statistics on the informal economy · the informal economy • the “informal economy” has never...

Expert Group Meeting on Statistics for SDGs: Accounting for Informal Sector in National Accounts

Statistics on the Informal Economy

Yacouba Diallo

ILO Regional Office for Africa

Addis Ababa, Ethiopia

1

Contents

• Relevance & uses

• Concepts & Definitions

• Components

• Statistical standards

• Impact of the 19th ICLS

2

Informality:

Relevance • Employment not recognized or protected under the legal

and regulatory frameworks

– Decent work deficits

– High degree of vulnerability

– Receive little or no legal or social protection

– Unable to enforce contracts or have security of property rights

– Limited representation or voice

– Limited access to public infrastructure and benefits

• Important source of employment in many settings

• Contributes to production and livelihoods

3

Informality:

Data uses

• Measure, monitor and inform development of policies

– Contribution to production (GDP)

– Small enterprise development

– Employment creation

– Promotion of decent work (full and productive

employment)

– Development and application of labour standards

– Implementation of social protection floors

– Poverty reduction

ILO Department of Statistics 4

Concepts & Definitions

5

1972,

coining of the term «informal sector» after Employment mission to Kenya

1991

the ‘dilemna of the informal sector’ –ILC discussions

2002 ILC:

A broader conception of the scale and dimensions of informality, with the new term «informal economy»

2014-2015 ILCs:

A standard setting item on transitions to formality

The ILO has been the leading agency in

addressing the informal economy over

many decades.

The informal economy

• The “informal economy” has never been defined for statistical

purposes

• This concept has been defined for legal purposes

– By the International Labour Conference (ILC) in 2002,

in a Resolution concerning decent work and the informal

economy

– By the International Labour Conference in 2015 in its

Recommendation concerning the Transition from the

informal to the formal economy


Recommendation concerning the transition

from the informal to the formal economy (No. 204)

Objective: to provide guidelines to countries in order to

– Facilitate the transition of workers and economic units from the informal to

the formal economy, while respecting workers’ fundamental rights and

ensuring opportunities for income security, livelihoods and entrepreneurship

– Promote the creation, preservation and sustainability of decent jobs in the

formal economy and the coherence of macroeconomic, employment, social

protection and other social policies

– Prevent the informalization of formal economy jobs (§ 1),

adopted by the International Labour Conference in June 2015

http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::

NO::P12100_ILO_CODE:R204


Legal concept of the informal economy

Recommendation No. 204

The concept “informal economy”

(a) 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

(b) Does not cover illicit activities (§ 2)

Economic activities insufficiently covered by formal arrangements:

• by economic units : workers in informal economic units (informal sector)

• by workers : workers with informal jobs (informal employment)


The recommendation expects statistics to

be collected This recommendation requires that statistics be collected

– In consultation with workers’ and employers’ organizations

– On a regular basis (§ 37)

What statistics?

– The number of economic units in the informal economy

– The number of workers in the informal economy

By sex, age, place of work, and other socio-economic characteristics (§ 36)


Employment in the informal economy

Components

Two components (2 statistical units):

• Employment in informal sector enterprises (Informal sector employment)

• Employment in informal jobs (Informal employment)

• Two different aspects of informalization of employment

• Important to keep separate as often require different policies

10

Informal sector

employment Informal

employment Informal jobs

outside of IS

Formal jobs in

IS enterprises*

Employment in the Informal Economy: = Informal sector employment + informal employment outside of Informal Sector

International statistical standards

• Resolution concerning statistics of employment in the informal

sector (15th ICLS, 1993)

• Guidelines concerning a statistical definition of informal

employment (17th ICLS, 2003)

Additional resources:

• Measuring informality: A statistical manual (ILO, 2013)


Informal sector employment

Definition -15th ICLS (1993)

12

Persons who, in a reference period, were employed in at least one

informal sector enterprise, regardless of status in employment and

whether it was their main or second job

• Hence, all jobs in informal sector enterprises

Requires operational definition of “informal sector enterprise”

sector enterprises (Criteria to define informal, 15th ICLS):

Criterion Purpose

1. Legal organization: enterprise not constituted as a

legal entity separate from its owner(s)

Identification of unincorporated enterprises

2. Ownership: enterprise owned and controlled by

member(s) of household(s)

Identification of household unincorporated enterprises

3. Type of accounts: no complete set of accounts

including balance sheets

Exclusion of quasi-corporations from household

unincorporated enterprises

4. Product destination: at least some market output Identification of household unincorporated market

enterprises

Exclusion of hholds. producing goods for own final use

5. Kind of economic activity Exclusion of households employing paid domestic

workers; possible exclusion of enterprises engaged

in agricultural and related activities

6.1 Number of persons engaged/ employees

working on a continuous basis: less than n

AND/OR

6.2 Non-registration of the enterprise

AND/OR

6.3 Non-registration of the employees or the

enterprise

Identification of informal sector enterprises as a subset

of household unincorporated market enterprises

Need for complementary job perspective

• Informal sector employment definition excludes

– Jobs in households and in formal enterprises not protected

under the legal and regulatory frameworks

• Casual, temporary (non-standard, atypical, precarious) employees

in formal enterprises

• Paid domestic workers in private households


15

Informal employment

Definition -17th ICLS (2003)

Total number of informal jobs, whether carried out in

formal sector enterprises, informal sector enterprises

or households, during a given reference period

Informal jobs

• Operational definition depends on status in employment

Impact of the 19th ICLS

on statistics on the Informal Economy • The international definitions of the informal sector and of informal

employment were adopted in 1993 and 2003

– They were meant to cover all employed persons; and

– Exclude all workers outside of employment

• The relevant concept of employment at the time was adopted in 1982 by the

13th ICLS

– Employment included all persons who produced goods and services

which were included within the SNA

• In 2013 a new definition of employment was adopted which narrowed the

scope of employment

– To persons who work for pay or profit

http://www.ilo.org/wcmsp5/groups/public/---dgreports/---stat/documents/normativeinstrument/wcms_230304.pdf


Work

New statistical definition (I)

“Any activity performed by persons of any sex and

age to produce goods or provide services for use by

others or for own use” Para 6,Resol I. (19th ICLS, 2013)


Concept for reference purposes

Not for direct measurement !

Recognizes all productive activities as work

But WORK ≠ Employment

Work

New statistical definition (II) • Aligned with General production boundary (2008 SNA)

– Must fulfill third person criterion

– Must result in production of goods or services

• Can be performed in any kind of economic unit

– Market units (i.e. for profit units, such as corporations, quasi-corporations

and household unincorporated market enterprises)

– Non-market units (i.e. government & non-profit institutions)

– Households producing goods or services for own final use

• Irrespective of formal, informal nature or legality of activity


Enables coherence between work statistics and economic statistics

Forms of Work Framework (I)

• Classification of productive activities (not of people!)


Forms of work framework (II)

• Distinguishes different “types” of work (i.e. productive activities)

– Main intended destination of production (own final use / use by others)

– Type of transaction (for remuneration / without remuneration)

• Enables their separate measurement in full

• Supports more targeted monitoring to inform policymaking

• Permits coherence with national accounts

– National production & satellite accounts


Correspondence with previous standards

and with national practice

Previous scope of “economic activity” used to define the employed

In general countries use narrower scope to identify the employed


Relevance for Labour force statistics

• Employment definition refined as work for pay or profit

• Narrower “employment” definition to serve as basis for labour force statistics

• Other forms of work to be measured separately


Reference concept for

Labour force statistics

Usefulness of new framework


1. Multiple activities of Persons 2. Household allocation of labour,

contribution to livelihoods

3. Assessment of labour market participation

& integration by persons in forms of work

other than employment

Impact of the 19th ICLS

on statistics on the Informal Economy

Three approaches are possible:

• To reduce the scope of the informal economy

– to the “new” definition of employment

(work for pay or profit)

• To maintain the scope of the informal economy

– to the “old” definition of employment

• To expand the scope of the informal economy

– to all forms of work


Towards a broader framework of

Work in the Informal Economy


• The informal economy would increase – If we measure all forms of work

• The scope would depend on national priorities – Statistics would be reported separately by forms of work

– Most comparable between countries

• It would require that ICSE also covers all forms of work – And that it creates groups for workers for which currently no explicit

status in employment exists (e.g., direct volunteers, unpaid trainees, volunteers through organizations, workers in other forms of work)

• Terminology would need to change – Informal work, work in the informal sector, work in the informal

economy

Towards a broader framework of

Work in the Informal Economy

• Need to consider informality in ALL forms of work, not

only in employment

• Unpaid trainee workers

• Volunteer workers in market units

• Volunteer workers in non-market units

• Volunteer workers in households

• Own-use producers of goods

• Own-use providers of services


statistics on the informal economy · the informal economy • the “informal economy” has never...

Documents