Starting a Business
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the informal labor market has been estimated to represent 40 percent of its total labor market (Gill and others 2007). In the Philippines, the figure is even higher, at 49 percent (ADB and World Bank 2008). In Lao PDR, the informal economy contributes around 30 percent of GDP (World Bank 2007c). Finally, given the current economic climate, the importance of the informal sector is likely to increase further, as evidence has linked economic crises with growth of the informal sector (Horn 2009). After the 1997 financial crisis, for example, Indonesia saw an increase in informal sector workers from 65 percent in 1998 to 71 percent in 2003 (World Bank 2006b). Given the depth and severity of the current financial and economic crisis, it is possible that we may see further shifts toward informal work. This is likely to hit women entrepreneurs and workers hard due to their particular vulnerabilities (see box 3.2).
Box 3.2
Economic Crisis, Informality, and the Vulnerability of Women Although the full details of the effects of the 2008–09 financial and economic crisis will not be fully understood for a while yet, various analyses have pointed out that women are a key vulnerable group who may be disproportionately affected (ILO 2009; ADB 2009; UNESCAP 2009). Women as workers are concentrated in sectors that are particularly hard hit: export-oriented manufacturing, agricultural exports, mining, and tourism. Moreover, women tend to be concentrated in nonregular and informal forms of employment, and evidence shows that such nonregular workers—casual, contract, temporary, or seasonal—have suffered the most from the first wave of the job cuts resulting from the crisis (ILO 2009). An ILO technical note on the gender effects of the crisis substantiates this claim. The note presents data for the sectors most severely affected by the crisis in the Philippines, Thailand, and Vietnam, and shows that women are paid lower wages and are concentrated in nonregular employment and unskilled or semiskilled jobs. Based on emerging trends under the current crisis and the experience of the 1997 Asian crisis, the note shows that these nonregular, low-paid, and unskilled or semiskilled workers are more likely to be the first to lose their jobs (ILO 2009). The crisis will also affect female entrepreneurs as they are also concentrated in the informal sector—particularly in the most vulnerable forms of informal (continued)