Social Science Review

 

Information based economy, Economic Restructuring, Employment vulnerability and the Emergence of New Urban Marginality in Gopalganj, Bangladesh   Irin Pervin1.*,Shimon Rahman1,Firoz All Mozahid2,Md. Rasel Ud Jaman2   1Assistant Professor, Department of Sociology, Gopalganj Science and Technology University, Gopalganj-8100, Bangladesh 2Department of Sociology, Bangladesh University.

Keywords		Abstract
Informal sector, economic restructuring, illegal activities.		Economy is the base for development and the pattern of economy determines the nature of growth and overall developmental scenario of a country. This economy (informal sector) includes diverse set of economic activities (street vending, open space food court), enterprises jobs, and workers that are not regulated or protected by the state. The concept actually applied to self-employment in small unregistered enterprises. Our population is increasing drastically as well over the year’s education rate is also increasing but government cannot afford formal sector employment for all. In this context a huge number of informal employment is taking place in recent years for example increasing number of beauty parlor, restaurants, street vendors, food court etc. As consequences planned urbanization become threatened, illegal activities in various social institutions is increasing at the same time local leaders are taking extra advantage from the informal workers. Moreover, though the informal sector is not acknowledged by the government and protected by the state law the persons those are involved in this sector always faced eviction, abduction of goods or even permanent displacement from their business location. As a thriving area Gopalgonj sadar also practicing the informal economic trend besides its mainstream economy as like as Dhaka city. In this study the researcher intends to explore the present condition of informal development of a suburban city and at the same time aimed to explain the recent changes occurring in the informal sector. Following the process of economic restructuring of the most prominent urbanist John Friedman’s World city formation (1982) this study intends to identify the informal sectors current situation and the recent changes occurring in this sector and how this changes shapes the study area in a new structure.

 

Introduction

Since its first appearance in the early 1970s the term informal sector has become so popular that now a day it is used with different meanings for different purposes. The fifteenth International conference of labor statistician (ICLS) held in January 1993 defines informal sector as follows- the informal sector may be broadly characterized as consisting of units engaged in the production of goods or services with the primary objective of generating employment and income to the person concerned. This unit typically operate at a low level of organization, with little or no division between labor and capital as factors of production and a small scale labor relation where the existence is mainly based on casual employment, kinship or personal or social relations rather than contractual agreements with formal guarantees. Informal sector was first discovered in the early 1970s and this sector refer to black market, shadow economy, illegal economy, unregistered economy, underground economy, informal economy, and so on. Nevertheless, all these definitions are used to refer to unregistered or unreported activities within the economy. This sector appears to be extensive in both developed and developing countries, and is estimated to contribution amount equal to between 16 and 75 percent of current gross domestic product in many third world countries. Over time the definition of informal sector has evolved. The sector can be defined through its activities in urban and rural economies: micro and small scale economic activities in crafts, trade, restaurants, or open food stalls, beauty parlor, fashion house, etc. Often these activities are carried out from temporary structures, sometimes even pavements and other open spaces.

 

Research questions:

1. What is the present condition of the informal sector in Gopalganj Sadar?
2. What are the changes taking place in the informal sector in recent years?
3. What are the possible policy recommendations to improve and organize the sector more effectively?

 

Objectives:

1. To understand the present condition of the informal sector.
2. To find out the changes in the informal sector through the years.
3. To suggest some policy recommendations for the further development of the informal sector in Gopalganj Sadar.

 

World city Formation and Economic Restructuring

One of the great urbanist of the late 20th century John Friedman’s most important contributions to urban regional studies which include urban planning and economic development. Friedman’s and Wolff’s two most remarkable urbanists given a theoretical explanation consists of urban economy and city formation.

“World city formation (1982)’ which represented a new breed of global command and control firms within the new international division of labor associated with post 1970s capitalism and economic development.’ Friedman’s and Wolff’s ‘Theory of World city formation” address the global nature of the economy that the spatial articulation and markets through a global network of cities. Especially it is the principal urban region in this network, dominant the hierarchy in which most of the world’s active capital is concentrated. They identified a hidden but an influential sector for economic development mainly in the 3rd world countries that is the informal sector. This theory categorizes six cluster in economy creating different income generating activities mostly in urban region. Friedman and Goetz Wolff classify six categories of employment.

1. The primary cluster of high level business services: in this category firstly come the large number of professionals. Their activities are management, banking and finance, legal services, accounting, technical consulting, telecommunications and computing, international transportation, research and higher education.
2. Secondary cluster of employment defined as essentially serving the first which is smaller number of professionals: real estate, construction activities, hotel services, restaurants, luxury shopping, entertainment, private police and domestic services etc. Most of the jobs in this cluster are permanent and well paid in nature.
3. The tertiary cluster of service employment centers of international tourism.
4. Industry services: in this sector industry serves the specific needs of some areas. Large influx of cheap labor is a significant issue in this sector which helps for profit maximization and on the other hand lower production cost.
5. Government services: This sector is mainly concerned about the maintenance and reproduction of the world city and produces some items of collective consumption such as provision of public housing, basic utilities, transportation service, and maintenance of public order, education, business regulation, urban parks, sanitation and public welfare for the destitute people.
6. The largest cluster is the Informal sector: This starts with the floating or street economy which ranges casual services to modest artisans. Due to various types of opportunity people are entering in this sector rapidly. The opportunities are like this require little or no overhead to start, first job opportunity for the new comer in the city from rural area or temporarily unemployed people, in this sector people can work independently and freely, there is no government regulations etc.

Major characteristics of the informal sector:

The main Characteristics of the informal sector are given below:

1. Most informal activities require little or no overhead to start.
2. Working hour is long.
3. Return or profit in this sector is low and uncertain.
4. Offer no security to the worker.
5. It is the first employment opportunity for the newcomer in the city.
6. It is also an opportunity of income for temporarily unemployed people.
7. Informal sector is generally not recognized or regularized by the government rules.
8. Activities are undertaken generally for self-employment or to earn additional income.

Research methods

This study covers the area of Gopalganj sadar. Researcher selected the field for conducting this research beyond the influence of personal interests and emphasized the societal needs, as the findings of the study could be more applicable in order to conduct the research, study areas are selected purposively. Apart from that, as a sub urban town Gopalganj did not have a very long history of rapid growth of informal employment. But now a day the town is going through a rapid growth of informal sector. The study covers street vendors, beauty parlor, restaurant, fashion house etc. Though the actual number of people involved in this sector is unknown (everyday people are joining this sector either part-time or full time basis), the study involves non probability sampling techniques to procure a suitable sample from the target population. Though there was not a defined target population, the researcher is unable to carry out a research using probability sampling technique. Due to the shortage of necessary time and budget the researcher considered purposive sampling technique in selecting respondents from the study site. The total number of respondents is one hundred and ten persons who were selected broadly purposively for the interview survey. For securing the best acceptance of research findings the researcher used mix method of data collection. Researcher used questionnaire for survey to collect quantitative data and in-depth interview for qualitative part. Researcher employed qualitative methods in an attempt to draw out multiple meanings and explanations from the participants through their individual experiences rather than a single and objective explanation. With a view to choose a representative sample, purposive sampling method is applied for this research (for selecting both male and female respondents). For collecting the necessary information, a pretested semi-structured questionnaire with a series of close and open-ended questions has been used. For analyzing quantitative data popular SPSS software has been used.

Limitations of the study

1. For finding the actual causes and effects of the topic, sufficient time was a crucial factor because it is such an important work.
2. Funding is another problem. All the expenses were managed by the researcher and that impaired in some space.
3. Most of the respondents were busy with themselves, so the researcher had to motivate them to take part in the interview.
4. Due to time shortage, random sampling was not possible in this research work.
5. In some cases, respondents failed to answer exactly what they were asked. As a result, it may be so that reliability was not attained in those cases at the expected level.

In practice, every study is more or less be set with the limitations in regard to timing and staffing. Keeping all these things in mind and considering the limitations in the case of provisioning time and manpower.

 

Findings of the study

For attaining greater acceptance of data the researcher took both male (84%) and female (16%) respondents. As mentioned by John Friedman most of the respondents do not have previous experience of their current occupation and the number is 44%. But most of the respondents have previous experience that is 56%. This survey shows that the majority part of the respondents is involve in this sector for one to five years and the amount of this respondents are (15%) on the contrary 10% respondents claim that their involvement with this profession is bellow one year. On the other hand, 8% respondents mention that they are in this sector for more than 15 years.

In informal sector there are various types of customers. This study shows that regular customers in this sector are mainly people who don’t have enough income or dependent on their parents given pocket money. Though it is a densely populated area, as I previously mentioned, after the establishment of university, two public medical colleges, textile university and so on, the number of population in this locality increased tremendously. As a result, mostly students of university and medical colleges are the regular customer of informal workers. Without that sometimes people from other profession purchase from them.

 

Current occupation of the respondents

The study reveals that among the respondents 10% are involved with restaurant business. The portion of street vendors are nearly 18% and they are the highest. Moreover, there are some respondents who are involved with beauty parlor and fashion house business. It can be mentioned that in the recent year’s beauty parlor, fashion house and restaurant business secured the highest position in the informal sector in Gopalganj town.

 

Problem faced by the informal workers

Among the respondents 44% mentioned that they do not face any problem in business and 56% argued that sometimes they faced problem. Sometimes municipal authority, or the law enforcing agency, or people from dc office evict them. Always they feel hesitation for displacement, eviction, abduction of goods, looting, or customer without payment. Most of the time they are the local leaders.

 

Changes observed in the recent years by the respondents

In this research 85% respondents mentioned cultural transformation as the cause of recent change in informal sector. Most of them claim that now people are involved with multiple cultural practices. Due to satellite channel diverse cultural practices influenced their taste and choice of goods. Moreover, not only domestic goods but also goods from global market secure their place on their demand list. As a result, their ultimate demand is rising day by day. On the other hand, 15% claim that the reason behind change is socio-economic development and modernization at the same time.

 

Discussion
Difficulties faced by the informal sector business entrepreneurs:

Bangladesh is a developing country. Like all other developing countries informal sector plays an important role in the economy and income generation. In Bangladesh, informal sector covers a wide range of economic activities producing goods and services which contribute much to GDP. Though informal sector activities are embodied in Bangladesh yet much attempt has not been taken to quantify the magnitude and incidence of informal activities. Informal sector activities in Bangladesh are not adequately defined but this field are taking place using mostly indigenous raw materials, small capital with small setup. As a developing part of Bangladesh, Gopalganj sadar upozila also has experience of informal sector development. But there are various types of difficulties and shortage faced by the entrepreneur of informal sector business. In this research the researcher mainly deals with street vendors, beauty parlor worker, fashion house worker, restaurant owner etc. More or less all type of business persons face problems involves with insufficient structural capacity. Almost all types’ people who are engage in this sector share one thing which is common: the lack of formal labor and social protection. Work in the informal economy is often characterized by small or undefined workplaces, unsafe and unhealthy working conditions, low levels of skilled labor and productivity, low or irregular incomes, long working hours and lack of access to information, markets, finance, capital, and technology. Moreover, there are also shortage of trained and skilled man power to serve in this sector. Lack of education is a great obstacle for people engaged in informal sector to graduate themselves from this sector to formal sector employment. This situation also creates the barrier to come out of the shrinking poverty line even though the sector commonly regarded for its positive role in upward mobility in terms of income generation, improvement of living standard and as well as economic development in the existing society. Among the informal sector in Gopalganj sadar the number of restaurant business is higher than that if other informal business. A great number of the restaurant owner claims that they face problem due to in availability of raw materials, sometimes they have to pay chanda to the local leaders, or without payment consumption. Though it is a rising district after the establishment of university, medical college, eye hospital and many other government and private organizations, gathering of people is increasing every year in this district for this reason the opportunity of informal sector is also increasing. The restaurant owner has to pay extra amount besides the regular payment in times of occasion. In times of unrest in the university the owners of the informal sector business (mainly whose shops are beside the university area) have to count material loss. Street vendors claim that though they don’t have permanent stall the authority sometimes displace them from their place and for getting permanent place they have to pay daily basis amount and it varies from place to place. Sometimes political leaders harass beauty parlor workers. Moreover, the local business man face less difficulties than the outsider business man. The situation in Gopalganj sadar illustrates the many folds of the informal sector, an indicator of the development and precursor of the potential threat and regular giving money (chanda) to the local mastans might collapse the economic development and progress.

 

Changes faced in recent years by the respondents:

Various types of changes are taking place in the recent years in informal sector. People always want variation and for the influence of globalization and other impact factor the choice and demand of the people mainly the young generation is changing rapidly. They love to wear trendy dress, western and other fast food items, interested in fashion and beautification. Moreover, they enjoy outing for this reason many types of entertainment business in increasing. All of the development causes social development. Now life style pattern is changing. On the other hand, competition in the informal sector business is increasing very rapidly. People find the best option to fulfill their needs. At a time, it was not so common that female child contributes to the family income but now a day many females are contributing to their family income. As a result, total family income is increasing and they are trying to improve their living pattern. In last 5 years the most rising informal sector business is restaurant business and it has many types. A new trend is developing among the youth that is party to celebrate birthday and various types of occasion. In this area new settlers are rising in terms of informal business settlement.

 

Policy recommendations for further development of informal sector:

There are various types of suggestions for the development of informal sector given by the respondents. They are as follows:

1. Firstly, development of new and broader consumer class.
2. Secondly, training program is needed to produce trained and efficient working class.
3. Thirdly, quality service should be maintained in the informal sector.
4. Easy and low interest rate loan facility should be provided to the informal sector workers.
5. Shop rent needs to decrease.
6. The so-called party–anti-party system should be banned for the proper development of informal sector.
7. Stable market is needed for swift flow of raw materials in the local market.
8. Development of transportation system all over the country is needed.
9. The business person in informal sector wants security of their business.
10. Improved working environment is also needed.
11. Moreover, education (mostly technological literacy) is necessary for the worker.
12. Above all, planned urbanization and market facility is essential for the development of this potential sector for economic development.

Case Study: 1
Abdur Rahim (75) is an owner of renowned restaurant at Gopalganj sadar. He is a successful businessman and he is doing this business from the past 45 years and observed a lots of structural change mainly in the last 6 to 10 years. When researcher asked him why this change occurred? He mentioned basically some institutions such as establishment of the university, Medical College, hospitals, different governmental organizations and institutions are mainly responsible for Structural change and creating numerous income generating activities mostly such as restaurants, food court, coffee shop, fashion house etc. He said that when he started his business only two or three hotels were there, but now this number is increasing at a greater level. He also pointed out that not only the local unemployed people, but also a massive amount of outsider doing this business in this locality.

Case study: 2
Mr. jobbar is a 65 years old man doing cloth and fashion house business in Gopalganj sador. He mentioned it is his family business and three generations of his family is involved with it. As a result, he saw everything very closely that is various types of ups and downs in this sector. At first there was very little competition in the market. Most of the people prefer to do governmental job and want to get a secured life. But through the process of time population is increasing and competition over governmental job reached its highest peak and various types of other business that are mainly non-governmental and involved with personal initiatives that is informal sector job becomes very popular among the unemployed youth mainly. Moreover, people becomes fashion and beauty conscious that was not so common in the past. Above all economic solvency is another important thing for being conscious. For all of this reason the domain of informal sector business is getting larger. But in Gopalganj there are shortage of proper structural facility and planned urbanization. Business environment is improving day by day. One day the informal sector development becomes so vital for the country’s economic development.

 

Conclusion

In the third world developing countries informal sector is very much influential for economic development. Besides the formal sector economic development informal sector is developing in a rapid scale. Now-a-days mostly young people, migrated people from rural area, female, or temporarily unemployed people are joining in this work force. This sector is out of government control and are rising like mushroom in the urban and sub urban areas. As a sub urban area informal economy is rising very rapidly in Gopalganj sadar upozila because a huge gathering of people in this area after the new structural development. Various types of job opportunity are knocking at the door of the unemployed people or students. As an example hotel management, sells person, travel and tourism guide, internet service, e-commerce business, outsourcing, online business, digital marketing, and so on. Though it is the initial stage of informal sector development in this area there are some shortage of facilities for fuller development in this sector such as in availability of necessary raw materials, structural capacity is not sufficient, lack of skilled persons to serve in this sector, influence of local leaders etc. This study is an attempt to explore the nexus between informal sector on employment and economic growth especially in Gopalganj sadar upazila.

 

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