Impact of Global Recession on the Poor in the Informal Sector
The global recession has severe consequences for the poor working in the informal sector. Unlike formal employees, informal workers lack social security, job stability, and regular income. This makes them highly vulnerable during economic downturns.
1. Loss of Employment
During a recession, small businesses often shut down or reduce their workforce. Daily wage earners, street vendors, and domestic workers lose jobs instantly without any compensation.
2. Wage Cuts
Even if they retain jobs, many informal workers face significant pay cuts. With no legal contracts or protections, employers reduce wages or delay payments.
3. Increase in Poverty
Reduced earnings and job loss increase poverty and hunger among families dependent on informal work. Many are forced into debt to survive.
4. Lack of Access to Welfare
Most informal workers are not covered by government welfare schemes, leaving them without support in tough times.
5. Impact on Women and Children
Women in informal jobs face both economic and domestic stress. Children may drop out of school to support families.
Overall, recessions push the informal poor deeper into poverty, highlighting the need for inclusive social protection policies.