HIV/AIDS is a recognized problem with a significant negative impact on companies (chapter 2). Many companies have now begun to screen appli-cants, offer awareness training and counseling, and provide limited forms of financial support. Some companies externalize their work forces through day contracts or subcontracting of services. However, these practices are less appropriate for skilled workers. It is not possible to select a worker at random to do a skilled job. Employers use an array of means to compensate for skills lost to HIV/AIDS. Some multinationals in South Africa reportedly hire three workers for each skilled position “to ensure that replacements are on hand when trained workers die.” (The Economist2001, as cited in Bloom and others 2002, p. 7). More typically, enterprises increasingly rely on train-ing functionally flexible workers (“multi-skilltrain-ing”) for two or more differ-ent, usually related, occupations. Functionally flexible workers are capable of carrying out several types of work involved in manufacturing (Aventin and Huard 2000, 173). Multi-skilling and team-working help alleviate the effects of HIV/AIDS by increasing and dispersing manual skills within and among teams, instead of concentrating them on individuals. In Zambia, the main reason for adopting these practices was not to compensate for AIDS but to increase efficiency and quality and to ensure enough skilled workers to support three-shift production (Grierson 2002, p. 44). Multi-skilling natu-rally involves increasing company investments in training and has implica-tions for the type of skills that should be offered by training instituimplica-tions.
Notes
1. See Biggs, Shah, and Srivastava 1995a; Dabalen, Nielsen, and Rosholm 2002; Grierson 2002. The DNR study is based on a series of background papers pre-pared by the authors for this review.
2. It is important to recognize the strengths and limitations of the RPED sur-veys. They were conducted in firms of varying size and ownership but included mainly anglophone countries (four of five) and all firms were in the manufacturing sector. The data pertain to the period from 6 to 10 years ago.
3. Such mechanisms include training workers inside and outside the firm;
conducting internal research and development; hiring expatriates; obtaining exter-nal access to foreign buyers and suppliers; interacting with other companies; and transferring technology from abroad through technical assistance contracts or licens-ing arrangements, foreign ownership, and exports (Biggs, Shah, and Srivastava 1995a, pp. 52, 207).
4. In the late 1950s, a formal apprenticeship system was introduced in Zim-babwe, but only for Europeans. It operated in seven fields. At independence, this system was opened to all Zimbabweans. Between 1,000 and 2,000 apprentices were registered annually by companies in the 1960s and 1970s, but at the time of the RPED survey, the number had declined substantially to the point where it was difficult to find an apprentice on the job in manufacturing. Most of the apprentices receiving training were working in parastatal organizations such as railways (Biggs, Shah, and Srivastava 1995a, p. 138).
6
Building Skills for the Informal Economy
Enterprises in the formal sector are active trainers, but in the informal sector among smaller enterprises—many operating at the subsistence level with unpaid family workers—skills development is more problematic. Filling this gap is important for poverty alleviation. Traditional apprenticeship is the most important source of train-ing for workers in the informal sector. This traintrain-ing is closely matched to market needs, cost-effective, and self-financing, but it tends to perpetuate existing technolo-gies. Improving awareness of and access to skills development in the informal sector remains a challenge for public intervention. A list of ideas for doing this is offered along with ideas for developing a training strategy for the informal sector.
Introduction
The stagnation of wage employment in the formal sector, highlighted in chapter 2, has forced large numbers of workers to pursue employment in the informal sector through self-employment. In most African countries, 30 percent of total employment is engaged off farms in the informal sector, two-thirds in urban areas and one-third in rural areas. Workers in the infor-mal agricultural sector account for about half of total employment. The informal sector is the safety valve for these economies and an increasingly important instrument for poverty alleviation, in view of the low productiv-ity and earnings in many micro and small enterprises.
Training by itself, however, is not sufficient to achieve this objective; other interventions are often crucial—for example credit, stable work environments, and access to markets and technology. Skills development is nevertheless an essential instrument in enabling an enterprise to generate income. Training is one element in a package of inputs for supporting the informal sector (Nell, Shapiro, and Grunwald 2002, pp. 14, 66). This chapter looks at skills develop-ment in the informal economy and addresses the following questions:
• What are the strengths and weaknesses of traditional apprenticeship training?
• What lessons can be drawn from recent efforts to support skills development in the informal economy?
• What are the elements of a training strategy for the informal economy?
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This chapter summarizes two works commissioned for this review by the ILO/ITC (Haan 2001 and Haan and Serriere 2002).
The importance of skills training for the informal sector is rooted in the need to enhance the productivity of informal sector activities and improve the quality of its products and services, in order to raise the incomes of those employed in the sector. Technical skills are crucial to diversifying product ranges and avoiding saturation of conventional informal sector markets.
They are also important for improving occupational safety and health.
Demand for Skills
Few informal sector operators see the need for, or value of, skills develop-ment for themselves or their workers. Instead, as identified by informal sec-tor operasec-tors in Tanzania, their main problems are limited access to capital, inadequate demand for their goods and services, lack of appropriate equip-ment, and difficulties in finding work sites. Lack of qualified workers was at the bottom of the list. Problems with the regulatory framework also con-strained informal sector operations; for example, business registration and licensing, bribes, inability to comply with the health act, and the require-ment to open an income tax account (Haan 2001, p. 72).
Lack of awareness of skills shortcomings and of opportunities to apply newly acquired skills stunt the demand (and the willingness to pay) for training (Ziderman 2003, p. 155). Despite low skill levels, fewer than half of the informal sector operators surveyed in Uganda indicated that they needed training. In Kenya, small producers did not deem training very important. Half said there was no need to train their workers. In Senegal, just over one-third of the informal entrepreneurs surveyed among leather workers indicated any skills problems, as compared with three-quarters who were experiencing marketing problems. However, there are excep-tions. In Uganda, demand for training was high among the 45,000 clients of microfinance institutions (Haan 2001, p. 51, 102).
If the informal sector is to continue to absorb more people and supply a modest but reasonable return on their labor, it is crucial to increase the skills of informal sector operators. Improved technical and business skills are of prime importance for enhancing the productivity of informal sector activi-ties as well as the quality of the goods and services produced. These improved skills will strengthen the informal sector’s ability to compete in the present situation of economic liberalization and globalization. Technical skills, together with other types of support (for example, access to credit, technology, markets, and information), are imperative. Consistent with information market failures and the perceived lack of need for skills, the majority of informal sector operators have no formal training. In Tanzania, only 2 percent of informal sector operators have acquired any skills through the formal training system. In Uganda, the comparable figure is 6 percent, and only 1.4 percent of Ghana’s working population has received any for-mal skills training. Operations in the inforfor-mal sector face difficulties in iden-tifying their training needs because of limited knowledge of recent technological developments in their trade.
What distinguishes skill requirements in the informal sector from formal wage employment is the breadth of tasks that need to be performed. Self-employed workers in the informal sector usually need to complete specific jobs by themselves, from beginning to end (Nell, Shapiro, and Grunwald 2002, p. 22). They must perform a full range of business functions, from ini-tial marketing surveys through cost and quality control, financing, and mar-keting. The main skill requirements fall into four categories, as shown in table 6.1. A major focus of training should be to enhance the creativity of the producers in finding solutions to their own problems, not just to provide standard programs (Nell, Shapiro, and Grunwald 2002, p. 22).
Training Supply
In relation to these training requirements, existing public training capacity is inadequate (see chapter 3). Training provided in Kenya reaches less than 7 percent of labor market entrants each year, not counting the backlog of those already in the labor force. The existing training capacity is devoted almost exclusively to pre-employment training for the wage economy.
Training is rarely given to the vast majority of the population already work-ing in the informal sector and in need of skills upgradwork-ing. Vocational train-ing centers offer a limited range of conventional trades and pay little or no attention to business skills. Choices are especially limited for girls and women (for example, tailoring and catering). To some extent NGOs have stepped in to fill the gap left by government. Their training is generally more relevant (more practical, linked with literacy and some business skills), but the courses tend to be lengthy, limited in range of trades, and lacking posttraining assistance.
Training for work in the informal sector is fundamentally different from that for work in the formal sector. It is characterized primarily by a close link with production, a distinct target group, full self-financing, and an unconventional delivery for immediate results. The dominant form is tradi-tional apprenticeship training.