Unorganized economic sector comprises 69 percent of labor force [Archives:2006/921/Business & Economy]
By: Yemen Times Staff
A recent economic study recommended development of the unorganized economic sector, encouraging it to incorporate with and shift toward an organized economic sector. The study mentioned this as one important solution to absorb unemployment and affect required economic development.
Prepared by Yemen's General Federation of Trade Unions, the study pointed out that the unorganized economic sector's contribution to Yemen's Gross Domestic Product (GDP) is between 20 and 30 percent, comprising approximately 69 percent of the labor force. The study engaged a sample of 800 workers in the unorganized economic sector and relevant parties from government institutions, trade union organizations, employers and civil society organizations in the capital secretariat and the governments of Aden, Hodeidah, Hadramout, Thamar, Sana'a, Taiz, Lahj and Dhalie.
The sampling revealed that more than 50 percent of those workers are youths aged 16-30, rising to 67 percent between the ages of 16 and 40. As for the workers' education level, the study found that 25 percent hold general secondary school and technical certificates, 9.7 percent are illiterate and 5.24 percent hold a university degree, with one holding a higher education degree.
The study also illustrated work hardships in the sector, revealing that 55.7 percent work as peddlers, 45 percent work more than 10 hours a day and 87 percent do not have a weekend holiday. Seventeen percent of those sampled were exposed to work incidents, while only 0.3 percent received compensation. Additionally, 89 percent of such workers work without job contracts and 80 percent have not registered with employment offices, as well as 47 percent do not possess permits for the profession they work in and 85 percent do not know their legal rights.
The study recommended the necessity of integrating the unorganized labor sector into the economy by encouraging establishing small enterprise cooperatives and offering facilities and services to develop the sector's activities. Recommendations also called for making a social contract and political commitment to deal positively with concerns of this sector's workers.
It also requested incorporating funding and administrative needs, legal protection, securities coverage and trade union organization with plans and programs for development and fighting poverty. The study recommended offering lending facilities to small enterprises and instructing funding sources and programs to offer more loans and assistance to cooperatives and small projects.
Nevertheless, the study pointed out the difficulty of defining the unorganized labor sector's volume and the proportion of its GDP contribution. It affirmed that within the past 10 years, the sector has witnessed significant growth characterized by randomness, disorganization and substandard conditions, circumstances and labor rights, as well as easy access to them.
The first attempt to study and estimate Yemen's unorganized labor sector volume was in 1996, when it was defined as being composed of small projects employing 14 workers and those economically active outside institutions. That study estimated Yemen's small enterprise volume at approximately 95 percent of total enterprises, whose GDP contributions were between 20 and 30 percent.
The first five-year plan for economic development (1996-2000) was the first government document to clearly mention the unorganized labor sector. The document differentiated between unorganized labor sector activities for potential development and display activities of individuals earning their living in outside enterprises on sidewalks and back streets.
The General Federation of Trade Unions' study identified the unorganized labor sector as an economic activity conducted outside official criteria. It includes production activities and exchanging legitimate goods and services, but lacks work licenses and does not abide by rules and licenses of geographic distribution or tax obligations. Such activities mostly are incompatible with labor rules and regulations.
This sector's growth and expansion in Yemen can be attributed to two problems: poverty and unemployment, which are ascribed to increased population growth, increased numbers of those entering the labor market, migration from the countryside, returning Yemeni labor from abroad and low production levels.
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