before discussion for migration and development in the long term.

Informal sector (IS) workers comprise a significant proportion of the Thai work force and contribute significantly to the Thai economy. Nevertheless, IS workers have little social protection and are economically marginalised, making them especially vulnerable to the effects of the government’s shutdown of the Thai economy to address the COVID-19 pandemic. Using a sample of 384 IS workers, researchers found that IS workers experienced dramatic decreases in their monthly income, although the reduction varied across occupation and geographic region. To compensate for reduced income, IS workers tapped their savings and increased their debt. A Thai government programme to provide income support for workers during the shutdown reached less than half of IS workers. Social workers can help provide better social protection to IS workers from pandemic-amplified social exclusion.

The author suggests a range of public policies that the Thai government should employ so as to help Thai nationals and smaller-size businesses weather the storm of the pandemic. As the Thai economy is significantly tied to its tourism development, it is not pragmatic for Thai authorities and nationals to aim at full economic recovery in the short- and mid-term. In the short-term, Thai authorities should help local businesses and nationals to satisfy household subsistence. Then, the Thai government should create more job opportunities for the Thai workforce and financially support local businesses in the short- and mid-term. Concurrently, the Thai government should expand their delivery of social protection schemes to Thai nationals, helping local populations obtain basic social welfare services that are conducive to their survival. In the longer-term, the Thai government should welcome international tourisms in phases, and co-build transport infrastructures with neighbouring countries in order to prepare a full re-opening of national borders in due course.

The authors compare poverty in three Eastern European countries (Bulgaria, Hungary, and Poland) with poverty in three countries of the former Soviet Union (Estonia, Kyrgyz Republic, and Russia). They find striking differences between the post-Soviet and Eastern European experiences with poverty and targeting. Among patterns detected: a) Poverty in Eastern Europe is significantly lower than in former Soviet Union countries. b) Rural poverty is greater than urban poverty. c) In Eastern Europe there is a strong correlation between poverty incidence and the number of children in a household; in the former Soviet Union countries this is less pronounced, except in Russia. d) There is a gender and age dimension to poverty in some countries. In single-person households, especially of elder women, the poverty rate is very high (except in Poland) and poverty is more severe. The same is true in pensioner households (except in Poland). In Poland the pension system has adequate reach. e) Poverty rates are highest among people who have lost their connection with the labor market and live on social transfers (other than pensions) or other nonearned income. But through sheer mass, the largest group of poor people is the working poor -- especially workers with little education (primary education or less) or outdated vocational or technical education. Only those with special skills or university education escape poverty in great numbers, thanks to the demand for their skills from the newly emerging private sector. f) The poverty gap is remarkably uniform in Eastern European countries, especially Hungary and Poland, suggesting that social safety nets have prevented the emergence of deep pockets of poverty. This is much less true in the former Soviet Union, where those with the highest poverty rate also have the largest poverty gap. In the short to medium term, creating employment in the informal sector will generate a larger payoff than creating jobs in the formal (still to be privatized) sectors, so programs to help (prospective) entrepreneurs should take center stage in poverty alleviation programs.

Reports that the number of new social safety net programs launched has increased in Africa over the last decade, and every African country has established at least one social safety net program. Program design varies across the region, with the most common programs focused on cash transfers, public works, or school feeding. Evolving designs feature more use of cash, programs designed to respond to climate change, a concentration on productive capacity and resilience, and programs promoting human capital development. Among all programs, 29 percent directly target children through nutrition interventions, benefits aimed at orphans and other vulnerable children, school feeding programs, provision of school supplies, and education benefits or fee waivers; 31 percent target households more broadly; and some programs can achieve gender-relevant impacts if they are thoughtfully designed with this aim. Although programs have been expanded, most of the poor in Africa are still not covered by social safety nets.

Comment on “Meeting the Social Policy Challenges Facing Korea”

Labor Market Rigidities and Informality in Colombia Camilo Mondragón-Vélez (bio), Ximena Peña (bio), and Daniel Wills (bio) Informality has been at the center of the economic debate in Colombia as a result of the high levels prevalent in the country and its substantial increase during the 1990s. The informal sector includes a range of heterogeneous activities, from unpaid labor to a number of unregulated salaried jobs. Informality is thought to have negative implications, mainly through inferior working conditions, lack of formal health, unemployment, and old age insurance, and low productivity levels for firms. Alternative definitions of informality have been proposed in the literature, each implying a different approach to this phenomenon. The Colombian labor market is characterized by high nonwage costs and a high minimum wage relative to the economy's level of productivity. Nonwage costs are costs faced by the employer and include health and pension contributions, payroll taxes, and transportation (commuting) subsidies.1 These labor market rigidities imply that the formal sector, where workers and employers comply with regulations, is less able to adjust to the business cycle than the informal sector. Hence, economic policy originally designed to protect workers might actually be worsening employment conditions by increasing informality. This paper brings new elements to the study of informality in Colombia and suggests directions for future research. We study the evolution of informality between 1984 and 2006—a period that includes both expansions and [End Page 65] recessions, structural reforms of the labor market, and significant variation in nonwage costs and the minimum wage. By generating individual or city-level variation, we are able to disentangle the effects of nonwage costs, the minimum wage, and the business cycle on informality. We begin our analysis by considering alternative definitions of informality, two of which we adopt (primarily driven by data availability): the definition used by Colombia's National Administrative Department of Statistics (DANE, for its initials in Spanish), which is based on firm size and occupation, and a definition based on contribution to health insurance (as a proxy for compliance with labor market regulations). With regard to the empirical analysis, we first estimate the probability of being informal as a function of individual characteristics, the business cycle, and labor market rigidities. Our results suggest that rises in nonwage costs and the minimum wage are highly correlated with informal sector growth. Next, we look at the transitions between sectors. On the one hand, we measure the transition flows between the formal and informal sectors using transition matrices. These describe, for example, the proportion of job destruction in the formal sector that is absorbed by the informal sector. On the other hand, we estimate the effect of labor market rigidities on the likelihood of switching sectors (controlling for idiosyncratic characteristics and macroeconomic conditions), to determine their role in the decision to make the transition. We find that labor market rigidities are important drivers of the transition into informality, particularly for low-skilled workers. However, further research is needed to understand the channels through which labor market rigidities affect the transition into the formal sector, in particular for workers with high educational attainment. One strand of the literature associates informality with labor market rigidities in Colombia. Núñez finds a positive relation between informality and income taxes on labor revenue for the period 1988–98.2 Sánchez, Duque, and Ruíz find that increases in labor market rigidities increase informality, unemployment, and its duration, based on aggregate data.3 Using a firm panel from the industrial sector, Kugler and Kugler find that a 10 percent increase in payroll taxes decreases formal employment between 4 and 5 percent.4 Santa María, García, and Mujica use individual data from Colombia's household survey; they find that the subsidized regime, financed through nonwage costs, [End Page 66] has increased the incentives to become informal, thus acting as a subsidy to informality.5 Our results suggest that an increase of 10 percentage points in nonwage costs is associated with an increase of 5 to 8 percentage points in the size of the informal sector. Some authors characterize informal workers and study informality from a segmentation perspective. Flórez finds...

Social Security, Labour Market and Restructuring: Current Situation and Expected Outcomes of Reforms

Participation in the informal economy has skyrocketed in China, coinciding with emerging labour markets that are segmented along lines of ethnicity, gender and migrant status. While a large body of literature examines migrant and female outcomes in the labour market, minority outcomes are much less understood in China. Information on minority employment in China’s informal economy is even more sparse. To help fill this “minority” gap in China, the author uses field survey data collected in Urumqi in July 2008 to reveal the extent of income disparity between the formal and informal sectors as well as within each sector, for ethnic, gender and migrant status subgroups. The statistical analysis generated three key results: (i) the accumulation of human capital positively influences income, but only in the formal sector; (ii) income disparity exists along the lines of ethnicity, gender and migrant status, and is most pronounced for Uyghur minorities in both the formal and informal sectors; and (iii) workers in the informal sector earn 22 per cent less than workers in the formal sector, and workers in the state-owned enterprises earn 15.3 per cent more than non-state workers. Findings are posited within a policy-relevant context and can be used to guide future development and ethnic policy in the region.

We empirically study the dynamics of labor market adjustment following the Brazilian trade reform of the 1990s. We use variation in industry-specific tariff cuts interacted with initial regional industry mix to measure trade-induced local labor demand shocks, and then examine regional and individual labor market responses to those one-time shocks over two decades. Contrary to conventional wisdom, we do not find that the impact of local shocks is dissipated over time through wage-equalizing migration. Instead, we find steadily growing effects of local shocks on regional formal sector wages and employment for 20 years. This finding can be rationalized in a simple equilibrium model with two complementary factors of production, labor and industry-specific factors such as capital, that adjust slowly and imperfectly to shocks. Next, we document rich margins of adjustment induced by the trade reform at the regional and individual level. Workers initially employed in harder hit regions face continuously deteriorating formal labor market outcomes relative to workers employed in less affected regions, and this gap persists even 20 years after the beginning of trade liberalization. Negative local trade shocks induce workers to shift out of the formal tradable sector and into the formal nontradable sector. Non-employment strongly increases in harder-hit regions in the medium run, but in the longer run, non-employed workers eventually find re-employment in the informal sector. Working age population does not react to these local shocks, but formal sector net migration does, consistent with the relative decline of the formal sector and growth of the informal sector in adversely affected regions.

We empirically study the dynamics of labor market adjustment following the Brazilian trade reform of the 1990s. We use variation in industry-specific tariff cuts interacted with initial regional industry mix to measure trade-induced local labor demand shocks, and then examine regional and individual labor market responses to those one-time shocks over two decades. Contrary to conventional wisdom, we do not find that the impact of local shocks is dissipated over time through wage-equalizing migration. Instead, we find steadily growing effects of local shocks on regional formal sector wages and employment for 20 years. This finding can be rationalized in a simple equilibrium model with two complementary factors of production, labor and industry-specific factors such as capital, that adjust slowly and imperfectly to shocks. Next, we document rich margins of adjustment induced by the trade reform at the regional and individual level. Workers initially employed in harder hit regions face continuously deteriorating formal labor market outcomes relative to workers employed in less affected regions, and this gap persists even 20 years after the beginning of trade liberalization. Negative local trade shocks induce workers to shift out of the formal tradable sector and into the formal nontradable sector. Non-employment strongly increases in harder-hit regions in the medium run, but in the longer run, non-employed workers eventually find re-employment in the informal sector. Working age population does not react to these local shocks, but formal sector net migration does, consistent with the relative decline of the formal sector and growth of the informal sector in adversely affected regions.