The site of operation can often determine access to markets, services and business inputs, and therefore can act as a determinant of income in estimating returns to NASE. It is evident from the OLS estimations that operating a home-based enterprise is associated with low returns to NASE. Both those individuals who operated from formal premises as well as those who operated from informal premises (such as street corner or a market stall) reported higher returns from NASE, ceteris paribus.
Expectedly, it is evident from Regression II that the premium to working from formal premises (46.5 percent) was greater than the premium from working from informal premises (17 percent).
The premium to working from formal premises is higher for women (50.8 percent) than their male counterparts (45.2 percent). Working from informal premises is not significantly different from working from home for the male non-agricultural self- employed. However for the female self-employed, operating from an informal business location is a significant determinant of hourly earnings. Those females who operate from an informal business location earn 35.4 percent more on average than those who work from home, ceteris paribus. This could suggest that a home-based enterprise either presents more constraints to the earning power of the female self- employed, or it may reflect the lower economic value of home-based work conducted by women.
I examined different determinants to NASE earnings disaggregated by gender using a multivariate analysis. The results of which indicated that men and women in NASE had similar returns to education. However, key gender differences in returns were noted when examining observable characteristics like employment sector, age and particularly race group. In addition, I found that although individuals in home-based enterprises earn less, ceteris paribus, than those with informal or formal business premises, being home-based presents more constraints to the earning power of the female than the male non-agricultural self-employed. The findings in this chapter therefore indicate that significant gender differences exist in the constraints and conditions facing the non-agricultural self-employed.
The findings in this chapter offer a partial explanation for the observed gender gap.
However the above investigation does not touch on access to finance and basic services for those in informal NASE. Researchers, such as Skinner (2005), Clarke et al. (2006) and Rogerson (2008) have argued that business performance, particularly in the informal sector, is reliant to a significant degree on these services. In addition, access to these services can play a role in explaining entry barriers to informal self- employment (see also Chen et al. 2004; Cichello 2005; and Maas & Herrington 2006). Analysing the access of informal enterprises to these services could provide answers to the question: ‘Why do higher female self-employment rates not attenuate higher measured rates of female unemployment as in other developing countries?’
Furthermore, an analysis of this nature could help to identify ways to improve the profitability of the informal non-agricultural self-employed. In order to provide clarity on these issues, I investigate informal NASE in Chapter Six using the Survey of Employers and the Self-Employed (SESE) 2005.
Chapter Six: A gendered profile of the informal non-agricultural self-employed
Chapter Four identified that the majority of the self-employed are located in the non- agricultural informal sector.49 This is particularly true of the female self-employed who are over-represented in this sector where they make up almost 54 percent of all those in the sector (see Figure 7 below). Indeed, I found that almost 90 percent of all women in self-employment are located in this segment of the informal sector compared to 70 percent of all men. In Chapter Four, I also detected gender inequalities in informal non-agricultural self-employment (NASE), with women engaging in NASE activities reporting lower hourly earnings than their male counterparts. The female informal non-agricultural self-employed reported average real hourly earnings of R4.83 in September 2005 compared to R8.16 reported by their male counterparts.
Figure 7: Non-agricultural informal sector enterprise owners by gender, 2005
Source: SESE 2005
Notes: 1. Data are weighted. 2. Estimates are for all informal non-agricultural self-employed individuals aged between 15 and 65 years.
The focus of this chapter will be the issue of access to finance and basic services for those in informal NASE. As already indicated research has suggested that access to these services can serve as a significant determinant of self-employment entry and success. These factors also play a role in explaining barriers to informal self- employment entry in South Africa. In order to investigate these issues, the Survey of
49 In this dissertation, the self-employed in the informal sector are defined as those who run one or more businesses but are not registered for Value Added Tax (VAT).
Employers and the Self-Employed (SESE) 2005 will be used to explore key gender differences in access to start-up capital, basic services like transport, and expenditure characteristics.
The objective of this chapter is to construct a gendered profile of non-agricultural informal sector enterprises (NISEs) and their owners in the informal sector. Section 6.1 will explore gender differences in the business start-up phase, examining differences in motivation for start-up, as well as the extent and source of economic start-up capital used. Section 6.2 provides income information for NISE-owners by discussing gender differences in expenditure and net profit, while Section 6.3 provides information concerning the operational capacity of the informal non- agricultural self-employed. Section 6.4 examines gender differences evident in the hiring practices of employers in this sector. One of the strengths of the SESE is the emphasis placed on identifying contributions that government and non-government actors could make towards promoting the profitability of informal businesses. Finally, Section 6.5 considers the contributions identified in the SESE 2005.