Part of a UNDP Jordan Blog Series: Exploring the Informal Economy in East Amman

Co-authored by: Ru’a Al-Abweh (LinkedIn | Twitter), Head of Solutions Mapping, UNDP Accelerator Lab Jordan and Salam Abukhadrah, Sustainable Development Analyst, Policy Advisory Team

Ever walked in a downtown or market area and come across someone selling vegetables on a cart or truck? 

Or selling cotton candy and toys on a stick?  

Or tissues, sunglasses, or socks on a self-made display table? 

Did you ask yourself how much money they are making? How the pandemic has affected them? How they feel about the work they are doing? What you could learn from them? How much they contribute to the economy?

The kinds of work I described (some of which are shown in the photos above) are all part of the informal economy and are very common sights in Jordan -particularly in East Amman. While some people respect any person’s effort to make their own living, I sadly also hear others complain that informal workers are crowding public space, not educated  (implying that they may not be as respected as other kinds of workers), and not contributing to society or the economy.

We at UNDP Jordan are aware of how widespread informal work is in Jordan and how it is also widely stigmatized. Therefore, since September 2021, we have been on an exploratory research journey to understand and destigmatize the informal economy in East Amman, with Jordan being one of the pilot countries for the global Informal Economy Facility (IEF). The IEF is a global UNDP initiative focusing on the protection and empowerment of actors in the informal economy to both benefit from and contribute to development . A collaboration between the Policy Advisory Team (leading the efforts), Innovation Specialist, Inclusive Growth and Livelihoods program, Accelerator Lab, and Gender Specialist, we are just at the start of an exciting opportunity to better understand this understudied, underappreciated, and underutilized sector.

While there is not much research done on informal economy, we do have some existing research that begins to tell us the story. We know from a 2020 study that Jordan’s informal economy contributes around 25% to the Gross Domestic Product (GDP) and employs around 46% of the overall workforce [1], a significant increase from 2008 International Monetary Fund (IMF) estimates reporting that it amounted to 26% of total employment.  Those who work in the informal economy are generally young, with 88% between the ages of 20 and 49, and most have few years of formal education -a secondary certificate at most [2].

Existing research tells us that two of the major reasons behind the expansion of the informal sector in Jordan are the lack of access to finance and high taxes [3]. Another reason is the lack of many factors that would encourage working in the formal sector. A lack of:

• formal job opportunities and alternatives to informal work;
• flexibility in working arrangements in the formal sector, which is especially difficult for married women;
• trust in government institutions to fulfill their duties and provide services;
• trust in the private sector as a provider of sustainable employment and fair salary;
• awareness of benefits informal businesses could receive from formal registration, such as social protection and better access to finance; and
• and relevance of one’s education and training to the requirements of the labor market. 

Furthermore, people are unwilling to follow the costly and complicated procedure of registering and licensing activities in the formal sector, which discourages entrepreneurship activities and motivates informality.

So, I’ve explained a bit about what we already know about the informal economy. Now where do we go from here?

We decided to start the exploratory research guided by a Statement of Intent –in other words, the direction and ambitions for the IEF:

• Challenge existing perceptions of informal economy through data, policy reviews, analysis, dialogue, and collective intelligence [4] –meaning a method of learning which involves collecting various ideas and information from diverse people, which when combined, give us a better understanding of a complex issue.
• Reach those furthest behind first and leave no one behind – regardless of formality or informality, we need to look at pathways to sustainable livelihoods and the creation of decent jobs. 
• Identify adaptable, resilient and/or innovative [5] business models that generate and transform work and contribute to building forward better, developed by informal workers themselves

This statement is merely a starting point for UNDP Jordan’s exploratory research. Based on what we learn from our research, it will be reviewed and can be edited to reflect any needed change in direction.

Speaking of the exploratory research, the overarching approach of our research methodology is a combination of sensemaking [6] and systems mapping [7]. Now if you’re thinking, ‘Huh? Sensemaking? Systems mapping?’, I can assure you these two fancy terms are simpler than they appear at first glance. Sensemaking is what it sounds like if you split the word in half and switch the two parts–making sense of something; trying to understand it by searching, reflecting, discussing, looking at it from different perspectives, analyzing the challenges and problems, and trying to figure out how to tackle the challenges and solve the problems. As for systems mapping, imagine taking everything you tossed through your brain while trying to make sense of an issue, and connecting the dots between the different pieces, organizing your thoughts into different boxes so they are less jumbled, and visualizing everything in a simple, readable way so you can explain it to your grandma.

And what are the methods we actually use to go through the process of sensemaking and systems mapping?

That’s what you see in the diagram below, which you can simply think of as a summary of the exploratory research process, starting from the Statement of Intent and showing each step in the circles.  The process is a combination of a structured, step-by-step exercise (shown in the black arrows), and the need to go back to previous steps at some points to check if we’re still on the right track (shown in the dotted colored arrows). Until now, we have worked on the first three steps –desk-based  research, stakeholder mapping, and collective sensemaking workshops– and are just starting the fourth and fifth steps –primary data collection, ethnographic research, and solutions mapping. The details of what these steps mean and what have learned from them will have to wait for another blog (to spare your brain too many fancy terms).

So far, working on the IEF has been a challenging and exciting learning process enriched by the various expertise of the UNDP team, and perhaps more importantly, the voices and stories of the informal workers shaping our work –not only the work of the IEF specifically, but also the work of UNDP Jordan at large for the coming years. Along with doing the exploratory research, we are also trying to figure out how the findings can influence our Country Programme Document (CPD) 2023-2027, the strategic document that determines the work of UNDP country offices.

There is still a lot to learn, answer, and piece together, so stay tuned for Chapter II in the UNDP Jordan Blog Series: Exploring the Informal Economy in East Amman to learn more about the collective sensemaking workshops and the steps that follow!

Footnotes:

[1] Al Quds Center for Political Studies (2020) (Sobh, B. and Aburumman, H., 2019. State of the Informal Economy in Jordan: Opportunities for integration. Amman: AlQuds Center for Political Studies.)

[2] Al Quds Center for Political Studies (2020)

[3] Al Quds Center for Political Studies (2019) & The Panoramic Study of The Informal Economy in Jordan” (2012).

[4] “At its simplest, ‘collective intelligence’ can be understood as the enhanced capacity that is created when people work together, often with the help of technology, to mobilise a wider range of information, ideas and insights. Collective intelligence (CI) emerges when these contributions are combined to become more than the sum of their parts for purposes ranging from learning and innovation to decision-making.” -Nesta (for more details)

[5] For the purposes of this project, “innovation” is defined as: [“implementation of a new or significantly improved product (good or service), or process, a new marketing method [e.g. a novel product design], or a new organizational method in business practices, workplace organization or external relations” (OECD/Eurostat 2005, p. 46)/ OECD/Eurostat 2005. Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data, third edition (The Measurement of Scientific and Technological Activities). Paris, OECD Publishing.

[7] For a more academic definition of sensemaking, Weick, Sutcliffe & Obstfeld say: ”Sense-making is central because it is the primary site where meanings materialize that inform and constrain identity and action (Mills 2003, p. 35). When we say that meanings materialize, we mean that sensemaking is, importantly, an issue of language, talk, and communication. Situations, organizations, and environments are talked into existence.”

[7] “Systems mapping is a set of methods and tools to help us make sense of the ‘mess’ of complex problems, through maps of important relationships. A system map is a living hypothesis to help us guess where to intervene in a system in order to change the sum of what is happening; the outcomes. Systems maps can help us identify leverage points. A systems map is a representation of our collective understanding of why a system behaves the way it does, and how it can be changed. It is the shared understanding of the interdependencies between inputs, outputs/ outcomes, issues, trends, drivers and actors.” -Living Guide to Social Innovation Labs (for more details)