Informal Sector/ Informal Employment / Informal Economy: Definition in the Philippine Context Wilma A. Guillen ANS, Social Sector Statistics Service SSO, PSA Workshop on Transition from informal to formal economy: Awareness raising on R204 towards designing an integrated policy framework in the Philippines 29 November 2017

The PSS The Philippine Statistical System (PSS) is characterized by strong policies, with strong institutional organization, that also recognizes and practices strong partnership and collaboration in planning and development, in general, and in the SDGs monitoring, in particular. STRENGTHS Legal Frameworks for Data Institutional Organization Strong partnership/collaboration

The PSS STRENGTHS Institutional Organization Legal Frameworks for Data Presidential proclamation of the CRVS Decade 2015-2024, in March 2015 The PSS STRENGTHS Institutional Organization Legal Frameworks for Data PSA Board Resolution No 4, Series of 2016 enjoined all concerned government instrumentalities to provide the necessary data support to monitor the country’s performance vis-à-vis the SDGs based on the indicator framework that shall be determined by the NEDA, PSA and other government agencies. Philippine Statistical Development Plan (PSDP) Presidential proclamation of the CRVS Decade (2015-2024), in March 2015

The PSS Strong partnership/collaboration 1 9 2 1 9 2 8 8 7 3 3 7 6 5 4 Analyze the SDG indicators for policy-making 1 Capacity building Philippine Statistics Authority PHILIPPINE STATISTICAL RESEARCH AND TRAINING INSTITUTE NEDA OTHER DATA PRODUCERS DATA USERS, POLICY- & DECISION MAKERS, PLANNERS PRIVATE SECTOR CSO MEDIA PARTNERS Development Partners ACADEME 9 relevance of SDG monitoring to public policy Integration of the SDG framework in planning & programming 2 Development of statistical methodologies 9 1 2 8 8 Activities/Investments to support achievement of the SDG Generate statistics for some indicators 7 3 3 Funding Support Technical assistance 7 6 5 4 Generation of data SDG advocacy 4 Statistical advocacy Raising public awareness on SDGs 6 Compilation/generation of data 5

Statistical Coordination The PSS OUR STRENGTHS Statistical Coordination Mechanism System of Designated Statistics (SDS) Interagency Committees ** PSA Board Statistical Survey Review & Clearance System (SSRCS)

Statistical Coordination Mechanism The PSS OUR STRENGTHS Statistical Coordination Mechanism System of Designated Statistics (SDS) PSA Board Establish appropriate mechanisms to promote and maintain an efficient and effective statistical system in the government and formulate policies designate statistical activities in the PSS that will generate critical data for decision making of the government and the private sector shall have priority in terms of resource allocation, budget for which is endorsed by the PSA Board to the DBM, together with the other statistical activities activities under the SDS have priority in terms of resource allocation from the DBM Statistical Survey Review and Clearance System to ensure conformity with standard definitions, concepts and classifications, and consequently, the reliability, comparability and accuracy of statistics generated out of said surveys and/or censuses. ** IACs Agriculture and Fishery Statistics 15 .Migration Statistics Civil Registration and Vital Statistics 16. Monetary, Financial & Government Finance Statistics Education Statistics 17. Population and Housing Statistics Environment and Natural Resources Statisticcs 18. Poverty Statistics Financial Statistics 19. Price Statistics Gender Statistics 20. Science and Technology Statistics Governance Statistics 21. Security Statistics Health and Nutrition Statistics 22. Social Protection Statistics Information and Communications Technology Statistics 23. Statistical Information Mgt & Dissemination Investment Statistics 24. Statistical Standards and Classifications Labor and Productivity Statistics 25. Task Force on Big Data for Official Statistics Macroeconomic Statistics 26. Tourism Statistics Survey Design Trade Statistics Interagency Committees resolve issues on sectoral statistics 26 Interagency Committees

Informal sector Informal employment informal economy”: 3 Important Concepts Informal sector Informal employment informal economy”: refers to all economic activities by workers and economic units that are – in law or in practice – not covered or insufficiently covered by formal arrangements; and does not cover illicit activities

PSA Board Resolution 01, Series of 2017 Existing Definition (Phil) 2002 Official Definition of Informal Sector Resolutions Approved by the NSCB Executive Board Series of 2002  NSCB Resolution No. 15 - Attachment 1 OFFICIAL DEFINITION OF THE INFORMAL SECTOR 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 household unincorporated enterprises that are market and non-market producers of goods as well as market producers of services. Labor relations, where they exist, are based on casual employment, kinship or personal and social relations rather than formal or contractual arrangements. 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. Particular cases that are excluded: Corporations Quasi-corporations Units with ten or more employees Corporate farms Commercial livestock raising Commercial fishing PSA Board Resolution 01, Series of 2017 Number 89

2002 Official Definition of Informal Sector Existing Definition (Phil) 2002 Official Definition of Informal Sector INFORMAL SECTOR CONCEPTUAL DEFINITION OPERATIONAL DEFINITION INCLUSION “units” engaged in the production of goods and services primary objective is generating employment and incomes_to the persons concerned to earn a living Household unincorporated enterprises: market or non-market producers of goods, AND market producers of services Household unincorporated enterprises 1. Informal own-account enterprises 2. Enterprises of informal employers LABOR RELATIONS casual employment, kinship or personal RATHER THAN formal or contractual -same

2002 Official Definition of Informal Sector Existing Definition (Phil) 2002 Official Definition of Informal Sector INFORMAL SECTOR CONCEPTUAL DEFINITION OPERATIONAL DEFINITION OPERATION low level of organization _no division between Labour and capital factors of production Informal own-account enterprises owned and operated by own-account workers either alone or in partnership with members of the same household or other households May employ unpaid family workers occasionally./seasonally hire workers Do not employ employees on a continuous basis Enterprises of informal employers Owned and operated by own-account workers either alone or in partnership with members of the same household or other households Employ one or more employees on a continuous basis Enterprise : Any unit engaged in the production of goods or services for sale or barter employ workers OR purchase services; owned and operated by single individuals working for their own account as self-employed persons (alone or with help of unpaid family members)

PSA Board Resolution 01, Series of 2017 Number 105 Existing Definition (Phil) 2003 Criteria for Identifying Informal Sector NSCB Resolution No. 16 Series of 2003 ADOPTING A SET OF CRITERIA FOR IDENTIFYING THE INFORMAL SECTOR WHEREAS, NSCB Resolution No. 15, Series of 2002, approved on  6 November 2002 provided the official conceptual and operational definitions of the informal sector (IS) for adoption by all concerned government agencies; WHEREAS, said Resolution specified some cases for exclusion from the operational definition of the IS; WHEREAS, the NSCB Executive Board instructed the Inter-Agency Committee on Labor, Income and Productivity Statistics (IACLIPS), the Technical Working Group on Labor and Employment Statistics (TWGLES), and the NSCB Technical Staff to study further the other cases for exclusion; WHEREAS, in compliance with this instruction and in adherence to the January 1993 Resolution passed by the 15th International Conference of Labor Statisticians (ICLS) concerning statistics of employment on the IS, the IACLIPS, the TWGLES, and the NSCB Technical Staff reviewed and agreed on the other cases for exclusion and came up with a set of criteria for identifying the IS to facilitate field operations relative to data gathering activities for the sector; NOW, THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that the Board approve the identified set of criteria as part of the operational definition of the IS (Annex BR-16-2003-01)for adoption by all concerned government agencies. Approved this 12th day of December 2003, in Pasig City. Attested by:   ROMULO A. VIROLA Secretary General PSA Board Resolution 01, Series of 2017 Number 105

CRITERION DESCRIPTION 2003 Criteria for Identifying Informal Sector Existing Definition (Phil) 2003 Criteria for Identifying Informal Sector CRITERION DESCRIPTION 1. Enterprise ownership Households 2. Legal organization Household enterprises, which refer to unincorporated enterprises owned by households, are units engaged in the production of goods and/or services that are not constituted as legal entities independent of the households or household members that own them The informal sector is defined irrespective of : 1. the kind of workplace where the productive activities are carried out, 2. the extent of fixed capital assets used, 3. the duration of the operation of the enterprise (perennial, seasonal, or casual), and 4. its operation as a main or secondary activity of the owner. The following criteria must be satisfied to be considered an informal sector:

2003 Criteria for Identifying Informal Sector CRITERION DESCRIPTION Existing Definition (Phil) 2003 Criteria for Identifying Informal Sector CRITERION DESCRIPTION 3. Type of accounts No complete set of accounts that will distinguish production activities, flows of income and capital between the households and the enterprises The informal sector is defined irrespective of : 1. the kind of workplace where the productive activities are carried out, 2. the extent of fixed capital assets used, 3. the duration of the operation of the enterprise (perennial, seasonal, or casual), and 4. its operation as a main or secondary activity of the owner. The following criteria must be satisfied to be considered an informal sector:

2003 Criteria for Identifying Informal Sector CRITERION DESCRIPTION Existing Definition (Phil) 2003 Criteria for Identifying Informal Sector CRITERION DESCRIPTION 4. Characteristics relative to employment • Informal own-account enterprises   Household enterprises owned and operated by own-account workers, either alone or in partnership with members of the same or other households, which may employ contributing family workers and employees on an occasional basis, but do not employ employees on a continuous basis The informal sector is defined irrespective of : 1. the kind of workplace where the productive activities are carried out, 2. the extent of fixed capital assets used, 3. the duration of the operation of the enterprise (perennial, seasonal, or casual), and 4. its operation as a main or secondary activity of the owner. The following criteria must be satisfied to be considered an informal sector:

2003 Criteria for Identifying Informal Sector CRITERION DESCRIPTION Existing Definition (Phil) 2003 Criteria for Identifying Informal Sector CRITERION DESCRIPTION 4. Characteristics relative to employment  • Enterprises of informal employers   Household enterprises owned and operated by employers, either alone or in partnership with members of the same or other households, which employ one or more employees on a continuous basis 5. Product destination At least some market output, hence, not entirely for own consumption The informal sector is defined irrespective of : 1. the kind of workplace where the productive activities are carried out, 2. the extent of fixed capital assets used, 3. the duration of the operation of the enterprise (perennial, seasonal, or casual), and 4. its operation as a main or secondary activity of the owner. The following criteria must be satisfied to be considered an informal sector:

2003 Criteria for Identifying Informal Sector Existing Definition (Phil) 2003 Criteria for Identifying Informal Sector Based on these criteria, the following cases are excluded from the informal sector: (1) Single proprietorships, partnerships and corporations (including corporate farms, commercial livestock raising, commercial fishing and similar units); (2) Quasi-corporations; (3) Units with ten or more employees (unless they satisfy all the criteria); (4) Domestic helpers hired by households; (5) Units engaged in professional services (unless they satisfy all the criteria); (6) Farms managed by cooperatives; and (7) Farms, regardless of size, keeping sets of accounts separate from the households The informal sector is defined irrespective of : 1. the kind of workplace where the productive activities are carried out, 2. the extent of fixed capital assets used, 3. the duration of the operation of the enterprise (perennial, seasonal, or casual), and 4. its operation as a main or secondary activity of the owner. The following criteria must be satisfied to be considered an informal sector:

Conceptual Framework for Informal Employment International Framework (17th ICLS guidelines) Conceptual Framework for Informal Employment PRODUCTION UNITS by Type Jobs by status in employment Own-account workers Employers Contributing family workers Employees Members of producers’ cooperatives Informal Formal Informal Formal Informal Informal Formal Informal Formal Formal Sector Enterprises INFORMAL Sector Enterprises (ISE) HOUSEHOLDs 1 2 5 7 3 4 6 8 10 9 “there are three classification of “production units”: 1. Formal sector enterprises  2. INFORMAL sector enterprises  3. Households as production units  JOBS distinguished accdg to status of employment categories (own-account workers, …) for definitional purposes and for analysis; and their nature as to formal , informal LEGEND: JOBS Do not exist Informal employment 1 to 6 ; 8 to 10 Formal jobs Employment in the informal sector 3 to 8 Informal employment outside the informal sector 1 , 2, 9 ,10 Informal jobs

Informal employment Types of production units Informal jobs Informal sector enterprises A B Other units of production C D Informal employment A + C Informal sector employment A + B Informal employment outside the informal Sector C Employment in the informal economy A + B + C

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