The booming informal economy in Algeria is dominated by dynamic, street-smart youth who find ways to get by despite the country’s crumbling formal economy. They also face serious stigmatization from a government which views their engagement on the fringes of the economy as illegal.
The informal economy—typically defined by economic transactions outside of formal regulation or state supervision—has played an important role in Algeria, particularly in recent years of rising unemployment. Jobs in the informal sector include minor trading, street hawkers, artisan and craft workers, transport, personal and residential services, small food vendors, and peddlers of all kinds. Although not typically recognized by the government, not taxed, and not counted in the country’s GDP, they are revitalizing parts of Algeria’s economy.
Housing and infrastructure in neglected areas have been built by citizens navigating through this marginal economy. They rely on it to provide their electricity, water, and other essentials. The Algerian government, however, views the informal sector negatively. Areas where informal economic activity is substantial, such as street markets, are often faced with disproportionate police harassment, with hawkers frequently being sanctioned for not having permits for their stalls.
The government’s crackdown is due to the high levels of tax non-compliance and disregard for state regulation common in the informal sector. Does a thriving informal economy mark a new way of life in Algeria or is it a sign that the country is struggling?
During the 1980s, Algeria faced a catastrophic economic crisis due to a global oil surplus and reduced oil prices. This led more Algerians to turn to the secondary marketplace for their basic needs. Moreover, the informal economy expanded as a result of then Prime Minister Chadli Bendjedid’s implementation of the Structural Adjustment Program (1990-1994), which aimed to introduce neoliberal restructuring.
The bigger layoffs caused by economic restructuring led to a rise in unemployment. In the peripheral urban areas of Algiers, young people are resisting social exclusion by occupying parts of the capital even as they are pushed out by global investors. They face difficulties from urban renewal plans, which threaten their access to both work and living spaces.
Due to urban restructuring, they are forced to live outside of the city’s peripheries. Yet, by engaging in the informal economy, they are refusing to be spatially excluded, and so they continue commuting to the kasbah (old part of the city)—to continue their activities, maintain their way of life, and remain attached to their ancient houma (the Algerian Arabic word for “neighborhood”).
Informal markets are perceived as an obstacle and a threat to economic restructuring efforts by urban renewal planners, who attempt to forcibly remove them from the marketplace.
These informal markets are perceived as an obstacle and a threat to economic restructuring efforts by urban renewal planners, who attempt to forcibly remove them from the marketplace.
The 2014 oil price drop also had a tremendously negative impact on the country, leading to an unsustainable economy. Despite promises of reform by the government, the political system remains unresponsive and stagnant. Economic restructuring projects imposed by international institutions, implemented to boost the failed Algerian economy, resulted in austerity measures: the government increased state revenues by raising the prices of regulated goods and services and expanding the tax base. Price deregulation also led to an increase in the prices of other goods and services without any corresponding increases in wages, which reduced the standard of living for many, driving more people into the informal economy.
One of the unfortunate side effects of the informal economy is that it paves the way for harmful, illicit industries that pose a threat, among other things, to human rights. The correlation between reducing restrictions on foreign trade and the development of clandestine operations to smuggle legal goods leads to an environment that facilitates human trafficking, the drug trade, and other problems. Undocumented sub-Saharan migrants, for instance—primarily from Mali, Niger, Nigeria, Cameroon, Burkina Faso, Guinea, and Liberia—are the most vulnerable to labor and sex trafficking in Algeria. Their vulnerability stems from poverty, language barriers, and irregular immigrant status.
As a result of the formal economy’s inability to provide an adequate standard of living for much of the population, targeted measures must be taken by the government to address the needs of vulnerable Algerians who can easily succumb to exploitation in illicit industries. President Bouteflika, completely out of touch with the boiling discontent of the country’s youth population, was ousted largely by young disenfranchised protestors. The government’s unresponsiveness to their needs led to their engagement in the informal economy in the first place and naturally to a desire for self-determination. What good is a government if it is utterly incapable of creating jobs or, at the very least, a regulated economic structure to allow people to create their own small trades and businesses?
The irony is that while the Front de Libération Nationale (FLN) government had previously described young people as the “hope of the nation,” much of the working class youth in Algeria is now marginalized. During the 1988 October Riots, young Algerians demonstrated on the streets of the capital to express their anger over the hogra (“power, abuse, injustice”) rampant in the FLN government. The military violently repressed the riots, making way for the first serious conflict between the state and the young generations in post-independence Algeria.
The stigmatization of the informal economy often runs parallel to the stigmatization of Algerian youth. Due in part to the mobilization of young Algerians by the Islamic Salvation Front in the 1990s, which painted Algerian youth as a source of risk, young people are also associated with societal problems such as overcrowding, poverty, and unemployment, and frequently linked in the media with crime and disorder.
This often means that they are side-lined from employment within the formal economy, excluded from educational opportunities, and often “exposed to precarious work and violence.” This marginalization makes them vulnerable to recruitment by radical political groups, a factor which perpetuates the vicious cycle. Algerian society has already been divided and damaged by the civil war in the 1990s, and further stigmatization of the informal economy without the creation of a formal and simple structure for individual business creation will deepen dangerous ideological divisions.
For young jobseekers and entrepreneurs to be more involved in the formal economy, the government needs to legitimize their work, take their needs more seriously, and implement policies that will diversify the formal economy to accommodate their inclusion.
Moving forward, young Algerians must participate in discussions about their own livelihoods, chronic unemployment, and the faltering economy. For young jobseekers and entrepreneurs to be more involved in the formal economy, the government needs to legitimize their work, take their needs more seriously, and implement policies that will diversify the formal economy to accommodate their inclusion.
Instead of being presented as dangerous by the media, Algerian youth should be presented as resourceful, dynamic, and talented, recognizing that they have created innovative ways to navigate an under-resourced country and inept economy by building their own.
After the ousting of Bouteflika, this historic moment has yet to show how it will shape the future of Algeria’s younger generations.