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BOX 2.1
Home-based work: Exploitation or flexible work arrangement?
As can be seen in figure 2B.1, home-based workers do earn less than other workers. Controlling for lower skill levels in the sector, home-based workers earn 22.8, 28.9, and 39.6 percent less than do workers outside the home in Mexico, Brazil, and Ecuador, respectively (Cunningham and Ramos 2001). But we cannot rule out that these lower wages are reflecting unobserved characteristics or the price of the flexibility that allows juggling other household responsibilities, not having to travel to the worksite, or other benefits that accrue to home care providers. This is partially borne out by the fact that home-based workers spend an average of 30 hours in productive activities each week, compared to more than 40 hours weekly among nonhome-based workers (Cunningham and Ramos 2001; Tomei 2000). This result is driven by women, especially those with young children and/ or spouses. In Brazil, Ecuador, and Mexico, home-based female workers spend one-third fewer hours on the job than do women who work outside the home. Home-based work may thus be a preferred work arrangement for those who have both home and market duties. Women with young children and/or who are married are more likely to engage in home-based work than are those without such household constraints, and less than half are household heads (Cunningham and Ramos 2001). Interviews with female home-based workers with children reveal that these women hope to work outside the home once their children have left home (Jelin, Mercado, and Wyczykier 2001).
A particular modality of the informal microfirm that has received increasing attention is home-based work. Numerous authors (Arriagada 1998; ILO 1995; Prugl and Tinker 1997; Tomei 2000; WIEGO 2000) tend to see the subcontracting out of these workers as a way for large firms to maintain flexibility, quality, and global profitability by both avoiding benefits and transferring the risks of demand volatility to workers. The absence of an internationally accepted definition of home-based work, among other problems, means that the reported shares of the workforce, ranging from 1.5 to 20.0 percent (see table 2B.1), are probably not comparable (Chen, Sebstad, and O’Connell 1999). Although some very famous firms, such as Italy’s Beneton, started as a cluster of home-based workers, it is questionable how important international links really are. As with informal microenterprises more generally, the fraction that reports working as contract workers, perhaps for large companies, rather than selling their work directly in the local market, is generally small (0.7 percent in Brazil, 1.2 percent in Ecuador, and 1.6 percent in Mexico). Yet the sector is often over 75 percent women and those whose personal characteristics make outside work inaccessible (Carr, Chen, and Tate 2000; Cunningham and Ramos 2001; ILO 1995; Tomei 2000). The concern is that employers may take advantage of the situation of those whose work options are limited to the home by subjecting home-based workers to lower remuneration and labor standards than workers who can compete in the labor market (Krawczyk 1993; WIEGO 2000). Despite suggestive anecdotal evidence, statistical studies have yet to document it as a widespread phenomenon.
FIGURE 2B.1
Hourly wage premium of outside home work to home-based work Percent
TABLE 2B.1
40
Home-based workers’ participation (percent)
35
Country
Algeria Australia Brazil Ecuador India Japan Mexico Philippines Peru United Kingdom United States
Estimated proportion
Proportion female
Year of estimate
3.3 2.9 5.5 17.3 2.5 1.6 4.4 23.0 10.5 2.3 7.53
97.0 — 74.8 73.6 — 93.5 64.4 — — 70.0 —
1989 1989 1999 1999 1981 1988 1999 1980s 1987 1981 1985
30 25 20 15 10 5 0 Brazil
Ecuador Men
Sources: Cunningham and Ramos 2001; ILO 1995. Note: — = not available.
Source: Cunningham and Ramos 2001.
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Mexico Women