Formalizing the Informal Economy: A Gender Perspective in Thailand
This article explores the formalization of the informal economy in Thailand through a gender lens, shedding light on the complexities and nuances of economic activities often overlooked. The authors analyze the significance of gender dynamics within the informal sector, offering insights into the implications for policy and empowerment.
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Formalizing the Informal Economy: A Gender Perspective Thailand Thailand Sorravich Kingsuwankul, Warn Nuarpear Lekfuangfu, Worralak Pakampai, Peera Tangtammaruk, Jessica Vechbanyongratana, and Yong Yoon
Thailand Overview Middle-income country in Southeast Asia Population of 68 million 38 million people in the labor force Labor force participation rates Men = 77% Women = 60% Unemployment rate = 1%
Formalization Policies and Regulations Labour Protection Act B.E. 2541 (1998) Social Security Act, B.E. 2533 (1990) Section 33 Employer provided social security by law Section 39 Voluntary scheme for those who left employment covered by Section 33 Section 40 Voluntary scheme for informally and self- employed Other Prompt-Pay for cashless transactions targeted at informal vendors who are predominantly female
Government Definition of Formal Employment All civil servants All state enterprises employees Private school principals or teachers, according to the law governing private schools. Employees who have protection under Labour Legislation Workers who are insured according to Social Security Act B.E. 2533 (1990), Section: 33, 39, 40 Section 33 Sections 39 Section 40
Social Protection in the Informal Economy Universal Healthcare (UCS or 30 baht healthcare) provides comprehensive health coverage for a nominal charge. Universal Non-contributory Old-age Pension Poor Card cash card used to purchase necessities and transportation Free education kindergarten-grade 12 Optional Social Security (Section 40) (300 baht per month) Pension Invalidity Death Child payment
Formal and Informal Monthly Labor Earnings (Private Firms) 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2011 2012 2013 2014 2015 2016 Formal Informal Minimum Wage
Three Case Studies Domestic Workers Manufacturing Sex Work
Domestic Work Incidence of Informality Domestic cleaners and helpers working in homes 100% 90% Formal 44.5 8,330 46 Informal 50.0 8,354 41 Hours Worked per Week Monthly Labor Income Hourly Wage 80% 70% 60% 50% 40% Cleaners and helpers working in offices and hotels 30% 20% Formal 46.8 9,013 49 Informal 45.3 7,513 42 10% Hours Worked per Week Monthly Labor Income Hourly Wage 0% Domestic cleaners and helpers working in homes Cleaners and helpers working in offices and hotels Formal Informal Minimum Wage = 37.5 baht per hour
Domestic Work Why do women choose to work in informal settings when formal cleaning work is available? Even though work hours are long, employers provide flexibility to take care of personal business and give annual leave/sick leave. Tasks are easier and there is less pressure. Access to informal credit through employer No transportation or living costs (for live-in workers)
Manufacturing Monthly Real Wage % female % informal 54.0 40.5 60.1 80.1 66.8 68.3 52.8 50.0 Formal 10,195 12,566 10,069 9,317 9,460 11,702 12,350 11,642 Informal Wage Gap 6,918 7,033 5,941 6,268 6,778 11,151 9,586 7,204 Manufacture of food products Manufacture of beverages Manufacture of textiles Manufacture of wearing apparel Manufacture of leather & related Manufacture of computers/electronics Manufacture of electrical equipment AVERAGE (Across all manufacturing) 38.4 32.2 32.4 47.1 29.7 4.8 8.3 27.8 1.47 1.79 1.69 1.49 1.40 1.05 1.29 1.62
Manufacturing Currently, Thailand faces a shortage of formal factory workers. Why do some workers prefer to do manufacturing in informal settings? The work is less arduous (lower productivity reflects lower pay) More flexibility
Sex Work Illegal to sell sex, but not illegal to buy sex in Thailand Sex industry in Thailand (2015) is estimated to be worth US$6.4 billion a year in revenue, accounting for 3% of GDP Customers International tourists Domestic men Workers Workers in Bangkok predominantly from North and Northeastern Thailand Workers in the provinces predominantly come from neighbouring countries.
Sex Work Most sex workers work are venue-based sex workers, meaning they work in massage parlors, spas, and other entertainment venues. Legally registered businesses sex workers are covered by social security and are considered formal. Required by law to be tested for HIV every 3 months. Technically covered by Labour Law But, given that selling sex is illegal, workers often cannot access the Labour Law because of risk of prosecution. Vulnerable to harassment and sexual abuse by employers and customers.
Conclusions Thailand has high demand for (female) workers for lower skilled work in the formal sector, but many choose to work in the informal sector Flexibility to deal with family responsibilities Less pressure Social networks Already have access to social protection Blanket formalization policies will not work Do not take into consideration preferences for informal working environment that are more compatible with caring roles Social stigma may actually drive some activities further underground
