Marginal Labor & Unorganized Sector [Archives:1998/10/Focus]

March 9 1998

By: Dr. Adel Salem,
First Expert & General Manager,
Ministry of Labor
Yemen, during this decade, has witnessed a big population growth due to the consistently high birthrates. An annual increase of 600,000 people has lead to the country’s population reaching 16,483,000 in 1997. Another prominent phenomenon during the 1990s is the internal immigration from rural areas to urban centers. Large numbers of people leave the countryside in search of work and better living and social conditions in Sanaa and other governorate centers.
According to the 1994 population census, the urban population forms about 23.4% of the total population in the country. Urban growth rate is estimated at 7% – one of the highest in the world. The population of Sanaa dramatically increased from 650,000 in 1990 to 1,140,091 in 1996. Due to this rapid growth in the urban population new challenges were created in terms of water and electricity supplies, food, housing, education, health care services, public hygiene, sewage disposal, car traffic, paved roads, pollution, violence, crime, and many other social problems.

The continuous immigration of a sizable workforce from rural to urban areas is putting an increasing strain on urban labor markets. These labor markets have become unable to provide enough work opportunities for the increasing numbers of unemployed people flooding urban centers around the country. This is especially so with the public sector, which has all but closed its doors against new employees. The same applies to a certain degree to the mixed and private sector establishments which are characterized by the high cost of employing an individual employee. Moreover, most of new migrant workers lack the required educational and vocational levels.
Thus, marginal labor and the unorganized sector have appeared as a spontaneous solution which unemployed people resort to by creating their own job opportunities. Most of those who cannot find work create their own work or become employed by others who established their private businesses. Thus, marginal work has absorbed a large proportion of the workforce – about 580,000 workers.

The first stage of economic growth in Yemen usually starts with street vendors and goes to develop into small workshops and handicrafts, some of which further develop into large industrial or service establishments. Demand usually leads to the emergence of a new commodity or service thereby creating spontaneous employment.
All types of marginal employment come under the unorganized sector. But the reverse is not always true, not all unorganized work is considered marginal. Marginal labor is characterized by the ease with which it can be engaged in since it does not require a permanent place of work. Therefore, it is easy to get work as a porter, street vendor, unskilled stone mason, caretaker, motorcycle driver, cobbler, plumber, car washer, brick layer, domestic servant, night guard, temporary restaurant waiter, qat and vegetable vendor, second-hand market dealer, and many other casual jobs.

So marginal labor can be defined as any form of labor which is not covered by the Labor Law or the necessary legislative protection. It is not organized and is practiced for the purpose of earning a daily livelihood and securing a means of survival.
In order to clarify the concept of the unorganized sector, it is important to briefly refer to the organized sector to be able to distinguish between the two.
The organized sector is characterized by the difficulty to enter into it, it has an intensive capital, relies on imported modern machinery, is protected by legislations and social security, and has the ability to organize trade unions.
The unorganized sector, on the other hand, can have the following features: – Easy to enter. – Employees are more mobile. – Has a more pronounced character. – Inclined to use local resources. – Offers low wages. – Employees are not settled. – Relies on black labor. – Has modest permanent assets. – Able to absorb a large proportion of the local unorganized workforce, which is not involved in trade unions, not protected by legislation or social security, and is oblivious of the bad work conditions and lack of vocational health and safety.
The unorganized sector includes workers involved in the making of or in the jewelry trade, hubble-bubbles, pottery and stoneware, baked-clay bricks, pickles and spices, blacksmithing, green groceries, barber shops, restaurants, real estate agencies, taxi driving, tanneries, puncture repairs, electrical maintenance, fish mongering, bakeries, cafes, welding workshops, tailoring, second-hands markets, etc.
Therefore, the unorganized sector can be defined as a group of varied vocational activities carried out without the state’s supervision for the purpose of securing a continuous source of livelihood. The Labor Law sometimes applies in certain cases.

The strength and flexibility of the marginal labor and the unorganized sector are inherent in their ability to adapt. The small volume of equipment and number of employees needed at the work place help to easily set up, dismantle, and transfer these types of trades. The little equipment there can be easily sold to the employees within the same activity. Employees do not present any threat to the employer. They can be laid off with no large compensations as is the case in the organized sector.
Although the unorganized sector enjoys mobility and private initiative, it is subject to two types of competition. First, the organized sector does not represent a real danger as long as the unorganized sector provides its commodities and services at lower prices. The second type of competition emanates from similar establishments in the unorganized sector. This gives rise to the unorganized sector’s ingenuity, innovation, and the quick adaptation with market demands. Offers here go out looking for demand. Whereas the organized sector demands the consumer should adapt to its products.