Informal trading is a form of good development for small businesses as it leads to more jobs. These businesses also have the potential to further expand the city’s economic base.
Informal trading exists only in Cape Town, Tygerberg, and the Southern Peninsula. Informal trading is quite common in these areas. These businesses can also conduct it by law according to the Business Act NO. 71 of 1991. If you want to learn more about informal trading and why it is important in South Africa, read further.
The Importance of Informal Trading in South Africa
Informal trade is essential to fill the unemployment gap in South Africa, as it provides many informal jobs. It is also a source of good income for underprivileged individuals. Around 18 percent of citizens work in the informal sector, which is a total of three million workers.
Some of the informal markets in South Africa give jobs to those who are unable to work in the formal sector. There is no doubt that South Africa’s informal workforce is quite poor. The good thing is that the government fully recognizes the informal economy in South Africa as an important part of Africa’s economy.
Gaining experience in the informal sector helps untrained individuals learn new skills. It can also prepare them for their future successes in the formal sector. The informal sector of South Africa is rapidly growing. In fact, it is growing at a far greater pace than the formal sector.
The National Informal Business Upliftment Strategy was introduced in 2014. This strategy focuses on inclusive growth that helps South Africa’s poor citizens to be a part of the economy. These citizens can provide a great deal rather than just merely redistributing wealth through various social welfare programs.
Types of Informal Trading That Takes Place in South Africa
There are different types of informal trading that take place in different parts of South Africa, such as Cape Town. Mentioned below are the different types of informal trading:
- Transport Interchanges
- Intersection Trading
- Street Trading
- Sector-based markets trading
- Trading in open spaces
- Mobile Trading
- Trading in special events
- Trading in pedestrian malls
The Advantages of Being a Part of Informal Trade in South Africa
There are many advantages that come with informal trading, and these are mentioned below:
Better Relationship with Employers
When working in informal trade, employee forte is more recognizable, and you work with a small team. This encourages a close relationship with the employer and allows them to understand their work more. This also leads to employer motivation that can be very good for the sector. Employers will also find it easier this way to seek permission for paid leaves.
Achieve Higher Profit
When working in informal trading, the employees’ efforts heads directly towards achieving profit rather than just completing routines that are irrelevant. There are many employees that pay well simply because the company does not have any tax obligations.
Another benefit of people working in informal trade is that they don’t have to go through lengthy interviews. Most of the hiring occurs on the spot. This saves a lot of time for the business to carry out other important tasks. At the same time, it’s easier for not very educated people in South Africa to get a job in informal trading.
Disadvantages of Working in Informal Trade
There are a few disadvantages that come with working in informal trading. Mentioned below are the disadvantages:
- No proper labor laws
- Less job security or none
- Summary dismissals
- Unable to make proper savings because of low wages
- Odd/Late working hours
- No fringe benefits such as health insurance or pension
As you can see, South Africa takes informal trading quite seriously due to the current economic situation in the country. The government is working towards improving the informal sector as well for a better standard of living. Visit this website and learn about trading Forex in South Africa.
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