Media reports on the economic meltdown have mainly concentrated on the impact of the crisis on the rich nations, with little concern for the mass of the population living in what used to be called the Third World. The current view seems to be that the setbacks in these ‘emerging economies’ may be less severe than expected. China’s and India’s high growth rates have slackened, but the predicted slump has not materialized. This line of thought, however, analyses only the effects of the crisis on countries as a whole, masking its differential impact across social classes. If one considers income distribution, and not just macro-calculations of gdp, the global downturn has taken a disproportionately higher toll on the most vulnerable sectors: the huge armies of the poorly paid, under-educated, resourceless workers that constitute the overcrowded lower depths of the world economy.

To the extent that these many hundreds of millions are incorporated into the production process it is as informal labour, characterized by casualized and fluctuating employment and piece-rates, whether working at home, in sweatshops, or on their own account in the open air; and in the absence of any contractual or labour rights, or collective organization. In a haphazard fashion, still little understood, work of this nature has come to predominate within the global labour force at large. The International Labour Organization estimates that informal workers comprise over half the workforce in Latin America, over 70 per cent in Sub-Saharan Africa and over 80 per cent in India; an Indian government report suggests a figure of more than 90 per cent.footnote¹ Cut loose from their original social moorings, the majority remain stuck in the vast shanty towns ringing city outskirts across the global South.

Recently, however, the life of street hawkers in Cairo, tortilla vendors in Mexico City, rickshaw drivers in Calcutta or scrap mongers in Jakarta has been cast in a much rosier light. The informal sector, according to the Wall Street Journal, is ‘one of the last safe havens in a darkening financial climate’ and ‘a critical safety net as the economic crisis spreads’.footnote² Thanks to these jobs, former imf Chief Economist Simon Johnson is quoted as saying, ‘the situation in desperately poor countries isn’t as bad as you’d think’. On this view, an admirable spirit of self-reliance enables people to survive in the underground circuits of the economy, unencumbered by the tax and benefit systems of the ‘formal sector’. These streetwise operators are able to get by without expensive social provisions or unemployment benefit. World Bank economist W. F. Maloney assures the wsj that the informal sector ‘will absorb a lot of people and offer them a source of income’ over the next year.

The wsj draws its examples from Ahmedabad, the former mill city in Gujarat where I conducted fieldwork in the 1990s. Here, in the Manek Chowk market—‘a row of derelict stalls’, where ‘vendors peddle everything from beans to brass pots as monkeys scramble overhead’—Surajben ‘Babubhai’ Patni sells tomatoes, corn and nuts from a makeshift shelter: ‘She makes as much as 250 rupees a day, or about $5, but it’s enough to feed her household of nine, including her son, who recently lost his job as a diamond polisher.’ Enough: really? Five dollars for nine people is less than half the amount the World Bank sets as the benchmark above extreme poverty: one dollar per capita per day. Landless households in villages to the south of Ahmedabad have to make do with even less than that—on the days they manage to find work.footnote³

Earlier this year I returned to the former mill districts of the city to see how the economic crisis was affecting people there. By 2000, these former working-class neighbourhoods had already degenerated into pauperized quarters. But the situation has deteriorated markedly even since then. Take the condition of the garbage pickers—all of them women, since this is not considered to be man’s work. They are now paid half what they used to get for the harvest of paper, rags and plastic gleaned from the waste dumps on their daily rounds. To make up the loss, they now begin their work at 3 am instead of at 5 am, bringing along their children to provide more hands. The Self-Employed Women’s Association, which organizes informal-sector workers in the city, reports that ‘incomes have declined, days of work decreased, prices have fallen and livelihoods disappeared’.footnote⁴ Their recent newsletter presents the following table, testifying to the crash in prices for the ‘goods’ collected on the dumps.

A sewa activist based in Ahmedabad reports on the anguish she met when visiting local members. One of these, Ranjanben Ashokbhai Parmar, started to cry: ‘Who sent this recession! Why did they send it?’

I was speechless. Her situation is very bad, her husband is sick, she has 5 children, she stays in a rented house, she has to spend on the treatment of her husband and she is the sole earner in the family, how can she meet her ends? When she goes to collect scrap she takes along her little daughter, while her husband sits at home and makes wooden ice-cream spoons, from which he can earn not more than 10 rupees a day.