Informality is a form of solidarity economy and post-pandemic survival mode for the most economically active population of Azerbaijan. Women, consisting 62% of the informal workers, should be situated in the center of conversations on reproduction, labor rights, social protection and welfare support during the COVID-19 pandemic. The informality is never a linear process, it is rather multi-layered, complex and requires a multi-dimensional modality. This article takes a story-based approach by talking to women engaged in informal economy and describes effectiveness and inclusivity of support mechanisms.
During the pandemic lockdown period, economic support policies were notorious for using self-employment to skirt around informal workers and their right to bargain for welfare support provided by the state. With 52.2% of its economy being informal (Schneider, 2018), Azerbaijan is one of the top 15 countries among 158 on a list that orders states according to the size of their informal economies. Even though Azerbaijan allocated the largest share of GDP (3%) among Post-Soviet countries to mitigate the pandemic's adverse economic effects, the support mechanism left out many of the country's disadvantaged – those operating in the informal economy (Abasli, 2020). Most of the applicants for economic support during the pandemic have been rejected because they lack documentation proving that they are 'self-employed.'
Professional training and education are generally overlooked in the informal economy, preferring workers who take on longer hours, even on weekends. When it comes to women, unpaid domestic labor, lack of qualifications, and gendered preconceptions of "women's work" frequently keep them out of better-paying formal positions (CRRC, 2019). As a result, women are more likely than men to participate in the informal economy, where they have fewer decision-making positions and opportunities to build economic networks.
High rates of informal work are not unusual among most Post-Soviet economies. Aliyev (2015) points out that the closure of Soviet factories resulted in increased unemployment for women and men who had previously been employed for full-time, permanent positions in the formal production sector. During the transition, more women sought income through informality, an area of the economy that existed under Soviet control. In addition, the elimination of daycare centers added more unpaid care work to women's daily labor.
Understanding informality and its gendered implications require an in-depth overview of informal practices using the ideas of solidarity economy and post-communist informality as mixtures of cultural and economic practices (Smith& Stenning, 2006). Informality and informal economic practices form economic-social safety nets and go beyond short-term and urgent measures. Instead, they are significant parts of the daily lives of most women.
Compared to Western economies where formal work has been a significant economic driving force, informality and other similar solutions have been effective survival strategies during the political-economic crises in post-soviet economies. There is an emerging discourse for defining the costs of labor performed in the informality and solidarity economies.
Unpaid versions of labor comprise a necessary basis of capital reproduction, according to the Marxist feminists who study women's role in reproduction and household work (Birtalan et al., 2019). Maintaining informal and unpaid labor is a crucial feature of capitalist relations around the world. Moreover, relations between informal economic practices also derive from patriarchal gender roles. These oppressive connections produce unfair labor conditions and the need for community networks to fulfill government support functions.
Considering that 62% of the informal workers (Guliyev, 2015) in Azerbaijan are women and that 70% of these women also bear unpaid housework and childcare (CRRC,2019), the gendered effects of COVID-19 require a closer look. To relay the real-life gendered implications of the COVID-19 pandemic and the stories of those neglected by governmental support mechanisms, we interviewed 15 randomly selected urban informal workers. Women respondents were engaged in various informal sectors but primarily concentrated in street vending and cleaning and beauty industries (see Table 1).
70% of the respondents noted that they have lost either complete or most of their income due to the decreased demand for secondary needs and services, such as beauty, sewing, cleaning, and street vending. Women engaged in the informal economy also mentioned that the lack of access to the state's economic and welfare packages undervalued their labor and attribution to the economy, entirely neglecting informal workers.
35% of women highlighted the increased importance of social media (especially Instagram) as a service provider for sales and networking during the lockdowns. In addition, 80% of women said they experienced an increased double burden of household work and childcare due to the lockdowns and the closure of education facilities. This increased amount of work has hindered their ability to focus on their jobs and remain flexible during new economic conditions.
38% of the women benefited from the standard packages offered by state institutions and international organizations. These consisted of food, necessities, and unemployment payments. During the lockdowns, the most commonly mentioned source of support was community and informal support from neighbors, relatives, and self-organized community initiatives where people donated food and money.
When asked about their motivations for not entering the formal economy, respondents stated that exact accounting, demanded by formal work, is sometimes not feasible in Azerbaijan for self-employed individuals and small business owners due to the lack of positive mechanisms that help elevate the tax burden. Our survey also asked respondents about the roadblocks they see for formalizing the informal economy. Respondents consider knowing their rights and opportunities when it comes to taxes vital for building confidence and transitioning to formal economies. Currently, they cannot have a say in forming the regulations that would affect them if they registered. They find that the current legal frameworks are designed in a 'top-down' manner and are 'very technical,' lacking consideration of informal practices that heavily depend on kinship and social capital and are deeply entrenched in local culture and traditions. Moreover, the emerging realities of informality and its involvement in social media also require new regulations designed for and with informal workers, taking their practical needs into account.
While 56% of the respondents mentioned that more accessible regulations and seed capital would incentivize them to transition into formality, 40% thought it would be challenging and economically unstable to do the same so quickly after the pandemic. Responses also varied when respondents were asked about understanding and employing their rights concerning work, social protection, and time off. Only 27% of the respondents reported benefiting from any social protection and labor rights at their job.
"The pandemic has illustrated how vulnerable we are as workers and that informality brings both flexibility and economic instability. Our work is also labor and contributes to the country's economy. Thus, it should also be valued in hard times, considering that we work both at home and with our customers," says one of the women respondents who engage in handcrafting her products. Support mechanisms should not neglect this heterogeneous mix of women who contribute to the country's running economy with unpaid and paid labor. Though supporting informality through community networks and social capital is a compelling case of solidarity economy during the pandemic in Azerbaijan, it is also an opportunity to re-think the status-quo around informal work, labor, gender, and the economic justice that any type of work demands, especially when it makes up 52%' of Azerbaijan's GDP.
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Abasli, I. (2020). "The Socioeconomic Impact of COVID-19 and Oil Price Fluctuations in Azerbaijan." Heinrich Böll Stiftung.
Birtalan, G., Gagyi, A. and Pósfai, Z.(2019), "Solidarity Economy and the Commons: implications for Central and Eastern Europe." Rosa Luxemburg Foundation.
Guliev, F. (2015) "The Informal Economy in Azerbaijan," Caucasus Analytical Digest, 75, July.
Schneider, F. (2018). "Around the World: What Did We Learn Over the Last 20 Years?" Working paper No. 18/17 Author/Editor: Leandro Medina. IMF.
Smith, A. and Stenning, A. (2006), "Beyond household economies: articulations and spaces of economic practice in post-socialism," Progress in Human Geography, Vol. 30 No. 2, pp. 190-213.