The resilience of informal labour markets

Project report Firms and COVID-19

This project studies labour relations in informal economies where there are no written contracts, employment benefits, or protection for workers. ‘Informality’ is a defining characteristic of labour markets in most developing countries, making the study of employment relationships and related policy challenges especially difficult due to the paucity of administrative records (Ulyssea, 2020).

The COVID-19 pandemic has further accentuated the need for evidence on informal employment to guide policy action: Governments in many developing countries introduced restrictions on economic activity and mobility to curb the spread of the coronavirus. This was also true in Uganda, our study setting, where public transport and non-essential businesses were closed from early April to June 2020.

While firms were shut down, there were reports of workers leaving cities and traveling back to their home villages. Consequently, the aggregate social and economic impact of the lockdown and the path to recovery is
closely linked to the resilience of relationships and the extent of worker recall in the informal economy.