Informal Economy and Child Labour

by: Yasmin Shoaib

Table of Content

1. Introduction

2. Informal Economy and Child Labour

2.1 Definition: Informal Economy
2.2 Definition: Child Labour
2.3 Relation: Child Labour & Informal Economy

3. Labour and Social Standards

3.1 Definition: Fundamental Labour and Social Standards
3.2 Organisations promoting labour standards

3.2.1 Non-Governmental Initiatives
3.2.2 Governmental Organisations

3.3 Standards concerning Child Labour

3.3.1 Approaches for Intervention
3.3.2 The standards issued by the ILO
3.3.3 The Success of the ILO Standards

4. Initiatives against Child Labour in Practise

4.1 Unilever and the Hybrid Cottonseed Production in India – a Worst Case
4.2 Children in the Mining Regions in Bolivia – a Best Case

5. Conclusion

1. Introduction

Child labour is a term that has been loaded with many emotions in the past. In industrialised countries, people have a very gridlocked opinion about this topic. Especially the recent discussions about sweatshops or other industries children work for, have brought up the question, if Western societies can really adopt their concepts on the developing world. As many of the jobs, children work in are in the informal sector, the author chose to put another emphasis on this topic.

This paper will first define the terms “informal economy” and “child labour”. In section 3 the concept of fundamental labour and social standards is introduced and the different organisations dealing with labour standards are presented. Proximately the approaches in child labour abolition are shown and exemplary demonstrated by the relevant conventions of the International Labour Organization. In section 4 a worst case and a best case example in combating child labour are presented.

2. Informal Economy and Child Labour

Before talking about the relation between the informal economy and child labour, it is necessary to define both terms.

2.1 Definition: Informal Economy

Living in an industrialised country, like Germany, most people will define the informal sector as work, that has not been registered with the authorities. Regarding the economical point of view, the loss of taxes and social security contribution is of special interest. This paper will not only focus on the economical impacts of the informal sector. Thus a broader definition is needed.

Economical and social scientists do not agree on a single definition on informal economy. The German Federal Statistical Office defines it as non-paid work, for example taking care of children and elderly, repairing items and other voluntary and social work.¹ Other economists argue, that all work, that can not be categorised into the formal sector, automatically is part of the informal one.² In this paper, the informal economy will be defined by the following criteria. As some of them can also occur within the formal sector, a combination of them will help to concrete the classification in questionable cases: ³

- There are no tax payments by the workers.
- The entrance barrier to the activity is low.
- There are very few employees working together.
- The activity is set up by a family and only family members work within the activity.
- The production is very labour-intensive and very capital- extensive.
- There is no or very few access to credits or other supporting programmes.
- The qualifications are trained on the job. They are not acquired within the formal school system.
- Work is divided to a very low degree.
- Simple and technological old means of production are used.
- Working hours are not well-regulated, agreements are made orally and payments are on a daily basis.
- There are no social securities.
- The intensity of work is very high, and the productivity very low.
- The products’ quality is poor.

Most authors exclude the criminal and the subsistence sector from the informal one. Although their inclusion would be interesting they will not be regarded, due to the restriction in time and extend of this paper.

2.2 Definition: Child Labour

In all centuries and all societies, children have worked. They helped in the households, raised their smaller brothers and sisters and contributed to the farm work. They were also working outside of the household in order to support the family’s income.⁴ Historically child labour only became a social problem, when education was spread to the whole society. Especially after education became compulsory, the combination of work and studies was not possible anymore. As society believed, that the education of children was a benefit and necessary, their work had to be abolished continuously. The negative image of child labour, that is common today in the industrial world, is hence a consequence of the changes in political, economical and social conditions.⁵

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1 cp. Teichert, V., p.21

2 cp. ibid

3 cp. Florisbela dos Santos, A.-L., p.11/12

4 cp. Seelaus, A., p.38

5 cp. ibid, p.19