The Urban Informal Economy: Towards more inclusive Cities

By |2023-12-19T12:19:09+01:00August 16th 2016|Gender and Inequalities, Integrated Planning|

By Marty Chen


The majority of urban workers in developing countries earn their livelihoods in the informal economy. Therefore, understanding urban informal employment is critical to promoting inclusive cities and reducing urban poverty. But, many cities around the world are actively undermining or destroying urban informal livelihoods. Practices that exclude informal workers from participating in cities are the norm in many parts of the world: there are daily reports of slum and street vendor evictions and unreported harassment of informal workers by local authorities, including bribes and confiscation of goods, on a daily basis.

In response, organizations of urban informal workers are gaining in numbers, strength and solidarity; and are demanding more inclusive urban policies and practices in support of their livelihoods. Over the past year or more, with support from the WIEGO Network, some of these organizations have jointly sought to integrate a focus on informal livelihoods in the policy discussions before and at the Habitat III summit and in the New Urban Agenda document which will be adopted at that summit.

From exclusionary to inclusive cities

Home-based producers, street vendors, and waste pickers are all age-old occupations in which large numbers of urban workers around the world are still employed, especially in developing countries. Few have secure work; most have low and erratic earnings and few are protected against loss of work and income. Most operate outside the reach of government regulations and protection; yet many are harassed or repressed by the police or other local authorities and excluded from economic opportunities. In the following, we provide promising examples of inclusionary urban plans and policies for these three worker groups.

Basic Infrastructure Services for Home-based Workers

Delivery of basic services – shelter, water, sanitation and electricity – is critical for most informal workers but particularly so for home-based workers whose home is their workplace. Although there has been progress in basic service delivery, the majority of informal workers live in slums or squatter settlements which tend to be underserved. Even for the fortunate minority who receive basic infrastructure, too frequently insufficient attention is paid to how the location, mode of delivery and design of new housing projects impacts on livelihoods.

Another worrisome trend is the intensification of forced evictions driven by, among other factors, large-scale urban renewal projects, the hosting of mega events, and the recent global recession. When slum communities are evicted or relocated, home-based producers in those communities temporarily lose both their home and their workplace. They are often relocated to housing with fewer basic services and to locations at a greater distance from markets for raw materials and finished goods or from the contractors who sub-contract work to them. Before her slum community was relocated, a home-based garment worker in Ahmedabad, India lived within walking distance from the contractor who sub-contracts work to her – now she spends over 40 per cent of her meager daily earnings on transport to take raw materials from and return finished goods to the contractor (Davidson 2012).1

In many countries in South and South East Asia−including India, Laos, Nepal, Pakistan, and the Philippines−organizations of home-based workers have negotiated housing and basic infrastructure services (water, sewage, electricity) for their members. Most notably, in several cities of India through its Mahila (Women’s) Housing Trust, the Self-Employed Women’s Association (SEWA) has negotiated public-private partnerships for slum upgrading and otherwise provided basic infrastructure services (water, sanitation, electricity, and roads) to large numbers of home-based workers and other informal workers (see Rusling, 2010).

In one such partnership in Ahmedabad City, the municipal corporation partnered with SEWA and community organizations in managing solid waste collection and in maintaining and repairing infrastructure. As part of the agreement, the Ahmedabad Municipal Corporation promised not to evict residents of the participating slums for ten years (Ibid.)

Urban Planning & Land Allocation for Street Vendors

Street trade is a consistent feature of urban retail systems in cities worldwide. Street vendors offer a wide range of goods and services in convenient and accessible locations, and contribute an essential service to the poor by offering low-cost goods in small quantities.

But, an on-line analysis over a year of the news coverage of street vending issues found that, on average, there is one case of a violent eviction of street traders somewhere in the world every day ( For example in September 2011, more than 7,000 street vendors were forcibly evicted from the streets of Kampala in Uganda with bulldozers razing their stalls. In Nigeria, state governments have authorized their own specialized law enforcement units (such as the Lagos State ‘Kick Against Indiscipline’ squad and the Abuja Environmental Protection Board) to carry out violent evictions of street traders.

More common than these large-scale evictions, however, are various types of low-level harassment of street traders that stems in part from uncertain policy and legal environments. This type of everyday harassment typically requires vendors who do not have licenses or permits to pay bribes to local authorities and subjects them to confiscation of merchandise. But many cities have not issued licenses to street vendors in recent years. Also, where licences are issued (as is the case in a number of cities in Asia) the number of vendors considerably exceeds the number of licences.2 In many countries there is a hostile legislative environment. There is a recent trend on the African continent, for example, for not only banning street vending but also treating purchasing from street vendors as a criminal offence (e.g. in Malawi, Nigeria and Zambia). While in China questions have been raised about the ongoing harassment of street vendors by urban management officers called chengguan. There are however also encouraging trends particularly in India and South Africa of street vendors negotiating with cities to find solutions for inclusive and effective management of street trade.

India is one of very few countries to have developed a national policy on street vending. Adopted in 2004, the objective of the National Policy on Urban Street Vendors is to promote a supportive environment for street vendors to earn their livelihoods, while reducing congestion and maintaining sanitary conditions in public spaces. Sinha and Roever (2011) outline the role played by the National Association of Street Vendors of India (NASVI) and SEWA in securing this policy. They also show that, although there are challenges with implementation, the policy has played an important role in advocating for street vendors rights in numerous Indian cities. In September 2012, again thanks to the advocacy of NASVI, SEWA, and other organizations, a draft street vending law, the Protection of Livelihood and Regulation of Street Vending Bill, 2012, was presented to the Parliament of India. The law holds the potential of giving the national policy legal standing and could impact positively on the estimated 10 million street vendors operating in India. (See Chen et al. 2013 for further details.)

Building on the recommendations of the national policy, the city of Bhubaneshwar in India developed a public, private and community partnership model for street vending after years of conflict between street traders and local authorities. This has entailed dedicated and legally sanctioned vending zones in public space, as well as attractive fixed kiosks, partially funded by formal businesses. There was an inclusive planning process, from joint planning of the conceptual model to the realization of 54 vending zones. (See Kumar 2012 for further details.)

Municipal Solid Waste Management & Waste Pickers

Millions of people worldwide−a large number of them women−make a living collecting, sorting, recycling, and selling valuable materials that someone else has thrown away. Waste pickers constitute about 1 per cent of urban employment in many countries (Vanek et al. 2014). They contribute to public health and lower the costs of solid waste management borne by municipalities (UN Habitat 2010; Scheinberg 2012). Further recycling is one of the cheapest, fastest ways to reduce greenhouse gas emissions and use fewer virgin resources (Tellus Institute 2008).

Despite progress made in highlighting the contribution of waste pickers to recycling and climate change mitigation, waste pickers in many contexts work in deplorable conditions, receiving little or no support from local authorities and facing continual threats. Waste pickers are often subject to arbitrary pricing by middlemen and to harassment on the streets. Further there is a global trend of privatizing the collection, transport, and disposal of waste and recyclables. At a meeting of waste pickers from 34 countries held in Pune, India in April 2012, privatization (usually leading to waste-to-energy schemes) was highlighted as the greatest threat to livelihoods. There are however also encouraging trends particularly in Latin America and India of waste collectors forming themselves into co-operatives. This places them in a stronger position to secure better prices from middle men, negotiate with local authorities for access to waste and appropriate facilities but also defend their rights.

Peru and Brazil have both passed progressive national laws that support the formalization of waste picking and encourage cooperatives. In Peru, Law 29.419 which regulates the activity of waste pickers was passed in 2010. This law, which was developed through a participatory process involving representatives of the waste pickers’ movements, encourages formalization via incentives to waste pickers’ cooperatives (reduction of taxes; capacity building programmes) and promotes integration of cooperatives into municipal recycling schemes. Brazil has a whole set of laws at the local, federal and national levels that mandate the inclusion of waste picker cooperatives/associations in solid waste management (see Dias, 2011a for further details). For example, a 2006 Presidential Decree commits state institutions to segregation of waste at source and donation of the waste to waste picker cooperatives and/or associations; and 2007 national guidelines for basic sanitation include a provision that gives preference to hiring waste picker associations or cooperatives.

An association of waste pickers in Bogotá, Columbia – the Asociación de Recicladores de Bogotá (ARB) – has filed numerous legal cases to preserve their occupation in response to the city government’s attempts to privatize solid waste management. ARB achieved a landmark victory in 2003 when the Constitutional Court ruled that the municipal government’s tendering process for sanitation services had violated the basic rights of the waste-picking community. Subsequent cases have appealed to constitutional provisions, to argue that cooperatives of waste pickers – and not only corporations – can compete in waste recycling markets. A December 2011 ruling halted a scheme to award US$1.7 billion worth of contracts over eight years to private companies. The court mandated that the cooperatives of waste pickers had a right to compete for the city tenders. In March 2012, the ARB submitted its bid to the city. (See Chen et al. 2013 for full details.)   It took the municipal government a year to review the bid, reconcile differences of opinion within the government, placate vested interests, and come up with a policy for integrating waste pickers into solid waste management in Bogotá City.   In March 2013, the waste pickers began to be paid by the city for collecting and transporting waste.

What are the core common lessons from these examples of inclusive urban planning and practices? One is that there are powerful vested interests – property developers, large retailers, private waste management companies – competing for urban land, urban services, urban customers, and city contracts. Another is that informal workers need to be organized in order to compete with these vested interests and to demand from the city their fair share of urban land, urban services, and city contracts; and representatives of these informal worker organizations need to be integrally involved in urban planning processes.


Given the sheer size and significant contributions of the informal economy and that most of the urban working poor, especially women, are engaged in the informal economy, more attention needs to be paid to urban informal livelihoods in efforts to make cities more inclusive and to reduce urban poverty.

Future Urban Statistics & Research

Improved statistics on urban informal employment are important: as data have power. Policy makers like data, more than other kinds of information. Not only does informal employment continue to be an important part of the urban labour force but improvements in data collection are also possible.   What, then, is needed going forward. First, it is important that informed users of urban statistics encourage national statistical services and the international statistical community to further develop statistical concepts and methods to better measure the urban informal economy and to identify separately all categories of urban informal workers. Second, it is also important that informed users of official statistics make the data and related data analyses readily accessible to researchers, policymakers and advocates in user-friendly formats.

Further, more grounded research on the working conditions of the urban informal workforce and how they are impacted by government plans, policies and practices is needed. Finally, detailed documentation is needed of cases where informal workers have been included into urban plans, with particular attention being paid to how private sector interests have been confronted, and the implications of these cases for activists and the practises of urban professionals (with a particular focus on planners, architects, urban designers and engineers).

Future Urban Planning & Policies

As summarized above, inclusive planning and policy approaches to the urban informal economy are possible, even if difficult. Here are some of the core elements of inclusive urban planning processes and practices:

  • Recognition of where informal workers fit in – and how they contribute to – the urban economy and into specific value chains or sectors
  • Recognition that the common policy stance towards the informal economy should combine regulation, protection, and promotion – rather than regulation, relocation, and repression
  • Recognition that many existing laws, regulations, and rules serve to exclude, rather than, include the informal economy and need to be reformed to match the reality of informal work
  • Recognition that informal workers need to be organized and that their representatives need to be integrally involved in urban planning and legal reform processes
  • Recognition that inclusive planning is planning with rather than for informal workers.

Finally, there is a need to recognize that inclusive planning will require a fundamental change in mindsets. As Ela Bhatt, founder of the Self-Employed Women’s Association (SEWA) and founding chair of the WIEGO network, puts it:

“The challenge is to convince the policy makers to promote and encourage hybrid economies in which micro-businesses can co-exist alongside small, medium, and large businesses: in which the street vendors can co-exist alongside the kiosks, retail shops, and large malls. …. Just as the policy makers encourage bio diversity, they should encourage economic diversity. Also, they should try to promote a level playing field in which all sizes of businesses and all categories of workers can compete on equal and fair terms.”

Future Organization & Collective Voice of Urban Informal Workers

Urban informal workers have begun to come together to demand more inclusive, rather than exclusionary or punitive, urban plans, policies and practices. Their organizations have given collective voice to some of the world’s most impoverished informal workers, such as home-based workers, street vendors, and waste pickers, and achieved important victories. The legal and policy victories in Ahmedabad,Bhubaneshwar, Bogotá and Pune would not have been put into place without the informed and sustained policy efforts of membership-based organizations of informal workers and their allies.

Despite these gains, many of the organizations of urban informal workers are still in their early stages. Thus, building and strengthening organizations of urban informal workers is both an end in itself – as informal workers achieve a sense of empowerment and are able to support each other – and a means to leveraging wider impact at the local, national and international levels. Organizing can begin to address the vulnerability, insecurity and dependence commonly experienced by the working poor in the urban informal economy whose lives are controlled by powerful economic and political forces.

But organizing alone is not enough to bring about needed changes. Workers need representative voice in those institutions and processes that set policies and the ‘rules of the (economic) game’. Ensuring a voice for informal workers in relevant urban planning, policy making, and rule-setting processes requires supporting the growth of their organizations, and building capacity for leadership, policy advocacy, and collective bargaining.

1 For the complete story, see
2 See Bhowmik’s 2005 review of evidence from 10 Asian cities and Itikawa’s 2010 study of Sao Paulo, Brazil in which she finds the number of legal trading posts covers only 10-20% of all the workers occupying public spaces.

Marty Chen
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