Rethinking Informal Economy Resilience during Crisis: Experience from COVID-19 Pandemic

Abstract

The COVID-19 pandemic has disrupted the public health system and socioeconomic sector, one of the worst being the impacts on the informal economy. Despite their past survival, the current pandemic-induced crisis has cast doubt on informal economy resilience. This study aims to capture the informal economy resilience facing the unprecedented economic crisis triggered by the COVID-19 pandemic. We reviewed 42 selected peer-reviewed journal articles to synthesise a general concept of informal economy resilience during pandemic-induced crisis. We found that strict lockdown during a pandemic becomes the main driver that exacerbates the vulnerability of informal economy. The impacts are spatiotemporally varied, different within the group, and have multilevel characteristics (from individual to society). This vulnerable condition has triggered the informal economy to conduct several coping mechanisms to face economic disadvantages. Both individual coping mechanisms and government intervention have altered the informal economy's resilience throughout time. The current combination of defense mechanisms results in four possibilities: bounce back better, bounce back, recover but worsen, and collapse. This review offers valuable insights into the appropriate actions that governments should undertake in response to economic downturns resulting from pandemics. It highlights the importance of considering vulnerable groups when formulating policy during a crisis.