The South African Informal Economy

The literature and key policy debates on the South African informal economy are reviewed through the lens of Chen’s taxonomy of informal economy debates into legalist, dualist, voluntarist, and structuralist schools of thought. Previous insights are supplemented with an empirical analysis of the South African informal economy, using Statistics South Africa’s Quarterly Labour Force Surveys. Together these analyses suggest that the post-apartheid informal economy is characterized by a large degree of heterogeneity by status in employment and sectoral distribution and is highly gendered in its segmentation. Further, earnings are low for all but a few groups of informal workers. Much of the existing evidence also suggests that, somewhat in contrast to conventional economic theory, the South African informal economy does not absorb newcomers easily, and particularly not in times of crisis. The chapter concludes by reflecting on the primary thrust of post-apartheid policy and by examining South Africa’s response to the global call to promote the formalization of the informal economy.