1. Copyright 2010, The World Bank Group. All Rights Reserved. The labor concept & the related indicators Part 1 Concepts Produced in Collaboration between World Bank Institute and the Development Data Group (DECDG)

2. Copyright 2010, The World Bank Group. All Rights Reserved. Concepts What are concepts? Answers what is to be described, e.g. unemployment Indicators are used to describe concepts Surveys reflect statistical application of concepts

3. Copyright 2010, The World Bank Group. All Rights Reserved. Concepts Concepts are often treated in different ways Questions not consistent with indicators used to describe a concept Questionnaire design can be problematic Different questions collecting different data Still attempting to explain the same concept Comparability suffers Across surveys Across time Across countries

4. Copyright 2010, The World Bank Group. All Rights Reserved. Labor Concepts Examples of labor concepts 4 LABOR FORCE LABOR SUPPLY: Population growth delivers the flow of labor supply Employed + Unemployed Full time Part time Underemployed (those who work part time but would like to work more

5. Copyright 2010, The World Bank Group. All Rights Reserved. Labor Concepts Follow ILO recommendations and guidelines International comparability Defined concepts to use by all countries National information and data needs Additional indicators can be considered Must be clearly defined Explain how and why definitions deviate from international standards

6. Copyright 2010, The World Bank Group. All Rights Reserved. Labor Concepts Developing countries Explore and evaluate concepts 1.What is relevant to individual country circumstances? 2.ILO definitions 3.Individual country needs

7. Copyright 2010, The World Bank Group. All Rights Reserved. Labor Concepts Developing countries Informal labor / employmentFormal labor / employment also Subsistence activities Non market activities A defined list of production work that needs to be measured Production of households for own consumption

8. Copyright 2010, The World Bank Group. All Rights Reserved. Labor Concepts How do we translate concepts into surveys producing indicators? Paid and unpaid labor activities Classification of activities provides view of how labor force activities relate to market and non-market activities Relationship between employment and non-market activities and the classification of formal and informal units 8

9. Copyright 2010, The World Bank Group. All Rights Reserved. Labor Concepts Working population Active Inactive Not in labor force (not working AND not seeking work) In labor force (working or seeking work) International standards exist to measure these concepts

10. Copyright 2010, The World Bank Group. All Rights Reserved. Labor Concepts Production units = Total of business units Formal units Informal units Formal sector Informal sector How to classify units: formal or informal One approach from the Delhi Group / ILO is size: informal units have fewer than 5 working persons Problems: - Not possible for international comparison - Comprises also formal units

11. Copyright 2010, The World Bank Group. All Rights Reserved. Classification of units Registration status criteria 11 - Defined according to national needs and possibilities - Registered for VAT? - Does employer pay income tax? - Registered with formal registration office?

12. Copyright 2010, The World Bank Group. All Rights Reserved. Labor Concepts Formal employmentInformal employment Written employment contractNo written employment contract versus Currently no standard exists regarding formal and informal labor

13. Copyright 2010, The World Bank Group. All Rights Reserved. Non-market activities Production boundary = all market transactions Inside Outside Productive activities Productive activities, but non-market transactions Non- productive activities

14. Copyright 2010, The World Bank Group. All Rights Reserved. Non-market activities Activities outside production boundary but considered productive Which non-market activities are relevant? Which topics? Collecting firewood Fetching water Construction Milling Other food processing Growing and gathering crops Burning charcoal Producing eggs and milk. Why to be measured? Individual country decision When important (relevant activities)

15. Copyright 2010, The World Bank Group. All Rights Reserved. Non-market activities Measured using Labor force survey Ask: Measurement: Hours worked Are the activities relevant? Are they done by the households? Are they done for other households? Are parts of these sold or exchanged for barter?

16. Copyright 2010, The World Bank Group. All Rights Reserved. Subsistence activities  Not fully integrated into the national accounts  No formal definition Subsistence = Production for own consumption for households Production value of subsistence activities are equal to value of similar production on commercial farms Informal production unit All production by informal units (market transactions) All not observed production in formal units

17. Copyright 2010, The World Bank Group. All Rights Reserved. Subsistence activities When are subsistence activities part of the market activities? 1.Purist position: When one apple is sold by a household unit, the unit is to be considered a market unit 2.More relevant approach: When enough is sold from household production to have a basic income, the household unit is to be considered a market unit 3.Concept of basic income: Depends on situation in country, can vary. USA: US$ 1,000.00 per month

18. Copyright 2010, The World Bank Group. All Rights Reserved. Subsistence activities Characteristics: Production units (households) not intended to operate as agents on markets No employment relationship Total time use can be measured as well as output

19. Copyright 2010, The World Bank Group. All Rights Reserved. Labor Concepts What can be measured of this complex of informal and other activities using a labor force survey? Informal units (size and registration) Informal labor (lack of written contract) Time use on non-market activities Measure subsistence activities (time use) Measure subsistence output (size of production) Also: Identify portion sold or traded with units outside family Then: collect data to identify the units and which part of output is traded. Summary of some labor concepts