International Journal of Environment, Ecology,

Family and Urban Studies (IJEEFUS)

ISSN(P): 2250-0065; ISSN(E): 2321-0109
Vol. 6, Issue 5, Oct 2016, 55-64
TJPRC Pvt. Ltd.

VULNERABILITY AND THE CHALLENGES OF URBAN

INFORMAL SECTOR WORKERS IN DHAKA CITY
ASHIM KUMAR NANDI
Department of Sociology, University of Barisal, Barisal, Bangladesh
ABSTRACT
Vulnerability posed some significant challenges for the urban informal sector workers (UISWs), and these
challenges drew critical attention for the size and contribution of informal sector. This study raised questions against
governments role to the sector and gave an opportunity to rethink the importance of social life of informal sector
workers amidst their economic needs and contributions. This study collected data using survey method on 336
respondents. The current study found that written contract or having pay slip, having employees or wage-earnings
otherwise, and itinerant business/work unit were the strongest components among the nine independent variables that
could explain vulnerability of informal sector workers. This study recommended that Government had better, monitor
work environment in informal sector, protect UISWs from harassment, increase social protection for UISWs, offer free
who are migrants.
KEYWORDS: Vulnerability, Urban Informal Sector, Urban Poverty, Dhaka City,

Received: Aug 30, 2016; Accepted: Sep 21, 2016; Published: Sep 27, 2016; Paper Id.: IJEEFUSOCT20167

INTRODUCTION

Original Article

training programs for UISWs, amend relevant laws that treat informal sector as illegal, and pay more attention to them

Vulnerability of urban informal sector workers is a major concern for developing countries because the
lions share of working population of these countries working in the informal sector. Moreover, some researchers
(e.g., Rahman et al. 2014) treat migrants as most vulnerable groups, and as the most of the UISWs in Dhaka city
are migrants then the concerns grow naturally. Bangladesh entered in the group of middle income countries,
although the country yet to ensure the social protection of urban poor who are, at bottom, informal sector workers.
Furthermore, informal employment in developing countries comprises a wide range of vulnerabilities, and the
reason is its key features: informally employed persons are not recognized or protected under legal or other
regulatory frameworks (ILO 2002). In addition, verbal contracts instead of written ones are leading potentially to
insecurity and subjective rules. Informal employment usually entails irregularity of employment, insecurity of
wage rate and long or uncertain working hours linked with low income and risks to occupational health and safety
(Upadhyaya 2003). Informal employment can be a career trap, and, thus, it can have a detrimental
intergenerational blow on life courses. This is connected with poorer risk-taking ability of the poor keeping them
poor. There are also other upshots that may cause general societal harm and instability that expands also to the
well-to-do strata (Wilkinson and Pickett 2010). Thus, these various vulnerability situations of UISWs encouraged
this study to find out the challenges of the informal sector workers that existed in the sector.

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Ashim Kumar Nandi

THE CONDITION OF THE INFORMAL SECTOR IN DHAKA CITY

The trend of fast urbanization is responsible for soaring growth of informal sector in Dhaka city. Over the last six
decades Bangladesh has undergone a distinguished trend of urbanization. The overall urbanization trend is curvilinear,
unstable and periodically fluctuating and it reflects both global and internal dynamism as well as statistical manipulation
by the politicized administration of a peripheral state (Ahmed 2004:9). With a population over 16982 thousands (2014) in
the city, Dhaka is one of the largest cities in the world, being ranked the 11th (2014) largest city (United Nations 2014).
Dhaka is also the fastest growing mega city in the world with a growth rate of 3.6% (2010-2015) (United Nations 2014)
and an estimated 300,000 to 400,000 new migrants, mostly poor, arriving to the city every year (World Bank 2007). It is
one of the most densely (968 person/Km2) populated countries on earth with an area of 147,570 km2. However, there exist
wide spatial inequalities in the rates of urbanization, quality and quantity of social infrastructure and economic growth and
development. Another reason that Islam (2006) mentioned for the existence of these inequalities is the practice of
development planning. In Bangladesh traditional development planning takes a sectoral form (transport, housing, energy
etc.) rather than a regional or spatial approach (Islam 2006).
In Dhaka city, the informal sector workers are predominantly young (44.3%) and male (84.3%) (Islam 1998: 36).
Nearly half (51%) of the total informal sector workers are illiterate in Dhaka city (Siddique 1996: 24). Size of the informal
sector in 1980 was 65% in Dhaka city (World Bank 1980) and it was 64.6% share of total employment in that year
(Amin 1989a: 7)1. Amin (2002) estimated that around 500,000 rickshaw drivers and 80,000 waste-related workers are in
Dhaka city that made it a city of hawkers and rickshaws. Moreover, there are nearly 400,000 hawkers and vendors in
Dhaka city corporation area (Islam 2012). Thereby, to some, Dhaka appears as an informal city, as Hasan (1999) calls
Karachi.

VULNERABILITY: A CHALLENGE IN URBAN INFORMAL SECTOR

Most of the efforts to reduce poverty will not be succeeded if the vulnerable people in the informal economy and
their employment needs are not addressed (Becker 2004). Since vulnerability is the existence and the extent of a threat of
poverty and destitution (Dercon 2005). In Bangladesh, 2010 Labor Force Survey data provide evidence that worker under
informal employment arrangements or those working in informal enterprises have low productivity and thus, have lower
income are more vulnerable to economic and social shocks (ADB and BBS 2012). These vulnerabilities made the informal
sector a strong candidate for social protection. Thus, the elements of decent work, particularly social protection against
extreme vulnerabilities and insecurity, have captured the real need of people who work in the informal sector (Amin 2002).
Gottdiener and Hutchison (2000:291) also acknowledged that work is precarious in informal sector and does not bring the
kinds of benefits that people in the First World identify with full-time employment, such as health insurance or social
security.
The decline of vulnerability should have a twin-track approach: on the one hand, support to the augmented
formalization of employment relations, on the other hand, support to the progress of general social protection schemes
(e.g. Smith Nightingale and Wandner 2011). Upadhyaya (2003) outlined four dimensions to reduce vulnerabilities in
informal employment. He makes out that a combination of occupation- based, caste or ethnicity-based, area-based and

To know more about statistical data on age, sex, education, migratory status and so on of Dhakas informal sector
workers, consult ILO, The Informal Sector in Asia from the Decent Work Perspective (Geneva: ILO, 2002).
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57

gender-based methods should be utilized when designing policies.

CONCEPTUAL FRAMEWORK
Vulnerability soars by the lack of access to credit, lack of written contact and so on, and this vulnerability limits
the growth of urban informal sector (see Figure 1). This study focused on vulnerability in the informal sector to explain the
sector in social context out of its economic significance. In Dhaka city, like de Sotos Peru case, informal sector workers
who are basically migrants try to find a job anyway, and as they have limited resources they has to do itinerant business or
work in such a condition that does not ensure their job security. Furthermore, the urban informal sector in Bangladesh, like
many developing countries, grew up due to the breakdown of the formal sector to absorb additional workforce. This
situation is steady with the state vs. protection school (Weeks 1975; Mazumdar 1976) as well as state versus legal system
(De Soto 1989).

Figure 1: The Conceptual Framework of the Growth of Dhakas Informal Sector

METHOD
The current study used quantitative methodology. As a data collection technique, this study applied survey method
because of its effectiveness in collecting data from large number of respondents. With a view to choosing a representative
sample, systematic simple random sampling method (probability sampling) was applied. At the outset, using Fishers
formula, 384 workers from the nine sub-markets of Nilkhet have been selected as a sample population. But after several
days of data collection, considering time constraint and scarcity of fund sample size was decided to be cut. Finally, this
study was completed by taking 336 samples (See Table A1). The fieldwork of this study was accomplished for a period of
over a month splitting by two phases during January and February, 2012. To analyze the data collected from the study site,
Statistical package For Social Sciences (SPSS) software was used.

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Ashim Kumar Nandi

EMPIRICAL RESULTS
Vulnerability of the Urban Informal Sector Workers
It was evident from the findings of the present study that 77.98% of total respondents did not exchange any
written contract or pay slip. Only 22.02% of the total respondents had written contracts or received pay slips.
This study also showed that 88.10% of the total respondents did not have any employees or wage-earnings
otherwise. These two were the indicators of vulnerability of the informal sector workers or employees. These data claimed
that the informal sector workers of Nilkhet were more vulnerable.
According to the current study findings, 38.10% of the respondents said that their business places or shops were
itinerant. Again, 11.90% have responded said that their main jobs were not itinerant. This data also indicated the
vulnerability of the workers of Nilkhet markets.
It was reported in the current study that 75% of the total respondents did not face any harassment in the
workplace. On the other hand, 13.1% of the respondents faced harassment. It was interesting to note that a considerable
number of respondents (11.9%) did not respond in this question. If we think that they were being harassed frequently and
to keep it confidential they did not respond. Then, the percentage of the respondents who face harassment would be 25%
(including those did not respond). Therefore, it was evident that a large number of the respondents did not face harassment
in their workplace.
Among the total respondents who face harassment, 50% of them used to being harassed 3-4 times in a year, 27.2%
being harassed 1-2 times, 13.6% being harassed 5-6 times, 4.5% being harassed 7-8 times, and 4.5% of them being
harassed more than 8 times in a year. Mostly, they used to be harassed by the students especially for price related problems.
Findings of the current study elucidated that- 18.1% of the respondents, who faced harassment, tackled it by
asking for forgiveableness, another 18.1% of them by influence, and the other 18.1% tackled by the intervention of samity.
But they always faced mental harassment because of their precarious markets. There was no private ownership in land in
the market. In fact, the market was established in government land. So, the workers/businessmen of the market always
operated their works/businesses amidst tension; thus this constrained the path of growth of the informal sector.
Vulnerability of the Informal Sector Workers: Bivariate Analysis
Test of Hypothesis
H0: There is no association between birth place and written contract or having pay slip.
H1: There is an association between birth place and written contract or having pay slip.
Table 1: The Result of the Chi-Square Test
Pearson Chi-Square

Value
14.986

df
2

Asymp. Sig. (2-Tailed)

.001

Based on the observed significance level for the chi-square statistic, we can reject the null hypothesis and accept
that there is an association between birth place and written contract or having pay slip. The observed significance level
is.001, which is less than the customary 0.05 (see Table 1).

Impact Factor (JCC): 3.7216

NAAS Rating: 3.63

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59

Vulnerability of the Informal Sector Workers: Multivariate Analysis

Table 2: KMO and BARTLETT'S Test
Kaiser-Meyer-Olkin Measure of
Sampling Adequacy.
Bartlett's Test of
Approx. Chi-Square
Sphericity
Df
Sig.

.501
83.462
15
.000

KMO and Bartletts test result confirmed the adequacy of data to measure factor analysis (see Table 2). Using the
criterion of retaining only factors with Eigen values of 1 or greater, three factors were retained for rotation (see figure 1).
These three factors accounted for 27.035%, 22.141%, and 17.537%, of the total variance, respectively, for a total of
66.714%.
Scree Plot
1.8
1.6
1.4
1.2
1.0

Eigenvalue

.8
.6
.4
1

Component Number

Figure 2: Scree Plot: Vulnerability

The factor analysis extracted the strongest explanatory components among the nine independent variables that we
found earlier to determine the dependent variable. From the Rotated Component Matrix, based on the Eigen values, we
found that only three components could explain vulnerability of informal sector workers at Nilkhet markets in Dhaka city.
These extracted explanatory components with their Eigen values are

Written contract or pay slip (1.622)

Having employees or wage-earnings otherwise (1.328)

Itinerant business/work unit (1.052)

DISCUSSIONS
We understood that urban informal sector has been growing rapidly with some positive and qualitative
developments. But it has also some negative sides. Vulnerability of the urban informal sector workers is an example. It was
significant that vulnerability constrained the qualitative development of the sector.
Brata (2010), in his study, concluded that informal sector workers did not join association because there were no
association in their areas and/or they had no interest to join in. But in the study area, I found association
(they called samity) of informal sector workers. It was significant to note that the rate of harassment was lower in informal
sector of Nilkhet because the Malik Samity (owner association) of Nilkhet markets actually dealt with these problems. As a
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Ashim Kumar Nandi

result, the small businessmen/workers of the markets could continue their business/work without frequent harassment.
Moreover, the findings of current study contradicted with that of Brata (2010). He argued that most of the street
vendors in his survey had no kin or relatives working in same area. But the current study found that there was a use of
family labor (29.3%). In addition, it was found that 50% of the business partners of them were family members or
relatives.
However, present study had some similarities with the findings of the study of Brata (2010). For instance, he
urged that most of the vendors were educated labors in his study area, at least at the elementary level. Similar pictures were
observed in the current study.
Use of family labor had influence on the savings behavior. The findings of the current study examined that the
more use of family labor, the more chance of saving money. Truly, family labor was used in informal sector by very low
wages or in some cases as apprentice. So, extra profit was achieved and then more saving became possible. Those who had
children were saved more money. On the other hand, those who had no children were saved less money for future.
Nevertheless, those who were engaged in itinerant business/work were saved less money. The reason was that their income
was very low. So, they expended their almost total income to meet the minimum fundamental needs. They could not save
money for the future. As a result, the vulnerability of this type of informal sector workers was higher. In addition, savings
behavior was negatively influenced by age. For example, this study showed that older people were less interested to save
money than young people in the informal sector. Such a behavior of reluctance to save money made older people more
vulnerable.
The findings of the current study indicated that 77.98% of the total respondents did not exchange any written
contract or any pay slip. Besides, 88.10% of the total respondents did not have any employees or wage-earnings otherwise.
These findings were supported by Ahmeds (1999) study findings collected from Dhaka city. He found that most of the
respondents had no job contract, recruited verbally (93%) and an insignificant few (11%) had secondary job. These two are
the indicators of vulnerability of the informal sector workers/employees. The above-mentioned data proved the
vulnerability of informal sector workers at Nilkhet. There was a significant association between birth place and having
written contact or pay slip. As this study found, those who were coming from village were more vulnerable than those were
coming from suburb or district city, so, we could claim that the innocent village people were more vulnerable in informal
sector since they were less aware about their rights and we had to pay more attention to them. Thus, we could minimize the
vulnerability of informal sector workers that was also essential for the growth of informal sector in Third World countries.
ILO (1972) argued that informal sector problems could be solved if issues like employment relationships and inequality
were solved. If we would want to minimize inequality, we would have to minimize the vulnerability of the informal sector
workers. So, the growth of informal sector of Nilkhet markets could be speeded up by minimizing vulnerability of the
workers/businessmen.

CONCLUSIONS
The broader policy is obviously to increase the social and environmental benefits of informal sector workers with
the growth potential and incomes earned in the urban informal economy. More specifically, contributions of urban informal
economy to national/international economy have economic implications but the uneven development, inequality of income,
low social protection, and lower standard of living solicit for careful attention of research and development in the urban
Impact Factor (JCC): 3.7216

NAAS Rating: 3.63

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informal sector. While a small portion of informal sector workers utilizing modern technology, other big portions are
threatened with vulnerability. From the humanitarian side, effective plan is needed to formulate immediately. Bangladesh
National Urban Sector Policy-2011 has incorporated some important issues supporting urban informal sector activities. For
instances, the policy recommended that (1) the local authority should not impose regulatory impediments limiting the
opportunities for informal sector operators such as hawkers, daily labourers, craftsmen, scavengers, street children and
women seeking to supplement their family incomes, (2) the local government can provide a favorable environment for
informal sector activities in a number of ways that may include- providing access to credit, providing marketing advice and
information, providing training and capacity building, providing business networking and information exchange,
supporting home-based income-generating activities, and zoning for micro-enterprises, space for hawkers, vendors.
These initiatives are of course commendable and positive. But it is also necessary to reach in a political consensus for
different political parties to materialize these policies. Because we see development initiatives change with the change of
government in Bangladesh. Lack of good governance, Corruption, lack of accountability, influence of political leaders and
lack of social awareness are reasons working beyond these.
Findings of the present study suggest that informal sector workers become vulnerable because of their itinerant
(38.10%) business nature. So, government should take step to provide them permanent/stable working space. Government
had better provide urban informal sector workers free or low cost internet facilities specifically to them who use internet
for their business (e.g. informal sector workers in Nilkhet). As the informal sector of Nilkhet has great scope of using
modern technology, so GO and NGOs can offer free training programs to them. Moreover, GO and NGOs can provide
them financial support (to buy technological instruments) and non-financial support (infrastructure). Government should
amend relevant laws that treat informal sector as illegal in different dimensions. There should have specific policy
framework that will legalize their works, as a result, they will get easier access to credit and will get relief from harassment
by local authorities. Finally, we have to pay more attention to them who are migrated from villages. Because, we have
observed that, those who are migrated from villages are more vulnerable because of their lack of consciousness about their
rights and opportunities.
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1.

Ahmed, A.I.M.U. (1999). Dependent Urbanization and the Protoproletariat: A Case Study of Urban Informal Sector of
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APPENDICIES
Table A1: Final Sample Size
Serial
1
2
3
4
5
6
7
8
9
Total

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Name of the Markets in

Nilkhet, Dhaka
Bakusha Market
Islamia Market
Nilkhet City Corporation Market
Hazrat Shahjalal Market
Babupura Market
Gawsul Ajam Super Market
S.N. Gilani Super Market
Banijya Bitan Market
Adorsya Biponi Bitan Market

Proportioning the Sample Size

According to Market (%)
46.8
11.5
3.3
1.1
3.6
21.6
4.3
4.7
3.1
100.0

Final Sample
Size
157
39
11
4
12
73
14
16
10
336

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