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How a pyramid sketch redefined the informal economy — and the new data that is putting that 20-year-old idea to the test

4963, November 2018

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Summary :

Nearly two decades ago, Marty Chen, the founding international coordinator of WIEGO, sketched a pyramid diagram to describe the structure of the informal economy in a way that captured the diversity of risks. The image, which was based on reviews of the available data by two WIEGO founders, Jacques Charmes and S.V. Sethuraman, demonstrated the strong links between informal employment, poverty, and gender in ways that were not often recognized at the time. The pyramid visual was important, because, for the first time, it showed the diversity of work and earnings within the informal economy — and, importantly, the vast inequality between men and women.

The sketch eventually became WIEGO’s Pyramid of Risk and was published in the 2005 edition of the UNIFEM (United Nations Development Fund for Women) flagship publication, Progress of the World’s Women. Initially populated with data from six countries and demonstrating the hierarchy of risk by gender, it has become one of our foundational contributions to understanding the informal economy.


But a lot has happened since WIEGO’s founding 20 years ago, and we wanted to see how this important concept holds up to a growing body of knowledge, research, data and advocacy. With new data from South Africa, we set out to see how well the informal economy today fits into the pyramid, and, importantly, what that means for addressing working poverty in the Global South in 2018.