In the last decade a number of emerging markets have recorded relatively high growth rates, yet many struggle to
convert this growth into improvements in poverty and inequality, suggesting that this economic growth is not
inclusive. Inclusive growth refers to growth that produces employment and income benefits for vulnerable
population groups, thus reducing poverty and inequality. Growth may fail to be inclusive when a large number of
individuals do not participate in the formal economy and are either informally employed or unemployed. This
research seeks to better understand the relationship between informality and inclusive growth in Africa, with a
particular focus on South Africa. South Africa stands out in the region for having relatively high levels of
unemployment and low levels of informal employment. As a result, South Africans typically hold one of two
opposing views on informality. The first is that the informal sector is an underutilised source of new employment
that should be promoted, since ‘any employment is better than unemployment’. The second is that informality
should be discouraged given the inferior quality of informal employment, and that the focus should be on creating
decent jobs in the formal sector. The central research question is therefore: “Do informal labour markets promote
or constrain inclusive growth?”