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From John Conroy on Are workers in the informal sector leaving formal sector workers behind in PNG?
This is a very interesting post, although it raises more questions than it answers. The single case study from Port Moresby (the successful and hard-working female betel nut seller) may or may not be representative, as Kelly Samof makes clear. The story he tells about her is useful, because it dramatises differences which can be found in Port Moresby between the formal, regulated minimum wage and the earnings of (some?) operatives in the urban informal economy. As Kelly freely admits, this case may not be representative of earnings of other betel nut sellers (let alone the earnings gained from performing other informal activities in the city).
There are things I would like to know about this betel vendor. Is there some special relationship between her and the owners of the shop outside which she sells her betel nut? For example, is any other seller free to set up a table outside this shop? It seems to be an ideal position, so wouldn’t you expect her to have some competition? If she is making so much money why haven’t other sellers set themselves up beside her? Clearly she has a locational advantage, and enough capital to buy bags of betel on a regular basis. Is there any relationship between her and the owners of the shop?
Also the 2003 study to which Kelly refers (which I was unable to download, for security reasons) appears to show an even greater difference between informal earnings and formal, regulated wage earnings. This makes me wonder: if betel nut sales are so profitable why didn’t more sellers enter that market also? Were there barriers to entry which prevented new sellers from competing prices down? The same question should be asked about the other study he referenced. This concerned ‘roadside’ vendors in Madang, and purported to show an even more extreme discrepancy between vendor earnings and betel sellers’ profits. By the way, this Madang case was a rural study, not an urban one. Anyway, it would be interesting to know whether some sort of monopoly was being enforced by local landholders to allow such profits to be made.
Kelly also asked, why does anyone accept minimum wage employment in Port Moresby, if informal earnings are (relatively) so high? Back in 1973, Keith Hart wrote about the informal economy in Accra (Ghana). He reported that non-wage (i.e., informal) incomes were more unreliable than inadequate. Returns to non-wage employment varied widely from period to period, around mean levels often higher (occasionally much higher) than unskilled wages (as appears to be the case with Kelly’s lady betel nut vendor). But because of this unreliability people were often reluctant to surrender low-paying wage employment, opting instead to juggle the demands of such work with the opportunistic, though sporadic, activities of the informal economy. People in low-paying formal jobs were often engaged in informal ‘side-hustles’ (or ‘moon-lighting’) which could be more rewarding than their official salaries. People who deal with public servants in government offices or hospitals in Port Moresby may recognise this situation.
Finally, I want to make a point about language. Put simply, there is no such thing as an informal ‘sector’. This is because economic informality occurs in every economic sector – primary (e.g., agriculture), secondary (e.g., manufacturing) and tertiary (e.g., services). It is also found in both the private (entrepreneurial) and government (state) sectors. To get the vocabulary right, we should be speaking of ‘economic informality’ conducted within an ‘informal economy’. Forget about the informal ‘sector’!
From RT Kaiulo on Trepidations of a female student in Port Moresby
It's so evident uncontrolled migration fueled by unemployment and uncontrolled drift from rural communities to urban towns and cities is no 1 priority for png govt to seriously take on to counter with appropriate interventions. Failing to do so leaves PNG a potential failed state!
From Michael on Are workers in the informal sector leaving formal sector workers behind in PNG?
Great piece Kelly. In 2020, few of my students interviewed about 100 street vendors in four bus stops (Waigani, Gordons, 4 Mile & Koki) to assess the impact of covid-19 on street vendors - after restrictions eased. The vendors mostly sold betel nut, smoke, and at the time face masks. They make a decent amount, more than the minimum wage in urban areas. And even though selling at bus stops is discouraged, they pay “tax” to the policemen and women: the police get buai from the vendors without paying for it, and turn let them sell at non-designated areas. Covid-19 restrictions meant they couldn't sell at the bus-stops, and some suffered as they rely on street sales. Others who got around the restrictions, however, made more money when the prices went as high as K10 at the height of covid 19 (I remember on particular day when gold prices collapsed below zero, my neighbours were selling one buai for K10 - buai was more expensive than gold 😂).
From Michael Wood on Timber barons v carbon brokers: the Kamula Doso forest area in PNG
Namakale. It is good to see your comment. I think you are right to be concerned about the development of the Kamula Doso project area as a logging operation. From the logging that has already occurred in the region it seems that landowners have not received many of the benefits they might have expected.
From Michael Wood on Timber barons v carbon brokers: the Kamula Doso forest area in PNG
Namkale. Good to see you responding on this blog. If the only option for the development of the Kamula Doso project area is to log it then past experience of logging in the region suggests that landowners will receive a poor return. There must be a better way for landowners to make some money out of their forests.
From BONE GUTERRES on Australia’s Pacific Engagement Visa: building support infrastructure
Thanks for information.
Very interesting.
I have been working in Australia for almost 4 years with the PLS program.
From Robert on Are workers in the informal sector leaving formal sector workers behind in PNG?
True indeed.
From Wisa Susupie on Timber barons v carbon brokers: the Kamula Doso forest area in PNG
Wisa Susupie, has a chairman of TTDL for Kamula Doso project area, I understand where PNG Forestry Authority coming in and also promoting FMA in Kamula Doso Forest area, now is the time we landowners raise our hands up and say, hi what you guys doing is not right, and we are raising our hands for win win benefits, not win and lose benefits since logging started in PNG, none of landowners communities were undeveloped.
From Jerry Engolom on Papua New Guinea: government, economy and society
Great Job done. this book really fills the Gap of Old Social Sciences, as this book is aligne with the contrary society of this Morden times. However, special thanks and appreciate you all for your contribution in preparing this educational tool for we Papua New Guinean future policy Makers and Political leaders or the Citizens.
From Simon Solo Embro on New tools for community-led development in PNG
Great achievement through Community based development is very important and special way in serving communities in the rural areas of Papua New Guinea and I am greatly in support and congratulate you all for your contribution in every capacity
From Stephen Charteris on Undoing Sir Mekere’s financial sector reforms in PNG
Banking the unbanked and reducing fees and charges has perennially been the complaint levelled at the commercial bank sector in PNG.
The greatest challenge facing banking institutions is the cost of providing such services and mitigating associated risks. Over the decades innumerable attempts were made to bring banking services to rural people. But the long history of bricks and mortar banking outside major centres has proven beyond all doubt to be the place where banks go to die.
Alternatively, it would greatly benefit rural populations if the government were to facilitate the widespread uptake of electronic banking services by enabling reliable signal coverage and band width at low cost to end users throughout the length and breadth of the country.
There is also the fact that historically, interference in the banking sector is legendary. I am familiar with the entity that was PNGBC in the 1990s. What on paper should have been the engine room for economic growth was sadly a constant target for interference, graft and corruption.
I well remember the challenges in the early 90’s faced by Sir Mekere as MD and later in 2000 as PM when he reached the conclusion that privatisation was the only option remaining to save PNGBC.
Quite why the great and good in halls of parliament have forgotten these painful lessons is for them to explain. Sir Mek’s reference to “sticky fingers” should remain their constant warning.
From Carolyn Jones on Trepidations of a female student in Port Moresby