In the Philippines, COVID-19 Is Still Taking a Toll on the Informal Economy

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In the Philippines, COVID-19 Is Still Taking a Toll on the Informal Economy

The pandemic may have waned, but its economic impact continues to reverberate on the nation’s streets.

In the Philippines, COVID-19 Is Still Taking a Toll on the Informal Economy
Credit: Flickr/Burgermac

Three years ago, Allain Rodriguez sold balut (boiled or steamed fertilized duck egg) on Mabini Street, behind the San Sebastian Church in Tarlac, a city some 130 kilometers away from the Philippine capital Manila. Even with a lot of fellow street vendors selling the iconic Filipino street food, he still managed to make a living.

Since then, a lot of things have changed for the 47-year-old. The most obvious was the onset of the COVID-19 pandemic, which wreaked havoc with his livelihood as lockdowns forced Filipinos out of the streets and in to their homes.

“The situation was really tough when the pandemic happened,” Rodriguez said in rough but jolly Tagalog as he handed out a plastic bag of balut to a customer.

He sighed as he looked out at the lively scene of Francisco Tanedo street, a place that is known to Tarlaquenos as a hotspot for businesses. “This place is going back to normal now, but during the pandemic it was so deserted that I didn’t know whether I would be able to come back to sell balut,” he said.

He added that this is the only livelihood that’s feasible for him: “I had to endure it even if the earnings got hit when the pandemic started. I had a family to take care of.”

A stone’s throw away from Rodriguez’ stall, Aminnah Sabtula, a 46-year-old Muslim woman, sells racks of clothes at a makeshift stand. She only does this on weekends, so her earnings are low, but during the pandemic she was forced to stay home entirely. “No one was buying clothes from me during that time,” she said with a smile as she straightened her hijab, waiting patiently for customers to show up.

Street vendors and peddlers make up a large portion of the Philippines’ informal economy, a nearly countless number of independent and small-scale businesses that distribute products, goods, and services outside the large economic establishments run by the government and the private sector. Globally, the informal economy makes up more than half of the workforce and dominates the world’s micro and small enterprises. The World Economics website calculates that the Philippines’ informal economy is worth approximately $470 billion, making up a significant 34.1 percent of the country’s gross domestic product.

However, these huge numbers do not translate into wealth for most vendors. According to Salary Expert, a typical street vendor in the Philippines currently earns around 279,928 Philippine pesos ($5,133) per year, or 134 pesos ($2.46) per hour, although this figure varies considerably from location to location.

In reality, despite the numbers and the tempting possibility of six-digit annual earnings, the informal economy comprises a huge diversity of jobs and activities that are not tracked regularly, if ever. In contrast with well-established conglomerates and companies, as well as government-sourced jobs and regular jobs with clear rules of recruitment, agreement, and responsibilities, jobs at informal enterprises are mostly (but not always) characterized by a lack of regulation from government inspectors, and based only on verbal agreements and understandings. They also tend to be characterized by untidy and dangerous working conditions, irregular wages for workers, and a lack of coverage by government laws and labor regulations. Thus, while the informal sector contributes as much to Philippines’ economy as the formal sector, it presents many risks to those who rely on it.

Aside from street vendors, the Philippines’ informal economy also includes people such as small-scale farmers, micro-entrepreneurs, fisherfolk, cobblers, street food hawkers, junkyard collectors, jeepney barkers, cigarette sellers, etc. Street vendors like Rodriguez and Sabtula sell not only cooked eggs and clothes but also other items such as fruits and vegetables, second-hand smartphones, hair products, cigarettes, candies, perfume, etc.

It is not unusual to see street vendors loitering along the crowded streets of the Philippines’ cities. These vendors may work from a fixed location such as a kiosk or sidewalk table, or they may be mobile. Given their ready visibility in the streets, street vendors and market porters provide necessary goods and services, especially to those who must buy life’s necessities in small quantities at affordable prices. They help provide nutrition and other basic goods and services for a wide swath of the population that cannot afford to shop at modern supermarkets or department stores.

In response to concerns about congestion, as well as the presence of illegal activity in the informal economy, some local government units (LGUs) have tried to restrict street vendors through local city ordinances. Zoning ordinances also restrict vendors to select locations that are sometimes inconvenient to both the vendors and their usual customers.

However, zoning policies and regulations differ widely between LGUs. When, where, and how vendors work usually depends on the views of the incumbent local official, which can differ starkly from place to place. In many cities, street vendors are forced to pay bribes to the authorities in order to work.

During the COVID-19 pandemic, street vendors were barred from the streets after a nationwide lockdown was implemented in an attempt to stem the spread of the deadly virus. But the move threatened not only the livelihoods of those involved in the underground economy but also the very survival of informal vendors and their families in some places.

It was also during the pandemic that the government allocated an emergency fund of some 200 billion pesos (around $3.57 billion) to 18 million needy Filipinos. They are still eligible for a monthly assistance of 5,000 to 8,000 pesos (roughly $89 to $143). However, the so-called cash transfer program has been marred by allegations of corruption, and Sabtula said that she did not receive even a single cent from the local government.

Three years after the implementation of the lockdown, the country is easing restrictions. Both Rodriguez and Sabtula said that they are still barely making ends meet, but at the same time, they said that it is better than earning nothing.

Rodriguez recalled the time prior to COVID-19, when it was easy and profitable to sell his products not only in Mabini Street but in other parts of Tarlac City. “Before the pandemic happened, all the balut eggs provided by our distributor were quickly sold out,” he said, while counting his earnings. “Competition is very hard that time because you have to deal not only with competitors who sell the same products but also with law enforcers who sometimes close down the stalls. Even then, I manage to sell almost all of my products in a week and earning is good enough.”

He also added that to prevent losing more customers in the past, he did not change the price of the balut eggs despite some of his competitors doing so. “Even my fellow vendors would get angry at me at times for not changing my prices. Maybe it’s because of competition or genuine concern for me,” he said with a laugh.

Similarly, Sabtula has not changed her prices, and there were even times during the pandemic when she had to lower the prices just to satisfy the few remaining customers that were willing to buy directly from her residence. “Right now, the situation’s already going back to normal and I am relieved for it because during the pandemic, I was always worrying where I would get money to feed my kids,” she said.

According to Ditte Fallesen, a social development expert for the Danish Parliament’s Foreign Affairs Committee, the COVID-19 pandemic had had a serious effect on livelihoods in the Philippines, especially those in poor communities. In an article that she published on a World Bank blog in November 2021, she listed jobs in the informal sector as having been affected the most by the pandemic. Aside from street vendors, owners of sari-sari kiosks, laundry women, hairdressers and barbers, and workers at small food canteen businesses all experienced significant work and income losses.

Even prior to COVID-19, efforts to integrate street vendors to the formal economy have been lackluster. For instance, former Manila Mayor Francisco “Isko Moreno” Domagoso made cleanliness one of his campaign promises back when he first ran for office. But while he made good on his promise to cleanse the streets of Manila of street peddlers, there was no clear plan from Domagoso or from other Manila officials on how to deal with street vendors and other informal workers, which comprise more than 70 percent of total employment in the capital.

There were also plans by incumbent Quezon City Mayor Joy Belmonte to relocate all the displaced vendors to a public market, but it was also disclosed that it would take two years for the new marketplace to be constructed. This meant that street vendors have had either to find other sources of income for two years or that they have to move out of the National Capital Region to find somewhere to conduct their business.

While there has been no official announcement about the end of the pandemic, cases remain low. But under the administration of President Ferdinand Marcos Jr., who took office last year, little progress has been made to help street vendors and other sectors of the informal economy get back on their feet. Current Manila Mayor Honey Lacuna signed a local executive order stating that street vendors are no longer allowed to put up stalls in specific areas, while a lawmaker recently filed a bill penalizing vendors who erect stalls on the sidewalks in an effort to minimize danger.

As Rodriguez handed over his last balut egg for the day, the afternoon sun slowly disappearing in the west, he said, “I still consider myself lucky that I was able to get back to work.”

He then sat down on the pavement and stretched his legs. “I’ve been doing this for more than 20 years,” he said. “I just hope I can survive in this business for the next few years.”