Retirement perspectives and coping mechanisms of urban informal economy workers: Ghana's case

Abstract

Background
The informal economy in Ghana plays a crucial role in both employment generation and contributing significantly to the nation's gross domestic product (GDP). However, this segment of the workforce often faces precarious conditions and lacks adequate work-related social protection. Proposed solutions, such as extending formal pay-as-you-earn pension schemes, have limitations. Additionally, traditional social security arrangements are diminishing due to globalisation, urbanisation, migration, and shifts in Ghana's economic structures.
Despite these challenges, there is a limited understanding of the coping mechanisms employed by informal economy workers to secure income in old age. This study addresses this gap by investigating the perceptions and strategies related to old age and retirement planning among informal economy workers and how these perceptions shape their approaches to ensuring income security in old age. Furthermore, it explores how these perceptions influence their attitudes in the context of a precarious labour market.


Methodology
This research adopts a qualitative approach and purposefully samples respondents using the snowball sampling technique. Data is collected from 40 urban informal economy workers in Accra and Kumasi during an in-depth face-to-face interview using a semi-structured questionnaire. The dataset is analysed using thematic content analysis, focusing on income levels, job stability, and social relationships.
Findings
The study identifies three distinct groups within the informal economy: the thriving, the intermediates, and the hand-to-mouth. Each group employs unique strategies to address the challenges of informal work and retirement planning. The Thriving group, characterised by higher incomes, stable employment, and stronger social networks is better positioned for long-term retirement planning. They view full retirement as an eventual goal, dependent on their ability to fully fund a retirement income out of their investments, even though they associate this with a behaviour more typical of formal workers.
The intermediates, although more secure than the hand-to-mouth group, have fragmented strategies that lack guarantees. They rely on social relations to safeguard their futures but view retirement as a transition from work to partial retirement because they do not have enough investment to provide them with the needed income in retirement. However, some anticipate continuing to work beyond this transition.
In contrast, the Hand-to-mouth group is the most vulnerable to economic shocks, with low incomes, unstable jobs, and weak social networks. They prioritise their present financial situation over thoughts of old age and retirement, believing work should continue until illness or death.
This research expands on the current understanding of old age income security in the informal economy by presenting the requirements and challenges of three unique groups. It exposes serious gaps in the efficacy of formal social security programmes, casting doubt on the widely held belief that they are adequate for workers in the informal economy. The results highlight the need for tailored policy responses that consider the unique traits and needs of these groups operating in the informal economy.

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Identifiers

ORCID for Isaac Kwaku Frimpong: orcid.org/0009-0009-7541-536X

ORCID for Paul Bridgen: orcid.org/0000-0001-6039-3254

ORCID for Traute Meyer: orcid.org/0000-0003-0767-8351

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