Dva3705

STUDENT NUMBER: 49362658

ASSIGNMENT NUMBER: 3

UNIQUE NUMBER: 613473

TITLE: DISCUSS THE ROLE OF THE INFORMAL SECTOR IN THE

SOUTH AFRICAN ECONOMY.

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TABLE OF CONTENTS

1.

2.

3.

4.

5.

6.

Introduction

Informal sector

Advantages and disadvantages of informal sector

Explain the potential of the informal sector in South Africa

Conclusion

Bibliography

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INTRODUCTION

The informal sector consists of a sector of the economy which is not legally a sector to

be recognized ,but in various third world countries the informal sector plays a vital role

in shaping a countries economy by providing employment mainly for those who don’t

find employment in formal sector. In South Africa, the household survey 2000,

estimated that 10.4 millions of economically active population are employed in the

formal sector, 1.9 million are employed the informal sector and 3.2 million

unemployed. Consequently, the informal sector in South Africa is seen as an alternative

solution to problems such employment and poverty alleviation. It also works as a

support base to the rest of the economy (Braude 2005)

In general, informal sector denotes all unregulated and non-formal economic activities.

And it is characterized by, low entrance requirement in terms of capital and qualified

workers, small scale operations, and, labour intensive methods of production and

technology. The informal employment is characterized by high percentage of women

and self-employment, lower levels of education, high rates of illiteracy and lower

wages, longer working hours and poor overall conditions. Therefore, the employment

in informal sector is described as lacking decent work as compared to the formal sector

employment (ILO (2001).

Since wages in the informal sector are generally low, the magnitude of poverty is

consequently higher among employees and households who rely on the sector

employment and income (ILO 2002). However in the 1990s the governments and

international agencies engaged in a reformist attitude toward...