An investigation of the integration challenges of informal contractors in the formal economy : a South African perspective

Abstract

This study investigated the integration challenges of informal contractors in Boshof, Dealesville and Hertzogville in the Tokologo Local Municipality (TLM) of the Free State Province of South Africa. The aim of the study was to understand the integration challenges through a literature study, to identify and explore these challenges, and to propose strategies to assist informal contractors for easy integration into the formal economy. In order to attain the objectives, a qualitative approach was adopted, aided by semi-structured interviews, and Focus Discussion Groups (FDGs) were conducted among informal contractors in the study areas. By means of purposive sampling, the researcher selected 134 informal contractors from the study areas. They participated in the research and were interviewed in two different groups.

Integrating informal contractors in the formal economy is key to the survival of rural contractors and for rural economic growth. Successful integration enable informal contractors to access infrastructure in the formal economy, acquire skills, and market their services on a larger scale. As such, they can create job opportunities, reduce rural unemployment, and sustain the informal economy. Integrating the formal and informal economic sectors is beneficial to the South African economy as it allows for the sharing of available resources, namely infrastructure, information, knowledge, and the expertise of individuals.

Chapter one provided the overall orientation of this study. Chapter two gave an account of the literature on informal contractors, and an overview of the South African construction industry, as well as the integration challenges. The chapter also explained the formal and informal economy and its significance. Chapter three examined how the study was conducted, taking into account the research design and methods. In Chapter four, a detailed account was provided on the analysis and interpretation of the research outcomes. Chapter five provided recommendations, taking into consideration the research outcomes stated in Chapter four.

It came to light that integrating informal contractors in the formal economy faced serious challenges, namely a growing fragile infrastructure, the lack of information and knowledge, difficulties in receiving skilful and specialised training and education, the inability to access marketing information, and a lack of funding and government support. Given these challenges, informal contractors were unable to recruit skilled employees and to sustain the informal construction industry in general. In was recommended that education and training be provided to contractors in the informal economy to enable them to easily access industry information.

Considering these challenges, the strategy of traditional apprenticeship programmes was suggested. One of the key features of this strategy is its flexibility and the combination of work and learning in a specialised field. This strategy is self-financing as it allows individuals to train and work to pay for all their expenses. The programme is linked to future employment opportunities.