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What is informal employment

Why does it happen?

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What is informal employment and why does it What is informal employment and why does it happen?happen?

• The official definition: The informal sector is largely made up of jobs over which there is little or no official control. It includes jobs such as child minding, domestic cleaning and bar tending.

• In HICs, this is the main area for the informal economy. • Previously, in the UK for example, this also included

something called the ‘Black economy’ or the ‘Lump’. • A lot of building workers were paid by the day in cash and

did not pay tax nor did they show up as being employed – in fact many claimed unemployment pay and worked illegally.

• Because of its illegal nature, pay rates were much lower than regular workers and so building contractors were only to happy to use them.

• Another group were illegal immigrants who worked in sweat shops for long hours, poor and often unsafe conditions and very low pay.

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What is informal employment and why does it What is informal employment and why does it happen?happen?

• But the minimum wage and the demand that building contractors withheld money, even from self employed people, to off-set tax has resolved many of these issues.

• Officially, someone cleaning houses for a few hours a week or doing a bit of baby sitting should be registered as an employee but small infrequent jobs of work are largely disregarded by officialdom. However, they do form part of the informal economy.

• In MICs and LICs the informal sector is far less controlled and involves a much greater variety of people and jobs.

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What is informal employment and why does it What is informal employment and why does it happen?happen?

• In LICs/MICs most street workers do not appear on any statistics - these include street vendors, shoeshine boys, car washers, litter pickers, as well as employees of back street workshops who work long hours in dangerous conditions.

• In some countries, children are sold by their parents to become ‘apprentices’ and so are virtual slaves until they reach adulthood and as it is for most part illegal to employ young children, they do not appear in any statistics either.

Venezuela

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What is informal employment? Why does it happen?• For example in India it has been estimated that the informal

economy was responsible for 60% of net domestic product, 68% of income, 60 % of savings, 31% of agricultural exports and even 41% of manufactured exports! Some estimates say that as many as 80% of the population earn most of their money through informal means.

India street market

In another example, Nigeria, it is thought that 40-45% of the GDP comes from the informal economy, even though Nigeria is a resource- rich country.

Guatemala

Siting factoriesSiting factories

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Why is industry situated where it is?Why is industry situated where it is?

• Factories might be built by an individual, a private firm, a large national company or a TNC (transnational corporation – can you name one?)

• Before it can be built, decisions have to be made about what is the best site for its location.

• It is unlikely that any one site will have ALL the best possible attributes

• But certain factors are more important than others, depending on the nature of what the factory will produce. The bottom line will be, on which site will we make the most profit?

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Factors Affecting Location of IndustryFactors Affecting Location of Industry

TransportRaw materials

Environment

LabourGovernment/EU

Capital

Market

Location/Site

Energy

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THESE ARE SO IMPORTANT. DON’T CLICK BEYOND THIS SLIDE UNTIL YOU CAN RECITE THESE WORDS. Learn them in THREE BLOCKS OF FOUR WORDS!

RAW MATERIALS

ENERGY

LOCATION/SITE

LABOUR

CAPITAL

MARKETS

GOVERNMENT POLICY

ENVIRONMENT

TRANSPORT

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Physical factorsPhysical factors

• Raw materials – the bulkier and heavier they are to transport, the more like the factory will be close to the raw materials.

• Power/ energy – in times of water and steam power the location near fast moving water or a coal mine would have been important – now electricity is nearly everywhere

In the 19th century it was the physical factors

that were most

important

Why

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Location / SiteLocation / Site

• The Land on the site is crucial to industry, new industries have certain demands:- flat land – cheap to build on- room for expansion- access to excellent communications such

as dual carriageway or railway• Location

- near to market- large population of skilled workers- near to a Port?

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RAW MATERIALS

ENERGY

NATURAL ROUTES

SITE AND LAND

HEAVY INDUSTRY IS TRADITIONAL INDUSTRY THAT GREW IN THE UK DURING THE 19TH CENTURY. IT’S LOCATION IS INFLUENCED BY THE FIRST FOUR FACTORS. YOU WILL HAVE STUDIED THE LOCATION OF IRON AND STEEL.

Heavy Industry will locate near raw materials as they are heavy to transport.

Traditional heavy industry relied on coal as a source of energy. Many industries located on coalfields.

Natural routes leading to you factory would help. Flat valley floors for railways and deep water ports

This is a key factor for all industry. Flat land is often needed, ideally with room for expansion. Low quality farmland can be cheap but increasingly “greenfield” sites are more expensive than “brownfield” sites.

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Push and Pull FactorsPush and Pull Factors

• A PUSH factor is a factor which causes an industry to move out of an area.

• A PULL factor is a factor that attracts an industry into an area.

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The PUSH of Inner City LocationsThe PUSH of Inner City Locations

• Cramped sites with no room for expansion

• Old out-dated factories

• Congested roads in city areas

• Higher rates/mortgages for buildings near city centres and greater competition for land

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The PULL of an Edge-of-Town LocationThe PULL of an Edge-of-Town Location

• Modern factories often specially built in advance• Good communications with a dual

carriageway/motorway nearby• Lots of space for expansion for future

developments and car parking• Cheaper sites as land values decrease from the

CBDCBD (CCentral BBusiness DDistrict – town centre)• Many areas are specially selected by the

Government to receive grants and financial aid• Near skilled and mainly female workforce in

modern private housing estates and commuter villages

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Human and Economic FactorsHuman and Economic Factors

• Labour – the right number and of suitable quality in terms of skills.

• Capital to invest

• Market – you need somewhere to sell the goods – the closer to the market the less the transport costs –

• One reason why Sony decided to make TVs in the UK was because it gave them easy access to the whole of the EU – 350 million and most of them well off!

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TransportTransport

• Sea

• Air

• Road

• Rail

Necessary for an industry relying on imports of raw materials or the international export of goods.

e.g. The Car Industry – Nissan in Sutherland

Used mostly by ‘light’ industries producing expensive products or industries that rely on fast delivery.

e.g. Parcel Force or IBM

Most commonly used in Tertiary industry delivering products throughout the country to markets.

e.g. Supermarket Giants, Flowers from Europe

Transport of finished products. This form of transport has become more popular again recently as Environmental Issues have become important. e.g. Tesco

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Government IncentivesGovernment Incentives• The kind of help governments offer companies

to set up in high unemployment areas include: Grants, which is money given to the company Loans, money given to the company that has to be

paid back over time Training, so that people will have the skills they need

in your industry Infrastructure, improvements in e.g. roads, electricity

supply, telecommunications and the water supply Constructing buildings that the companies can move

into. • Government aid is provided by the local

authorities, the British Government and the European Union.

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EnvironmentEnvironment

• Industry is concerned with image

• New industries are well landscaped and managed, this encourages skilled workers and clients to see the industry as professional and prosperous.

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It is human and economic factors that attract It is human and economic factors that attract modern industrymodern industry

• Modern industries tend to be light and hi-tech in nature and so do not need lots of space or to be near the source of raw materials.

• However good transport links, being close to the market and where there is government assistance is much more important!!

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LIGHT INDUSTRY IS MODERN INDUSTRY THAT HAS GROWN IN THE UK DURING THE 20TH CENTURY. IT’S LOCATION IS MOSTLY INFLUENCED BY THE LAST eight FACTORS.

LABOUR

CAPITAL

MARKET

TRANSPORT

Industry may locate for quality of labour (near a University) or quantity (near a large town)

Early industry needed to gain funding from wealthy entrepreneurs. Banks now fulfill this role.

Access to a market is now very important. This may cause an industry to locate in a particular area or even country.

Nearness to motorway junctions is now often a preferred site. Industry may locate near market to reduce transport costs or at a port so that imports can go directly into the factory rather than incur costs of a second form of transport.

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GOVERNMENT POLICY

IMPROVED TECHNOLOGY

ENVIRONMENT

Governments may offer incentives to industries to encourage them to locate in areas that need extra jobs etc. Incentives include tax reductions and offering a grant for each job created.

Electronic communication means that locating near customers etc may be less important. Telephones, fax and the internet can be used instead.

Locating in an area that has good facilities may attract good staff. People will be reluctant to move for a job if the local area offers little to do in leisure time.

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Footloose IndustriesFootloose Industries

• Light industries are termed "footloose" they are not tied to the location of raw materials as heavy industries are.

• “Footloose and fancy free !!” – NO TIES !!

• All these industries need are excellent communications, access to skilled workers, being close to a market and usually Government incentives are provided.

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Governments can offer grants to companies locating in declining areas. For example

Samsung was given £58 million for locating in

Teeside.

Governments may set up Urban Development

Corporations or Enterprize Zones. For example the

Teeside UDC reclaimed old industrial land and prepared

it for new businesses

Invest in transport links that may make

the area more attractive for

footloose industries

Other incentives governments can offer

include:- a grant for every job created, tax incentives

in the first year of business and free

premises for 12 months.

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Industrial DeclineIndustrial Decline

• As the type of industry and its location changed many problems were created in the older industrial areas.

Factories CloseUnemployment Rises

Less income and money to spend in community

People move away

Factories pulled down

Increase in derelict (waste) land

Reduction in Market for Goods & Services

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Some new developmentSome new development

Old Railway Sidings - Unused

Derelict Land

Coastal Location

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Features of Industrial DeclineFeatures of Industrial Decline

• Choose the correct word from the brackets !!

1.As industry decline in an area unemployment (increases / decreases)

2.Many small supply industries are forced to (open up / close down) when a large factory closes

3.People have (more / less money to spend when jobs are lost

4.Derelict, waste ground begins to (disappear / appear)5.Some people (move away / stay) hoping to find new jobs6.The number of local shops and services (increases /

decreases)

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Industrial DeclineIndustrial Decline• Economic effects - to do with money - unemployed

people have less money to spend, local shops and pubs take in less money, the local government gets less taxes and therefore has less money to spend, services such as schools and post offices are cut back, more people leave and so the area is badly run down.

• Social effects - to do with people - e.g. unemployment, low standards of living, family break-ups, crime, vandalism and depression. As many younger people will move away to look for work the area gets an ageing population.

• Environmental effects - to do with the surroundings - e.g. empty factories and houses, gap sites (where buildings used to be), waste ground and dirty buildings. One positive effect of the old polluting factories closing down is there is less air and river pollution now.

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Regional Differences within the U.K.Regional Differences within the U.K.

• Areas which have depended on the old, heavy industries (coal mining and iron and steel) have low wages, high unemployment and population decline. Areas like these include parts of the North-East of England, Central Scotland and South Wales.

• Areas which have modern, light industries have low unemployment, high wages and population increase. Areas like these include parts of south-east England and East Anglia.

Poor NorthThriving Rich South

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Factors Attracting New Industries

Why is Nissan sited in NE England?

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Map of NE EnglandMap of NE England

NE England

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Recent Industrial ChangesRecent Industrial Changes• Recently new employment has been provided by overseas

companies, as shown on the map below.

• New employment in North East England

These developments have further diversified the types of manufacturing industry (motor, electronics, off-shore supplies), and have provided more opportunity for office and retail work. The region has been particularly successful in attracting call centres, which employ more than 30,000 people.

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Reasons for Growth Reasons for Growth (Physical and Human)(Physical and Human)

• Availability of GreenfieldGreenfield sites

• Availability of BrownfieldBrownfield sites (previously used industrial area)

• These sites provide room for expansion.

• Deepwater Ports are available for the IMPORT of raw materials and for the EXPORT of finished products- in particular to EU countries.

• Good road infrastructure A1 (motorway) access from North/South UK

• Airports for both business travel and movement of products - close proximity to Newcastle and Stockton on Tees Airports

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Part 2 - Reasons for GrowthPart 2 - Reasons for Growth

• Large supply of skilled labour available from Newcastle, Stockton on Tees and Middlesborough after the decline of traditional engineering industries.

• Training opportunities available - local colleges and universities

• Relatively low ways in comparison to other European developed nations

• Few working constrictions in UK.

• Being an assisted government area, local and national incentives and grants were available.

• English language a benefit in EU/world market place

• Multiplier effect for new supplier/component companies

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Identifying Industrial Location Factors from Identifying Industrial Location Factors from maps and photos OF THE Nissan sitemaps and photos OF THE Nissan site

Additional flat land is available for expansion.

This is the Nissan plant, attracted to the NE by government grants and a strong tradition of engineering in the region.

The A 19 offers a major north-south transport route for the shipping in of components needed to build the cars and the export of the finished product to a European market.

The site is close to the major cities of Newcastle an Sunderland, a handy and skilled workforce.

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Identifying Industrial Location Factors from Identifying Industrial Location Factors from maps and photosmaps and photos

The Nissan plant occupies a site of over 2 miles2

The room for expansion is clear here

A test track – fancy a drive?

This major transport axis is good for workers and the movement of finished products and components.

The river Wear offers another transport option

The Nissan site was built on a disused airfield, close to farming areas

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LocationLocation • NMUK is located in the Washington area of Sunderland, in a triangular area of land between the A19, the A1231 Sunderland Highway, and Washington Road.

• The factory is adjacent to the Nissan Distribution Centre (NDS), and a number of synchronous suppliers. The landscaped NMUK site incorporates conservation areas, such as ponds, lakes and woodland.

• The site, once the Sunderland Airfield, was close to large ports on the Tyne and Tees, within easy driving distance of the international Newcastle Airport, and close to major trunk roads such as the A1 and A19.

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How the government assisted..How the government assisted..

• In February 1984, Nissan and the British Government signed an agreement to build a car plant in the UK.

• As an incentive, the land was offered to Nissan at agricultural prices; around £1,800 per acre.

• The North East region of England had recently undergone a period of industrial decline, with the closure of most of the shipyards on the Tyne and Wear, and the closure of many coal mines on the once prosperous Durham coalfield. The high unemployment this caused meant Nissan had a large, eager, manufacturing-skilled workforce to drawn upon.

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Why did Nissan want to come to Washington?Why did Nissan want to come to Washington?

• NISSAN – A Japanese TNC• Wanted a foothold in Europe (access to European

market without paying import taxes).• Located in Washington (Sunderland) because:-

Large site for building (an old airfield) that was flat and had room for expansion.

The NE of England has a history of engineering skills from ship building that could easily be modified and staff trained to build cars the Nissan way.

Nearness of port (Tees) for import and export.

• Globalisation helps companies avoid trade restrictions. eg Nissan gained access to the EU market by locating in Sunderland.

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Recent developmentsRecent developments

• April 2009• Government scrappage schemes operating

in Europe, and planned for the UK from later this month, have prompted Nissan to recruit 150 manufacturing staff on fixed-term contracts from June for its Sunderland plant in north east England.

• Nissan is expecting additional, short-term customer demand for the UK-made Micra, Note and Qashqai models as a result of the scrappage schemes.

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Recent developmentsRecent developments

• Tuesday, 21 July 2009

• Nissan has announced plans to build a plant for the production of its advanced lithium-ion batteries in Europe, the first significant step towards producing batteries for its Zero Emission Mobility Program in Europe.

• As part of the newly established Low Carbon Economic Area, Government intends to establish a new training centre, specialising in low carbon automotive technologies; a technology park and an open access test track for low carbon vehicles.

• Research takes places at the Centre for Advanced Electrical Drives at Newcastle University and Sunderland University’s Institute for Automotive and Manufacturing Advanced Practise (AMAP) provides design consultancy and state-of-the-art training for both new entrants and experienced engineers.

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Recent developmentsRecent developments• Friday, 18 December 2009 • Regional Development Agency One North East and car

manufacturer Nissan Motor Co., today entered the next phase of their partnership on the development of zero emission mobility in North East England.

• Under the agreement, One North East will install at least 619 publicly available, ‘future-proof’ charging points by January 1, 2011, which will support both 3kW and 7kW charges and twelve 50kW ‘rapid-charging’ stations. Electricity at the 619 charging points will be provided free of charge until March 31, 2012.

• Nissan has agreed to supply Nissan LEAF electric vehicles to the region in early 2011 and to place priority on requests for electric vehicles in the UK from North East England.

• Nissan LEAF is the world’s first affordable electric vehicle. Designed specifically for a lithium-ion battery-powered chassis, the medium-size hatchback comfortably seats five adults and has a range of more than 160km (100 miles) to satisfy real-world consumer requirements.