Informal Construction Employment, Earnings and Activities: A Boon or Bane for Tanzania?

Abstract

This paper assesses whether the growth of informal construction employment and activities in Tanzania are a boon or bane for informal workers. It examines the importance of employment and income provision, employment conditions, and linkages between formal and informal firms. It also examines the determinants of earnings of workers and the challenges faced by the informal construction sector. The study finds that informal construction activities are important in providing employment and income to people, although a significant number of employees work without contracts and pensions. The level of informal sector earnings is also lower than that of the formal sector. The statistically significant results from regression analysis of the determinants of earnings, which are positively related to earnings are: age, education level, and number of years of experience. The policy implications of this study include: the need for informal construction employees to be affiliated to pensions and health insurance benefits; requirement of a mechanism to enable them to formalize easily in order for them to access credit and to expand their operations; improvement in their skills to enhance their income levels so as to reduce poverty; and to empower them to share in the growth of construction activities.