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Working in the Informal Sector in Togo: Choice or Constraint?

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Abstract

The paper aims to determine whether working in the informal sector in Togo is a choice or a constraint. Two instrumental variables models (probit and 2SLS) were used to estimate the probability of being satisfied with informal employment. The data used come from the Survey on Transition to Working Life (ETVA) in Togo carried out by the ILO in 2014. The results show that working in the informal sector in Togo is more a constraint than a deliberate choice. In addition, salaried jobs in the informal sector are undesirable, and non-salaried jobs in this sector are chosen. Furthermore, several factors determine the satisfaction of young Togolese in informal employment, notably the salary, the geographical location of the company and the socio-demographic characteristics of the worker. Apart from these classic factors, job security, job flexibility, salary consistency and personal development are factors that also increase the likelihood of being satisfied with one's job in Togo. Thus, any policy targeting the Togolese informal sector should take into account the heterogeneity of this sector for better organisation and formalisation in order to reduce the degree of job insecurity and, in turn, fight against indecent jobs and poverty among young Togolese.

Résumé

L’objectif de cet article est de savoir si travailler dans le secteur informel au Togo est un choix ou une contrainte ? Deux modèles à variables instrumentales (probit et DMCO) sont utilisés pour calculer la probabilité d’être satisfait de son emploi. Les données proviennent de l’Enquête sur la Transition vers la Vie Active (ETVA) au Togo réalisé par le BIT en 2014. Des résultats, il ressort que travailler dans le secteur informel au Togo est plus une contrainte qu’un choix délibéré. Il ressort également que les emplois salariés du secteur informel sont de seconde main alors que les emplois non-salariés de ce secteur sont choisis. Par ailleurs, plusieurs facteurs déterminent la satisfaction des jeunes togolais dans l’emploi informel notamment le salaire, la situation géographique de l’entreprise et les caractéristiques sociodémographiques du travailleur. En dehors de ces facteurs classiques, la sécurité de l’emploi, la flexibilité de l’emploi, la consistance du salaire et le développement personnel sont des facteurs qui accroissent également la probabilité d’être satisfait de son emploi au Togo. Ainsi toute politique visant le secteur informel togolais devrait tenir compte de l’hétérogénéité de ce secteur pour une meilleure organisation et formalisation afin de réduire le degré de précarité des emplois et par ricochet lutter contre les emplois indécents et la pauvreté des jeunes togolais.

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Notes

  1. In Togo, the informal sector is defined as a set of unincorporated enterprises owned by households that produce at least some products for the market but have fewer than a specified number of employees and/or are not registered according to specific forms of national legislation; registration may refer, for example, to registration provided for by tax obligations or social security contributions or other administrative provisions. Like many other countries in the subregion, growth in Togo does not create significant formal employment. Dominant employment remains in the informal sector.

  2. According to the ILO (2019), the share of informal employment in total employment in Togo increased from 87% in 2000 to 92.8% in 2016, with a proportion of 90.3% for men and 95.2% for women. The informal sector contributed 35.9% to GDP in 2015.

  3. Private sector employment is not taken into account here because young people employed in the private sector represent only a small proportion (less than 2%).

  4. The capital, Lomé, has more infrastructure than the interior of the country, and most of the production is based there; more than 86% of the country’s electrical energy is consumed in Lomé (AfDB, 2015).

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Authors and Affiliations

  1. Department of Economics, Faculty of Economics and Management, FASEG, University of Lome, Lome, BP 1515, Togo

    Korem Ayira

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Appendix

Appendix

See Tables 4, 5, 6, and 7 and Figs. 1 and 2.

Table 4 Results with income not instrumented
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Table 5 Factors of satisfaction and dissatisfaction
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Fig. 1
figure 1

Distribution of the density of propensity scores in the two sectors before and after matching. Note that the left part shows the distribution of propensity scores before matching for the two sectors (formal and informal) and that the right part shows the distribution of propensity scores after matching in the two sectors of activity

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Fig. 2
figure 2

Diagnosis of box plots of propensity scores before pairing and after pairing. The left side shows the box plots of the data (propensity scores) before matching for the two sectors (formal and informal) while the right side shows the box plots of the formal and informal sectors after matching

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Table 6 Accuracy of the propensity score match for the mean of the covariates used
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Table 7 Impact of the formal sector on job satisfaction
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Ayira, K. Working in the Informal Sector in Togo: Choice or Constraint?. Eur J Dev Res 34, 2598–2623 (2022). https://doi.org/10.1057/s41287-021-00468-z

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