Socio-economic Status of Informal Sector Business Entrepreneurs in Bangladesh

Abstract

Informal sector business is a highly growing sector of Bangladesh which is defined as the businesses that are neither taxed nor monitored by any form of government or authority. A large number of small and medium enterprises (SMEs) fall into this category of the informal sector of businesses. The major driving forces behind the growth of informal sector businesses in Bangladesh are the rise in household demands for goods and services manufactured and supplied by them as well as the rise in demand for intermediate inputs. Unlike the formal economy, activities of the informal economy are not included in the country's Gross National Product (GNP) or Gross Domestic Product (GDP). The largest numbers of employments of Bangladesh are also created by this sector. At present, more than eighty percent employments of the country are in informal sector. As the businesses of this sector are highly fragile, the employments in this sector are also vulnerable in nature. These informal businesses are highly unregulated and unrecognized in the country. People who are engaged in this sector include wage laborers, self-employed persons, unpaid family labor, piece-rate workers, and other hired labors. The informal sector businesses are mainly engaged in toiletries, electronics, clothing, household accessories, stationery, fruits, vegetables, foods, etc. Although, informal sector businesses have a significant contribution to the economy of Bangladesh, the entrepreneurs of this sector are neglected by the government and other supporting organizations. Hence, this study aims at identifying the socioeconomic status of informal sector business entrepreneurs so that they can properly be addressed by the appropriate authorities and the policymakers of the country. For conducting the study, 212 informal sector business entrepreneurs located in Dhaka city were interviewed with a structured questionnaire. Descriptive and inferential statistics were used to analyze the data. Results show that the informal sector entrepreneurs of Bangladesh face an unfavorable business environment that is mainly characterized by a number of challenges such as, no stable place for business, low technical, administrative and government support, no marketing knowledge, lack of scope for professional development, etc. Study also found that the socioeconomic status of the entrepreneurs has been improved by their attachment with these businesses. It improved standard of living of the entrepreneurs, use of gas in cooking, increase safety in working lives, improved housing and medical facilities, increased savings and deposits in banks, increased awareness about the people and the society. This study suggests that the policymakers of Bangladesh should extent supports to the informal sector entrepreneurs in or to increase their contributions to economy of the country.