Abstract:
This paper investigates the determinants of job satisfaction, profitability and informality in the informal sector in Egypt. It is based on a sectorally structured sample survey that elicits the views of 90 employers and 180 employees regarding informality. With respect to employers, findings indicate that they tend to be more profitable in the trade sector and have a higher probability to remain informal in the manufacturing sector. For employees, satisfaction is higher in the manufacturing sector. Overall, higher levels of education are positively associated with employers’ profitability, but negatively with employees’ job satisfaction. The paper also finds that decent work conditions are important for profitability and job satisfaction. To conclude, the study stresses the importance of gradually motivating the informal sector to formalize. This could be achieved for example by linking upstream informal entities to downstream formal ones. Such linking may gradually bring about the acquisition of knowledge, efficiency and adherence to specifications that could motivate these entities to shift to formality.
