Transition from informal to formal economy: Awareness raising on R204 towards designing an integrated policy framework in the Philippines Name of presenter: Susanita “Babes” G. Tesiorna Title: Consensus Building On Which Definition Of Informal Employment and Sector in the Philippines

ASEAN SME Policy Index 2018 Dimension No. 5 INSTITUTIONAL FRAMEWORK

5. INSTITUTIONAL FRAMEWORK Implementation – one definition is not used consistently by all government agencies In the Magna Carta for MSME’s, flexibility is provided for different and additional measures to be used to determine firm size, which result in counting and policy inconsistencies For instance, the Phil. Statistical Authority uses a definition that includes number of employees to measure firm size.

Why harmonize the definitions and come up with one definition? focused intervention responsive and tailored-suit interventions > project and policy development > targeting comprehensive diagnostic study fix measures to tackle informal economy comprehensive procedure for monitoring and evaluation inclusive and wholistic statistics Inclusive governance

Definitions: Informal Sector NSCB RESO. NO. 15, SERIES OF 2002 1. Conceptual Definition: The informal sector consists of units engaged in the production of goods and services with the primary objective of generating employment and incomes to the persons concerned in order to earn a living. These units typically operate at a low level of organization, with little or no division between labour and capital as factors of production. It consists of households unincorporated enterprises that are market and non-market producers of goods as well as market producers of services. Labour relations, where they exist, are based on casual employment, kinship or personal and social relations rather than formal or contractual arrangements.

Informal Sector : Operational Definition 2. Operational Definition For statistical purposes, the informal sector shall refer to household unincorporated enterprises which consists of both informal own-account enterprises and enterprises of informal employers. Informal own-account enterprises are household unincorporated enterprises owned and operated by own-account workers, either alone or in partnership with members of the same or other households which may employ unpaid family workers as well as occasionally/seasonally hired workers but do not employ employees on a continuous basis. Enterprises of informal employers are household unincorporated enterprises owned and operated by own-account workers, either alone or in partnership with members of the same or other households which employ one or more employees on a continuous basis.

Informal Sector : Operational Definition Particular cases that are excluded: Corporations Quasi-corporations Units with ten or more employees Corporate farms Commercial livestock raising Commercial fishing

Definitions: Informal Sector RA 8425 OR SOCIAL REFORM AND POVERTY ALLEVIATION ACT OF 1997 (w) "Workers in the informal sector" – Refers to poor individuals who operate businesses that are very small in scale and are not registered with any national government agency, and to the workers in such enterprises who sell their services in exchange for subsistence level wages or other forms of compensation; (i) "Micro-enterprise" – Any economic enterprise with a capital of One hundred fifty thousand pesos (P150,000.00) and below. This amount is subject to periodic determination of the Department of Trade and Industry to reflect economic changes;

RA 9178 : Barangay Micro-Business Enterprise Act of 2002 BMBE: refers to any business entity or enterprise engaged in the production, processing or manufacturing of products or commodities, including agro-processing, trading and services, whose total assets including those arising from loans but exclusive of the land on which the particular business entity's office, plant and equipment are situated, shall not be more than Three Million Pesos (P3,000,000.00) The Above definition shall be subjected to review and upward adjustment by the SMED Council, as mandated under Republic Act No. 6977, as amended by Republic Act No. 8289.

Combination of NSCB Reso. No. 15, series of 2002 and RA 8425 Proposed definition to make “Go Negosyo Law and BMBE Act” work for the informal sector Legend: Red Font-RA 8425 Black Font-NSCB Reso No 15, series of 2002 Combination of NSCB Reso. No. 15, series of 2002 and RA 8425 The informal sector consists of vulnerable micro-enterprises with capital of less than P150,000.00 engaged in the production of goods and services with the primary objective of generating employment and incomes to the persons concerned in order to earn a living. These units typically operate at a low level of organization, not registered with any national government agency as micro-enterprise, with little or no division between labour and capital as factors of production. It consists of households unincorporated enterprises that are market and non-market producers of goods as well as market producers of services. Labour relations, where they exist, are based on casual employment, kinship or personal and social relations rather than formal or contractual arrangements. For the vulnerable micro-enterprises to enjoy the incentives as provided under BMBE Law, then requirements for the VME shall be relaxed and fees and permits in the LGU’s should take into account the affordability of the informal sector operators.

Other related definitions RA 10606 PhilHealth “(qq) Other Self-earning Individuals – Individuals who render services or sell goods as a means of livelihood outside of an employer-employee relationship, or as a career, but do not belong to the informal sector. These include businessmen, entrepreneurs, actors, actresses and other performers, news correspondents, professional athletes, coaches, trainers, and other individuals as recognized by the Department of Labor and Employment (DOLE) and/or the Bureau of Internal Revenue (BIR).

Other related definitions RA 10606 Phil Health “(ss) Professional Practitioners – Include doctors, lawyers, certified public accountants, and other practitioners required to pass government licensure examinations in order to practice their professions. “(vv) Members in the Formal Economy – Workers with formal contracts and fixed terms of employment including workers in the government and private sector, whose premium contribution payments are equally shared by the employee and the employer. “(ww) Members in the Informal Economy – Workers who are not covered by formal contracts or agreements and whose premium contributions are self-paid or subsidized by another individual through a defined criteria set by the Corporation.

SSS Coverage A self-employed person, regardless of trade, business or occupation, with an income of at least P1,000.00 a month and not over 60 years old, should register with the SSS. Included but not limited to the following are self-employed persons: 1. self employed professionals 2. partners, single proprietors of businesses and board of directors of corporations duly registered with appropriate government agencies 3. actors, actresses, directors, scriptwriters, and news correspondents who do not fall within the definition of the term “employee”

SSS Coverage 4. professionals, athletes, coaches, trainers and jockeys 5. farmers and fisherfolks, and, 6. workers in the informal sector such as market and ambulant vendors, public utility transport drivers, tourism industry related workers, and others similarly situated

Philippines - Informal employment Informal employment, female (% of total non-agricultural employment) Definition: Employment in the informal economy as a percentage of total non-agricultural employment. It basically includes all jobs in unregistered and/or small-scale private unincorporated enterprises that produce goods or services meant for sale or barter. Self-employed street vendors, taxi drivers and home-base workers, regardless of size, are all considered enterprises. However, agricultural and related activities, households producing goods exclusively for their own use (e.g. subsistence farming, domestic housework, care work, and employment of paid domestic workers), and volunteer services rendered to the community are excluded. Source: International Labour Organization, Key Indicators of the Labour Market database

Philippines - Informal employment Informal employment, male (% of total non-agricultural employment) Definition: Employment in the informal economy as a percentage of total non-agricultural employment. It basically includes all jobs in unregistered and/or small-scale private unincorporated enterprises that produce goods or services meant for sale or barter. Self-employed street vendors, taxi drivers and home-base workers, regardless of size, are all considered enterprises. However, agricultural and related activities, households producing goods exclusively for their own use (e.g. subsistence farming, domestic housework, care work, and employment of paid domestic workers), and volunteer services rendered to the community are excluded. Source: International Labour Organization, Key Indicators of the Labour Market database.

Philippines - Informal employment Informal employment, male (% of total non-agricultural employment) Definition: Employment in the informal economy as a percentage of total non-agricultural employment. It basically includes all jobs in unregistered and/or small-scale private unincorporated enterprises that produce goods or services meant for sale or barter. Self-employed street vendors, taxi drivers and home-base workers, regardless of size, are all considered enterprises. However, agricultural and related activities, households producing goods exclusively for their own use (e.g. subsistence farming, domestic housework, care work, and employment of paid domestic workers), and volunteer services rendered to the community are excluded. Source: International Labour Organization, Key Indicators of the Labour Market database.