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| Municipalities in a predicament |
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Municipalities in countries with periphery economies, which are national economies that develop little new technologies by their own, are in a predicament. As the technology is not produced in the country itself, it has to be imported and rationalizes further labour force. The municipalities are obliged to transact high investments to offer favourable infrastructural conditions for medium-sized and big enterprises, so that they can create assessable employments.
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That way the state increases its tax revenues, but boosts at the same time the migration into the cities. The people then even surge into the cities, when there is little chance to find formal occupation. The earnings in the city is, even pursuing informal activities, much higher than in the economically underdeveloped rural areas because of the elevated cash flow caused by the large number of formal employees (for prosperous states this approach can be regarded especially for immigrants, see >>> global informality > forms of informality). |
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The city hall in Rio de Janeiro |
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As neither the state has funds to maintain the people in the less developed regions nor support the unemployed nor the big enterprises create roughly enough employment, informal work represents the only survival strategy. |
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| Long queue in front of the job centre hoping for a formal employment |
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Mainly the urban informal activities offer services and stand by that way in direct competition to formal small-scale entrepreneurs. Formality guarantees advantages as legal security, but also induces much higher costs. The informal sector neither pays taxes nor other duties and can offer his services for lower prices. This leads to bankruptcy of many formal firms or they make arrangements with the informal sector, respectively get informal by themselves. Thereby the state and the municipalities lose strongly needed revenues for investments and social security funds.
At the same time, in unions organized enterprises apply pressure on politics and administration, in order that they forbid or at least reduce the informal activities. The municipalities are forced to act drastically against informal labourers to protect small firms and with that an important revenue source, although neither they nor the by them supported enterprises can offer the people much alternatives.
In addition, solutions for these problems are impeded by corruption and lobbyism (see >>> global informality > Causes for informality). |
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Long term measures for reduction of informality
To prevent that enterprises file for bankruptcy or adapt as less informal structures as possible, and to encourage the founding of new formal firms or moving in of established enterprises, the municipalities try to facilitate laws and regulations and reduce taxes and ancillary labour costs. Furthermore already established informal enterprises shall be stimulated to transform to formal ones by incentives and tax benefits. |
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Order of public space and legitimation of parts of the informal sector
Informal activities occurring in the public space are regulated by the authorities to give the state the possibility of control and influence. As many street hawkers as possible, for whom there is no formal employment, receive a governmental legitimation for their informal business. By paying a small licensing fee and accepting obligations, determinate locations are assigned to them where they can pursue their business legally.
Hence the space for formal and informal commerce can be separated. That way the municipalities not only accommodate the formal enterprises, which are freed from direct competitors in front of their shops. They also increase the controlling capacity towards them. |
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Popular markets and licensing
These form of defined locations for the informal trade are the fixed popular markets (mercados populares, or popularly known as “camelôdromos”, what means “street hawker arena”). The biggest of these camelôdromos is located on the Uruguaina square, but there are also fixed informal markets behind the central station and in any other bigger city district. These markets are relatively good structured, so that at most of the stands you can even pay with credit card. The merchants there are represented by associations which stand in discourse with the municipality.
Furthermore there are licensed lines of stands in several determinate streets and squares like at the Largo São Francisco de Paula. The stands at the beaches are all licensed, too. The municipality is trying to achieve this even with the travelling hawkers there.
In addition to the fixed locations, there are on certain weekdays special-interest markets as the tourist markets at the Copacabana beach promenade or on the General Osório square in Ipanema. On special events, which take place on manageable locations, the municipality raffles extra-licenses for street hawkers, e.g. in the streets around the famous Sambódromo carnival stadium, during the carnival parades.
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Up: The Mercado Popular (popular market) Uruguaiana in downtown Rio de Janeiros
Down: Licensed stands at the Largo São Francisco de Paula |
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Training for street hawkers, licensed sellers around the carnival parade, teaching the hygienic exposure of food
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Short term measures for the containment of informal activities
The licensing measures better the working conditions and earnings of many street hawkers. Nevertheless the number of protected and lucrative points of sales is not sufficient for the mass of informal labour force, who earns the keep as street hawker. Many also do not want to be replaced by the administration to less profitable locations, mostly to districts in the suburbs, even if this legalises their work. There is also the problem that many worthwhile locations are purchased by formal entrepreneurs with the help of informal straw men in law. There informal employees of these entrepreneurs offer products of their shops for cheaper prices. Therewith they reduce on one hand direct competition; on the other hand they have a turnover that can be evaded from tax (see >>> Illegality > Linkage of the formal and informal commerce).
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Repression
Street hawkers without license or at unauthorized locations are displaced in a cat-an-mouse game by municipal security forces, the so called guarda municpal. These unlicensed hawkers sell their ware “on the run” (“na correria”), either on vendor’s trays (tabuleiro), on awnings (paraqueda=parachute) or on small tables (tripê) so that they can take quickly refuge when the guards appear (see >>> the ware > Sellers of illegal goods, not-licensed street hawkers and homeless). As soon as the guarda municpal went away the street hawkers reinstall their stands. Sometimes the guarda municipal confiscates stands and wares of the hawkers. Then the situation frequently escalates to heavy confrontations and small street battles.
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| Public security forces guarda municipal in full gear |
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