Many immigrant women from ethnic minorities participate in informal work because of a range of formal institutional barriers to formal employment. Anam Bashir shines a light on the reality of the labour market for immigrant women in London.
As a Pakistani student pursuing a graduate degree in London, I was intrigued to explore why Pakistani and Bangladeshi women record the highest unemployment rate in the UK’s formal labour market statistics. Exploratory research revealed that these statistics misrepresent these women’s participation in the workforce, as the majority of are made ‘invisible’ by homeworking, which contributes significantly to the informal or the so-called ‘hidden economy’.
I conducted qualitative research in Newham, one of the most ethnically diverse boroughs of London with a significant population of South Asians. Newham has undergone massive regeneration projects in the last five years, including the Westfield Shopping Centre and London Olympics. Despite these economic regeneration projects, the borough still records a high unemployment rate of 10 per cent overall, while Pakistani and Bangladeshi women hold the highest rate (13 per cent according to Ipsos Mori, 2016) of all categorised demographic groups. Interestingly, exploratory research has indicated the presence of informal work in the borough, which further confirmed complementary research studies on cash-in-hand informal work. To fill the information gap in existing research on informal participation of ethnic minority immigrant women, I adopted an intersectional gendered lens to explore the existence, rationales and mechanisms of informal self-employed Pakistani and Bangladeshi women in the borough. I then juxtaposed these findings with the perception and understanding of this sector among representatives of local employment support agencies.
The informal economy has emerged as an extensive and persistent feature of urban economies in advanced countries. This sector is mostly attractive to migrant workers and certain ethnic minorities people who access the labour market differently, whereby they experience deskilling and racism, which significantly impacts their formal labour market participation. These challenges are particularly acute for ethnic minority immigrant women, regarded as the most vulnerable group in the labour market.
The aim of the study was to get an in-depth understanding of the institutional factors that explain participation of ethnic minority immigrant women in informal work. I wanted to understand how policies can more effectively integrate them back into the formal labour market. This is not only crucial because of the revenue losses from uncollected taxes and additional costs of regulations, but also because of factors such as weakened trade unions and poor working conditions.
Formal Institutional forces
Research has revealed that ethnic minority immigrant women participate in informal work because of a range of formal institutional barriers to formal employment. Fiddling or ‘working while claiming’ was identified as an important factor that encourages informal participation. Interviewees rationalised their employment while claiming benefits as their only window of opportunity to supplement their income. There was a ‘need not greed’ component motivating women to participate in the informal work as the social security benefits were claimed to be inadequate. In addition, interviewees highlighted that the extensive formalisation process was a major deterrent to registering their work. While Newham has experienced welfare-to-work policies and regeneration initiatives in the past years, it appears not to have created the right kind of jobs. Contrastingly, representatives of local employment support agencies acknowledged the presence of informal work yet reported their resource and capacity constraints to tackle it. They viewed informal work a blessing in disguise. While the women interviewees stated the failure of formal employment support agencies was a significant factor driving informality. Interviewees shared their unsatisfactory experience of Job Centres Plus/Workplace centres stating that it lacks a holistic understanding of a jobseeker’s personalised needs. It was interesting to hear about the informal characteristics and exploitative nature of the formal jobs offered by the locality. The research findings signify a mismatch of skills, needs and aspirations of Pakistani and Bangladeshi women with the opportunities provided by statutory and voluntary support organisations.
Informal Institutional forces
While policy makers have underscored the formal institutional forces, the informal factors – namely, ethnic and socio-cultural forces – have remained off their radar. Employing a gendered lens revealed that South Asian women in the sample were more likely to engage in informal work to achieve an ideal ‘work/life balance’. The majority explained that their domestic responsibilities deterred them from seeking formal employment. Informal participation provided the best window of opportunity to utilise their skills to achieve economic returns while managing household chores. Women’s caring responsibilities as mothers emerged as a significant barrier to formal employment. Self-employment increasingly allowed greater flexibility in childcare arrangements, and these women expressed their hesitation in using childcare facilities. It was interesting to observe that their social networks served as an important information channel about labour market opportunities. However, these social networks comprised mostly of women of similar ethnicity and residential location, which confined them to narrow job search paths. Respondents reported that participation in the informal economy helped seize the opportunity of catering to the demand of ethnically specific products and services, which was either not fulfilled at all, or not offered in affordable prices and quality. Demand in these niche markets meant that a large majority of the women worked as caterers, beauticians or provided tailoring services.
Reducing the asymmetry
Drawing from institutional theory, the sample under study reveals that the formal laws and labour market at present is not designed to offer employment opportunities to ethnic minority immigrant women. The formal labour market fails to provide the right kind of jobs that align with these women’s socio-cultural expectations. Meanwhile, social security policies and excessive state regulations have created a strong disincentive to formalise home-based businesses. Contrastingly, the economic behaviour of the women participants was driven by informal institutional factors, namely: the socio-cultural and ethnic forces.
These women’s socio-cultural expectation of prioritising domestic and familial responsibilities restricts them to the vicinity of their home. While the failure of the formal labour market to provide ethnically specific products, provides them a niche market to be exploited. The resulting incongruence between formal and informal institutional forces creates opportunities in the informal economy. The presence of a solid collective identity between the group of immigrant women, formed by their strong ties with women of the same ethnicity and residential location, helped them recognise opportunities in the informal economy. Women in the sample group became cognizant of the possibility of catering to the needs of the members of their collective identity group, which could not be provided by the formal sector.
This set of conditions warrant policies to correct the institutional incongruence by achieving a symmetry between formal and informal institutions. This entails attempts to create an economic environment in which economic activities can be formalised with minimal regulatory impediments, tax system can be made more user-friendly, right kind of jobs can be created and service delivery can be improved by giving special consideration to ethnic minority immigrant women. However, improving the informal institutional forces is much more effective in managing informal economy. In order to achieve this, trust must be built in existing childcare services, advertising campaigns can be employed to improve awareness about the costs involved in working informally and benefits associated with formal employment. In addition, normative appeals and awareness sessions could go a long way in tackling informality.
This research was conducted as a part of the author’s Master thesis. Semi-structured interviews were conducted with a representative group of Pakistani and Bangladeshi women working in home-based businesses in Newham. Interviews were also conducted with representatives of Newham Workplace, Community Links and local employment support agencies (BS Social Care & Team Support).
This article was originally posted on the www.runnymedetrust.org, and is republished with the permission of the author and Runnymeade. This article gives the views of the author, and not the position of the South Asia @ LSE blog, nor of the London School of Economics. Please read our comments policy before posting.
About The Author
Anam Bashir is an LSE alumna who now works in research and policy for the UN’s Agency for Migration in Geneva. Her Master’s research was on the reality of the labour market for immigrant women in London. She tweets @anambashir19.