Debates

Why does the informal economy not generate employment? Shouldn't policy empower the informal economy?

It is well known that the informal sector in South Africa is relatively small. Some years ago, the informal sector was a hot topic in economic policy discussions. Later, the related concept of the second economy was in vogue. Recently both these topics seem to have disappeared from the economic policy radar. In both the New Growth Path and the National Development Plan the informal economy is hardly mentioned, and most attention is focused on formal sector growth (albeit including SMMEs as an important job-creating sector in the NDP). The question is why the informal sector still is not growing much, and why the obstacles to informal sector employment and self-employment are not tackled by appropriate policies?