In 2020, more than 2 billion workers earned their living in the informal economy worldwide. Informal employment represents 90% of total employment in low-income countries and 67% in middle-income countries. The share of informal employment in Cambodia is 93.1%. When COVID-19 hit the country in February 2020, UNDP Accelerator Labs in Cambodia in collaboration with the country Economic Team rolled out tracking surveys to assess the current and future socioeconomic impacts of the pandemic on 1,400 informal workers (48% female) and 500 Micro, Small and Medium enterprises (MSMEs) across the country. The surveys were carried out by Kantar Cambodia, with findings from this study featured in the Data for Cambodia Dashboards developed by UNDP Cambodia Accelerator Lab. The insights garnered from these dashboards helped citizens, policymakers, decision-makers, NGOs, CBOs and CSOs understand the varied and far-reaching effects of the pandemic on informal workers, MSMEs and any intersections between those groups.
The Life of Informal Workers
We met an informal worker who is 24 years old and lives in Siem Reap (name withheld to protect privacy). She is currently unemployed. Prior to COVID-19, she was employed at a massage parlor earning on average US$100 per month. She worked from 1pm to 9pm each day, 6 days per week. We heard how she lives with twelve family members, with only four members earning an income. Their combined salary is used for household expenses and to repay pre-existing debts for household renovations and daily groceries. Before COVID-19, things were going well for this family as there were many earners who could cover the family’s expenses.
Since the pandemic began last year, three of the twelve family members have migrated to Sihanoukville to work as construction workers. The massage parlor where our interview participant worked closed due to COVID-19 restrictions. She was then hired as a cleaner for a restaurant, but it also had to close and then she sought employment as a chef assistant at another restaurant. As a chef assistant, she now earnt US$250 per month. However, the hours were long, and she worked 7 days per week with no days off. Unfortunately, the last restaurant where she worked had to close late February 2021 due to the community outbreak in Phnom Penh.
Currently, this informal worker is unemployed and none of her family members are working except for her mother’s family busines selling groceries at home, earning a revenue on average US$20 per day to sustain the entire family. Due to limited income, her family has reduced expenditure on food for their own consumption. The family received financial support from the Government IDPoor program before the pandemic, which was used primarily for medical expenses. During the COVID-19 period, the family now receive $75 per month from the IDPoor program, which now also used for basic essentials. She does not expect her family’s situation to improve anytime soon. Her biggest concern is that there will be no money to repay the debts owed.
This story mirrors many other informal workers’ life in Cambodia. By January 2021, a year after the first case of COVID-19 in Cambodia, our panel data revealed that approximately one in five informal workers remained unemployed (18%), marking a 4% increase compared to October 2020 (14%). Women like an informal worker whom we met continue to face this unemployment status more acutely (22%) than men (13%) despite attempts to find employment.
While the unemployment rate consistently rose, the average weekly income among informal workers has seen a sharp increase (60%) in January 2021 (US$86) compared to October 2020 (US$54). However, the increase in the average weekly income remains less than their income prior to COVID-19 (US$112). The dropped of their income made informal workers’ life harder as highlighted in the above story. Our tracking surveys showed that by January 2021 three in five informal workers were unable to meet their daily needs (63%), and four in five reduced their food expenditure (80%).
For informal workers who are in debt financial issues become more acute as they continue to borrow more, which indicates a lack of support for borrowers to alleviate their current levels of debt or inability to repay the previous debts. Roughly three in ten informal workers borrowed money to purchase basic goods like food (28%). The woman we met was fortunate in that she did not have to borrow for food consumption as her family provided for her. Yet, the general sentiment among informal workers is one of pessimism and anguish. Approximately, two in five individuals foresee their life will get worse over the next 6 months (17% compared to 10% in October 2020).
One piece of good news is it is clear that cash transfers are having much needed positive impacts for families at or below the poverty line. The social and economic impacts of the pandemic are not prevented but are certainly made significantly less severe. In impact evaluation work currently nearing release, we see that cash transfers are not only helping families meet daily needs, but also providing a valuable boost to economic demand through local markets, where it is needed most.
A resurgence in COVID-19 cases throughout Cambodia in February-June 2021, continues to hinder the economic and social opportunities of informal workers. UNDP Accelerator Labs in Cambodia will continue to track the socioeconomic status of informal workers throughout 2021 to raise awareness, inform policy making and consult with decision makers on appropriate measures to mitigate the impacts on informal workers throughout Cambodia. UNDP is also exploring further opportunities with ILO to promote decent work and social protection for people in informal economy.
Written by Dany Vinh, Head of Experimentation, UNDP Accelerator Labs, Cambodia