Informal waste workers are primarily compensated through a free-market system based on the commodity value of the materials they recover and sell. Their compensation is highly variable, relying on profits rather than fixed wages.
Here is a breakdown of how informal waste workers—such as recyclers, dismantlers, and collectors—are compensated:
1. Revenue Sources
- Sale of Recovered Materials (Profit Motive): Informal workers, particularly collectors and recyclers, are driven by the profit motive to retrieve materials. They collect discarded items, such as paper, plastic, metal, and glass, and sell these materials to bodegas (warehouses or junk shops). The money they earn comes from the intrinsic value of the materials.
- Reselling for Reuse: Workers often sell reusable items like clothing, books, and functional electronic equipment directly at flea markets, which contributes to their income. For example, in the informal e-waste sector, dealers repair and sell computers or functional parts, which is more profitable than selling them as metal bits.
- Agreed Exchange/Paid Exchange: In some organized arrangements, recyclers may be hired by educational institutions or residential complexes on a full- or part-time basis to manage and sort waste. In these cases, the recycler gets to keep the recyclable material as compensation (agreed exchange). In a paid exchange, a variation of this arrangement, they are paid for their labor in addition to keeping the materials.
2. Variability and Economic Conditions
The compensation and resulting income of informal waste workers are highly variable due to several economic and behavioral factors:
- Market Prices: Daily price fluctuations for materials, seasonal availability, and competition directly impact their income.
- Behavioral Economics (Consumption-Labor-Balance): Informal recyclers often operate based on a consumption-labor-balance principle, meaning they may work as many hours as needed to earn enough revenue to meet their immediate needs.
- When material is scarce, they may work longer hours for a meager profit.
- When material is abundant, they may work fewer hours and focus on higher-value items, leading to higher profits.
- This ability to adjust their own wages means they value their own labor highly when work is plentiful and lowly when it is scarce.
- Mode of Collection: The type of vehicle or equipment a collector uses directly impacts their income:
- A recycler using a small device like an over-the-shoulder burlap bag or a wooden board on wheels might earn USD$2–7 per day.
- A collector using a large hand-drawn cart or tricycle might earn up to USD$15 per day.
- Those using horse-drawn carriages, due to their large storage capacity, could make around $40 per day.
- Job Type: Within the informal e-waste sector in Addis Ababa, Ethiopia, income levels vary significantly. Dismantlers (waste-pickers) generally fall into the lowest income bracket (less than 1,000 ETB/month), while electronic repairers and maintenance workers often fall into the highest income bracket (up to or above 10,000 ETB/month).
3. Financial Sustainability as a Free Service
Because informal workers derive their income from the resale of collected materials, the service they provide is essentially "free" to the municipality. This economic structure makes the unregulated recycling system financially sustainable on its own, as each segment (collection, storage, sale) operates at a profit and the costs are absorbed by the network of people and businesses, not a central subsidized institution.
Compensation for these workers in the unregulated system means they exchange their labor for the resource value of the goods they collect. The total cost of handling a tonne of recyclable material in the informal system is significantly higher in aggregate (e.g., ~$1,900/tonne in Bogotá, with about $935/tonne covering labor costs) than in a formal system (e.g., $415/tonne), but the unregulated system’s revenues exceed its costs, guaranteeing its persistence.
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