1. Statistics on the ‘Informal’ Economy  Informal Sector  Informal Employment Presentation by: Margarita F Guerrero Inter-regional Workshop on the Production of Gender Statistics 6 -10 August 2007 New Delhi, India

2. 2 Informal Sector (IS): Definition  Adopted by the 15th ICLS (1993) and included in the SNA 1993  Defined in terms of characteristics of production units/enterprises (enterprise approach) rather than characteristics of persons or their jobs (labour approach)  Defined as subsector of the SNA institutional sector ‘households’ (unincorporated household enterprises)

3. 3 Characteristics of IS activities  Registration : not registered according to existing registration laws (e.g., tax office; social security)  Scale of operation : small; low levels of organization, productivity and income  Employment : self-employed worker with no or very few regular paid employees  Place of business : ‘invisible’ places– small shops; at home; no fixed location  Objective: generation of income

4. Framework of IS Definition Informal own- account enterprises Enterprises of informal employers Other own-account enterprises Other enterprises of employers Household Unincorporated Enterprises Own-account enterprises Enterprises of employers Informal Sector

5. 5 Informal Own-Account Enterprises  Operated by own-account workers, either alone, or in partnership with members of same or other households  May employ family workers and occasional employees, but not employees on continuous basis  Include all or exclude those registered under certain specified national legislation

6. 6 Enterprises of Informal Employers  Owned and operated by employers, either alone or in partnership with members of same or other households, but which employ one or more employees on continuous basis Employees (hired on continuous basis) below a specified number Non-registration of the enterprise Non-registration of employees (labour laws)

7. 7 Criteria for Identifying IS Enterprise Essential  Legal organizationUnincorporated enterprise  OwnershipHousehold  Type of accountsNo complete set of accounts  Product destinationAt least some market output Additional Operational  Number engagedSpecific to country  Non-registrationSpecific to country

8. 8 Optional Criteria  Kind of economic activity Possible exclusion of: Agriculture and related activities Paid domestic services  Geographic areaPossible exclusion of rural areas

9. 9 Harmonized definition based on the recommendations of the Delhi Group  For international comparability-- narrower definition based on the largest common denominator of currently used national definitions.  3 essential criteria + additional criteria to be applied simultaneously: Productive units with less than five paid employees, and Productive units not registered, and Exclusion of households employing paid domestic employees

10. Measuring the Informal Sector  Measurement Objectives  Measurement Options (depend on objectives)

11. 11 Measurement Objectives  Employment in the informal sector  Structural information of enterprise— Number and characteristics of enterprises Production activities Income generation Capital equipment Operational conditions and constraints Linkage between formal and informal sectors  Demand of households for goods and services produced by the informal sector

12. 12 Employment in the Informal Sector  All persons who are employed in at least one informal sector unit irrespective of their status in employment and whether it is their main or secondary job Resolution concerning statistics of employment in the informal sector -ICLS 1993

13. Country% of total% of men% of women Georgia6.910.03.8 Turkey9.910.66.2 Russian Fed.12.612.912.3 Kyrgyzstan24.928.520.8 India55.755.457.0 Indonesia (a)62.759.368.2 Pakistan66.5 65.8 Thailand (a)71.0 71.1 Nepal73.367.486.5 Employment in the informal sector in Asia and the Pacific as a share (%) of non-agricultural employment National definition or (a) Related concepts

14. Country% of total% of men% of women National definition Turkey9.910.66.2 Russian Fed12.612.912.3 Harmonized definition Turkey 11.211.310.5 Russian Fed 5.55.35.7 Employment in the informal sector in Asia and the Pacific as a share (%) of non-agricultural employment

15. 15 Contribution of IS to GDP (unofficial)

16. 16 Contribution of Women & Men

17. Informal Employment

18. 18 Conceptual Framework: IE  Purpose : Relate/extend enterprise-based concept of employment in the IS in consistent manner with/to a broader, job-based concept of IE.  Basis : Employed persons hold jobs having various job- related characteristics, which are undertaken in production units (enterprises) having various enterprise-related characteristics.  Observation unit for employment: Jobs rather than employed persons (reason: multiple jobholders).  Result : Total employment classified by type of production unit and type of job.

19. 19 Conceptual Framework ( 17 th ICLS Guidelines )

20. 20 Informal Jobs of Employees Employment relationship is not subject to—  National labour laws  Income taxation  Social protection or entitlement to certain employment benefits, such as Advance notice of dismissal Severance pay Paid annual or sick leave

21. 21 Reasons for Informality  Non-declaration of job or of employees  Casual jobs or jobs of a limited short duration  Jobs with hours of work or wages below a specified threshold (e.g., threshold for social security contributions)  Employment by unincorporated enterprises of by persons in households  Jobs where employee’s work of place is outside the premises of the employer’s enterprise

22. 22 Informal Employment (IE) = Total number of informal jobs, whether carried out in formal sector enterprises, informal sector enterprises, or households, or = Total number of persons engaged in informal jobs during a given reference period

23. 23 Components of IE  Employment in the informal sector: Sum of Cells 3 to 8.  Informal employment: Sum of Cells 1 to 6 and 8 to 10.  Informal employment outside the informal sector: Sum of Cells 1, 2, 9 and 10.

24. Data Sources

25. 25 Surveys on the Informal Sector  Labour force survey  Household income and expenditure survey  Informal sector enterprise survey  Informal sector mixed household-enterprise survey Independent or ‘stand-alone’ ‘Rider’ to labour force or other survey  “1-2” survey

26. 26 LFS: Questions for measuring employment in the informal sector (1)  All respondents: Number of persons usually working in the enterprise by status in employment Place of work  Own-account workers, employers, contributing family workers: Form of registration of the enterprise, or Type of tax payment by the enterprise

27. 27 LFS: Questions for measuring employment in the informal sector (2)  Employees: Kind of ownership of the enterprise If private: Legal organisation of enterprise If unknown, Type of the enterprise (approximate information)

28. 28 Persons in informal employment =  Employers and own-account workers having informal sector enterprises +  All contributing family workers +  Producers of goods exclusively for own final use by their households +  Employees, including paid domestic workers with informal jobs

29. 29 Measuring IE thru an LFS (1)  Employees : additional questions for the identification of informal jobs of employees.  All other status-in-employment categories: whether production unit is formal enterprise, informal sector enterprise or household

30. 30 Measuring IE thru an LFS (2)  Some operational criteria used by countries to define informal employment: Lack of written employment contract Lack of entitlement to paid annual leave or sick leave or maternity benefits Lack of coverage by social security system Lack of stable or guaranteed work

31. 31 Mixed Household & Enterprise Surveys  Reporting units: IS entrepreneur/operator  Observation units: IS enterprises Household enterprises Establishments  Types Independent Module attached to existing household survey Integrated survey

32. 32 “1-2-” Survey Approach: Basic Idea Data is collected in two phases  First phase— Collect data on employment, including informal employment Collect data on characteristics to be able to identify HUEMs  Second phase— Use first phase data to construct sampling frame for HUEMs Collect data on HUEM Identification of ‘informal sector’ enterprise is done in the data analysis stage

33. 33 Market (all or most of output marketed) Non-market Producing at least some goods & services for market Producing goods & services for own final use Non-agricultural Agricultural GoodsServices Formal sector Informal sector Forma l sector Informal sector Agriculture, forestry, fishing Paid domestic services Other activitiesOwner occupied dwelling services Household Unincorporated Enterprises (HUEM) Starting point for data collection

34. 34 Identifying Criteria: HUEM  HUEM1. Legal organization Production units that are not constituted as separate legal entities independently of their owners  HUEM2. Book-keeping practice Production units that do not keep a complete set of accounts  HUEM3. Product destination At least some of the products are sold in the market

35. 35 Project on Measurement of IS & IE  Utilize existing data collection vehicles Phase 1- labour force survey (LFS)  Introduce modifications LFS- include data items for identifying HUEM (includes ICLS criteria on informal sector) and measuring informal employment Phase 2- HUEM survey  Integrate into regular data collection system

36. Analyses of Data on IE

37. 37 MDG3: Proposed New Indicator

38. 38 Informal employment in non-agricultural employment, by sex 1994/2000

39. 39 Poverty rates of formal & informal workers by sex

40. Segmentation of Informal Employment by Average Earnings and Sex ( UNIFEM, 2005 )

41. Poverty Risks of Households by Sources of Income ( UNIFEM, 2005 )

42. Poverty risk of households by sources of primary income ( UNIFEM, 2005 )

43. 43 Poverty rates by household category, India (1999/2000)

44. 44 Relative poverty rates of formal & informal workers by sex and status in employment

45. 45 Poverty rates among persons in households sustaining themselves on income from informal employment by type of employment income and industry, Urban India Source: Sastry, 2004 using data on EUS, 1999/2000

46. 46 Poverty rates by household type, South Africa 2003