This month, the UN Resident Coordinator for the Fiji Multi-Country Office, Sanaka Samarasinha sat down with us to discuss Pacific informal economies. In this in-depth interview, he speaks about the unique challenges faced by the informal sector, and how we cannot hope to build back better from the pandemic without addressing the massive gaps within this often ‘invisible’ space.

1. Hello Mr. Samarasinha, thank you for making time for this interview. You were recently quoted by a Fijian journalist as saying that ‘People in the informal sector are the hardest hit by the COVID-19 pandemic.’
Could you expand on that sentence a little more for a person sitting, for example, in Australia or Europe – where the ‘hardest hit’ are typically the elderly or immunocompromised who are at risk of death?

Although Covid-19 related cases remain low in the Pacific, the socioeconomic impact in the region is high due to a large part of the population working in the informal sector. The Covid-19 pandemic hasn’t affected all sectors uniformly, therefore there is a stronger need to protect the most vulnerable among the populations – people at the margins of our society. Informal workers are among those most vulnerable to socio-economic disruptions and income loss, given their exclusion – in most cases – from national social protection coverage and other services which are available to those employed in the formal labour sector. High incidence of informality still pervades across the Pacific, with more than three in four workers within the tourism sector that are involved in informal jobs (ILO, 2020). These jobs are characterized by a lack of basic protection, including social protection coverage.

In addition, Small-Medium Enterprises [SME’s] which are a large part of many economic sectors such as tourism, are also informal (informal enterprises) and often lack sufficient access to credit and financial buffers, which makes it difficult for them to sustain their operations and keep their workers in employment during a crisis. Since economic diversification is already low in the Pacific SIDS, informal workers and informal SMEs aren’t able to pivot to other income generating sources relative to other countries. Additionally, informal workers are mostly low-skilled, which further exacerbates their challenges in generating livelihood resources.

The very fact that there is a large informal sector indicates that many individuals and businesses aren’t able to compete in a regular government-regulated market. The barriers of entry are high such as capital, education, skills, network, access to information. This therefore indicates the imperative to not just formalize the economy but to also create a more inclusive economy such that more people can participate and compete in a fair manner.

Finally, I would like to highlight that the informal sector is often characterized by highly volatile low-semi-skilled workers who have very limited ability to variegate into other occupations during layoffs as they would not have the right skillsets to change in a short-medium term without adequate skills training. Their ability to access funding available from Government’s superannuation and other forms of grant get further marginalized due to lack of access and awareness on how such schemes could be accessed.

2. Over the last year, you have shown just how significant you believe the socioeconomic dimension of COVID19 is for the Pacific. The UN in the Pacific undertook a large socioeconomic impact assessment in Fiji in late 2020, and later successfully received funding from the UN Secretary General’s office for the Pacific Informal Economies Recovery Project. Why did you personally believe it was so important for the UN to get involved?

One of the key principle objectives of UN’s programmatic interventions is to Leave No One Behind. It became obvious early on that the socio-economic impacts of COVID were being disproportionately felt by the historically disadvantaged, including the economically excluded. During disruptions like the current pandemic, informal workers not only remain excluded from formal social protection schemes that formal workers would be privy to, but they also lack financial reserves to sustain them throughout this disruption in their livelihoods. To survive they can only borrow, where possible, which puts them deeper in debt making them more vulnerable. In addition, they usually have limited access to information, access to finance and even access to national documents like birth certificates, citizenship cards and voter registration, which dis-enfranchises them even further.

Moreover, more women-led SMEs (85%) operate in the informal sector compared with men-owned SMEs (77%) across the Asia Pacific region. Women, people with disabilities, people below the poverty line, in the informal economy, who are already suffering from pre-existing vulnerabilities are most at risk of a reduction and loss of income, and typically lack access to social protection and safety nets. These factors cumulatively bring about high risk for food security, increased social tensions, and aggravated the state of mental health among informal workers.

Thanks to the technical support provided by the four implementing agencies involved in this project, (UNESCO, UNDP, ILO IFAD) this project aims to make business development services as accessible as possible to informal sector micro enterprises; with a particular focus to those who were made vulnerable by COVID-19. This is of vital importance to create financial stability and encourage economic recovery.

Coordinating with governments through the One UN approach, we provide integrated support, connecting analysis and responses across sectors, and building continuity between immediate measures and longer-term recovery plans.

3. We know that there is a massive gap between the informal sector and the formalized sector in terms of income stability and access to social safety nets. However, what we may often overlook are the vast discrepancies even within the informal economy. Can you talk to us about that?

The informal sector at large may consist of individuals/businesses who choose to work outside the ambit of the government and those who are forced to do so due to socio-economic factors such as low skills, poverty, less access to formal work, absence of government documentation, less capital etc. Therefore, our main focus is on the latter group - the informal workers who on account of their vulnerabilities do not have formal alternatives. Particularly those at the margins of society, that lack adequate and accurate access to information and without a voice, have to be protected first.

Statistics indicate that women led enterprises and women workers have experienced more job losses due to various factors including their increased burden of care at home. Moreover, more women-led SMEs operate in the informal sector compared with men-owned SMEs across the Asia Pacific region. Informal workers who are women, people with disabilities, people below the poverty line, are at a predominantly higher risk for food security and immediate livelihood.

Rural populace who do not have as much up to date information as people in towns and cities, not just limits their opportunities to seek help but may also put them at risk by people who may take advantage of their ignorance. Vulnerability manifests in many ways, and through the UN’s focus on informal workers, our hope is to provide them with access to information, choices and opportunities for socio-economic recovery.

The informal economy needs to be better studied to ensure data is gathered for further analysis to understand the full composition and complexities of this sector. Whilst on one hand, we may have Government policies targeting the very sector, without adequate and full-scale data on this sector, well informed policies and decision making are a leap in the dark. Lack of data brings us even more ambiguity on sector specific vulnerabilities and sector-based discrepancies.

In general, Fijian women from all socio-economic groups have little financial autonomy – female labour force participation in Fiji is approximately 38%, with a large concentration on informal employment

5. And of course, almost any issue that we consider in the Pacific, has a climate dimension, doesn’t it? Is that true of the informal working sector as well?

The relationship between the Pacific people and their environment has always been a very strong one - with a high dependency on the services that the local ecosystems provide, such as food and freshwater. The vital resources and ecosystems upon which Pacific islanders depend for their sustenance and livelihoods are under increasing pressure. Climate change is already having very real impacts on coastal and forest ecosystems, our oceans, fresh water supplies, biodiversity, and indeed all aspects of life – particularly on informal sector workers, as they are more vulnerable to erratic weather partners and extreme weather events affecting crops, fisheries and all other economic activities.

6. What are some solutions at the Government and country level?

The Secretary General has appealed to member states that recovery from the COVID-19 crisis must lead to a different economy - one where the most vulnerable are well protected through reinforced social protection systems. While the short term will focus on emergencies, there is an imperative to explore new economic sectors such as the blue economy and green economy to diversify and create more jobs.

Another solution can be found from forming better synergies with the private sector; by expanding partnerships with the private sector there is a chance to leverage their financial and technical prowess to expand the economy.
There is also a need to make financial packages more accessible to people in remote areas, as many do not have information about or access. There is a potential to leverage the power of technology through mobile phones to disseminate information as well as to provide access to financial support.

It is important to consider that formalization of the economy should happen in a phase wise approach such that businesses aren’t burdened with taxes immediately. Rather, the economy as a whole should be made more inclusive, with progressive taxation regimes, fiscal incentives, access to capital, financial training for SMEs and women-led enterprises so that weaker economic actors are better able to compete within the remit of the “formal economy”.

7. As we wrap up, I wanted to touch a little on your own personal experience of this pandemic. Prior to the national lockdown, you travelled quite extensively around Fiji. And in more recent weeks, you have been conducting ‘virtual visits’ with other member countries in the Pacific. What have you been observing?

Towards the end of 2020 and beginning of 2021, we undertook three joint UN-Government ventures to reach out to those who have been left behind, not in thoughts but more literally in terms of access to service delivery. As part of these missions, we visited the remote communities of Kadavu and Lau, where access to Government services is quite limited to non-existent. Collectively, close to 200 people representing 20 Government bodies, 13 UN entities, 8 Non-Government Organizations, 5 International Development Partners, 3 Private Sector partners and 4 Media partners visited 13 islands in Fiji. These joint missions allowed the UN, Government and development partners to experience and understand directly the challenges of being located in remote islands far away from the rest of the Fiji and the positive effect that we can have when we work together on our common goals. When we work together, we have the power to change lives.