stats sa the south africa i know, the home i understand survey of employers & the self- employed...

STATS SA

THE SOUTH AFRICA I KNOW, THE HOME I UNDERSTAND

Survey of Employers & the Self-Employed (SESE)

Presentation to the Portfolio Committee

3 September 2014Pali Lehohla Statistician-General


Presentation outline• Defining the informal sector and non-VAT registered businesses within the sector.

• Comparing outcomes in the informal sector with the formal sector.

• How the Survey of Employers and the Self-Employed (SESE) was undertaken.

• Access to services/amenities and socio-demographic profile of non-VAT business operators.

• Location and reasons for start-up.

• Industries in which non-VAT businesses operate.

• Employees and labour costs.

• Turnover, Net profits and Debts.

• Financial inclusion and assistance needed.

• Highlights


The Survey of Employers & the Self-Employed (SESE) is mainly about the informal sector

•SESE is based on a household survey consisting of two stages.

•First stage identified persons who were running businesses in 2001 and 2005

using the LFS and in 2009 and 2013 using the QLFS.

•Second stage was a follow up - persons identified in the first stage were

interviewed.

•Only those who ran non-VAT registered businesses were asked detailed

questions about their business operations.

•Most non-VAT registered businesses from (SESE) are in the informal sector

Total employed

Employed excluding Agriculture & Private households

Employers, Own-account workers, Persons unpaid in household businesses

Not registered for VAT or Income tax

Fewer than 5 employees in the business

Income tax not deducted by employer

Employees

Informal sector

Defining the informal sectorDefinition of the informal sector is based on

registration and the number of employees in the business.

Definition of the informal sector is based on

registration and the number of employees in the business.


Most non-VAT businesses are in the informal sector (1,4 mil of 1,5mil in

2013) but a small number (143 thousand) pay income tax and are

in the formal sector.

Most non-VAT businesses are in the informal sector (1,4 mil of 1,5mil in

2013) but a small number (143 thousand) pay income tax and are

in the formal sector.

Registration details 2013No VAT but Income tax 1 517No VAT no Income tax 1 374 Income tax only 143% Income tax only 9,4

Non-VAT

Informal Formal sector

Non-VAT formal (paying income tax)

SESE coverage


Non-VAT registered businesses in South Africa play an important role in job creation and income generation among various groups.

These units typically operate at a low level of organisation and on a small scale.

Non-VAT businesses in the informal sector are often not connected to companies in the formal sector, operating in different markets with different customers.

The importance of non-VAT registered businesses

THE SOUTH AFRICA I KNOW, THE HOME I UNDERSTAND 7

Comparing the formal and informal sectors :

Based on the QLFS results


Year-on-year changes in formal sector employment has been the main driver of real GDP in the post-recession period. But the informal sector

is an important source of jobs for many groups

Year-on-year changes in formal sector employment has been the main driver of real GDP in the post-recession period. But the informal sector

is an important source of jobs for many groups

Output and jobsSTATS SA

THE SOUTH AFRICA I KNOW, THE HOME I UNDERSTAND 9

While the informal sector accounts for between 5-6% of GDP, it contributes 15,8% to total employment (including agriculture) in 2014.

While the informal sector accounts for between 5-6% of GDP, it contributes 15,8% to total employment (including agriculture) in 2014.

Contribution of the informal sector to output and jobs in South AfricaSTATS SA


Province: Formal and informal sector share of total employment

Formal sector Informal sector

The informal sector provides jobs for one in

every four employed

persons in LP and one in every five persons in MP, EC

& KZN

The informal sector provides jobs for one in

every four employed

persons in LP and one in every five persons in MP, EC

& KZN

STATS SA

Results of the SESE


Persons running non-VAT registered businesses:Socio-demographic profile;

Access to services and amenities


Compared with 2001, in 2013 larger proportions of people aged 35-44yrs

and 45-54yrs were running non-VAT

registered businesses

Compared with 2001, in 2013 larger proportions of people aged 35-44yrs

and 45-54yrs were running non-VAT

registered businesses

Age profileNon-VAT registered businessesSTATS SA


GenderNon-VAT registered businessesSTATS SA

In 2013, more than half (55,4%) of those who had non-VAT businesses

were men - up from 39,3% in 2001

In 2013, more than half (55,4%) of those who had non-VAT businesses

were men - up from 39,3% in 2001


Almost nine out of every ten people running non-VAT registered businesses are African

Almost nine out of every ten people running non-VAT registered businesses are African

Population group, 2013Non-VAT registered businesses

STATS SA


In every province more than 50% of persons

running non-VAT businesses had less than

matric.

Highest proportions with less than matric were in:

MP (82,7%) EC (79,7%)

KZN (78,1%)

In every province more than 50% of persons

running non-VAT businesses had less than

matric.

Highest proportions with less than matric were in:

MP (82,7%) EC (79,7%)

KZN (78,1%)

Education profile, 2013Non-VAT registered businessesSTATS SA

Note: The sample size in Western Cape, Northern Cape, Free State and North West is too small for reliable estimates.

Selected features in 2013

69,9% do not have piped water28,3% have no electricity33,2% only have a pit latrine

69,9% do not have piped water28,3% have no electricity33,2% only have a pit latrine

Source of water (%) Electricity (%)

Toilet facilities (%)

Non-VAT registered businesses

STATS SA


75,7% of persons running non-VAT

businesses do not keep accounts

75,7% of persons running non-VAT

businesses do not keep accounts

Selected features in 2013Non-VAT registered businesses

Financial records (%)

Reasons for not keeping records


Duration of the business operation

Non-VAT registered businessesSTATS SA

In 2013, a larger percentage of businesses were in operation for 10 years or longer (19,6%) compared with in 2001 (11,0%)

In 2013, a larger percentage of businesses were in operation for 10 years or longer (19,6%) compared with in 2001 (11,0%)


Persons running non-VAT registered businesses:Percent of the working-age population


2001 2013

Thousand 2 258 1 517

% WAP 8,3 4,3

In 2013, % of WAP running non-VAT registered businesses highest

among:Men (4,9%)

Black Africans (4,9%)45-54 yrs olds (8,0%)

In 2013, % of WAP running non-VAT registered businesses highest

among:Men (4,9%)

Black Africans (4,9%)45-54 yrs olds (8,0%)

Percent of the working-age population (WAP) running such businesses



Among the working age population in

every province the proportion who ran non-VAT registered businesses declined

over the period 2001-2013.

The % of the WAP running non-VAT

businesses is highest in LP; MP; GP: KZN &

EC

Among the working age population in

every province the proportion who ran non-VAT registered businesses declined

over the period 2001-2013.

The % of the WAP running non-VAT

businesses is highest in LP; MP; GP: KZN &

EC

Percent of the working-age population (WAP) running such businesses



Persons running non-VAT registered businesses:Location and main reason for start-up of business


In 2013, most non-VAT businesses were located in the owner’s dwelling :

25,3% in a separate space 21,3% in the family space

In 2013, most non-VAT businesses were located in the owner’s dwelling :

25,3% in a separate space 21,3% in the family space

LocationNon-VAT registered businessesSTATS SA


Except in GP, the percentage of non-VAT businesses with no fixed location increased over the period 2001-2013.

The largest increases were in:

EC by 17,0 percentage points

MP by 13,6 percentage points

Except in GP, the percentage of non-VAT businesses with no fixed location increased over the period 2001-2013.

The largest increases were in:

EC by 17,0 percentage points

MP by 13,6 percentage points

Businesses with no fixed location by province




The main reason given for starting a non-VAT

business was unemployment

(69,2%)

The main reason given for starting a non-VAT

business was unemployment

(69,2%)

Reasons for starting the business, 2013



Reflecting the impact of the global crisis, a larger

proportion of people started non-VAT registered

businesses because of unemployment.

Largest increases in FS, KZN, LP, MP

Reflecting the impact of the global crisis, a larger

proportion of people started non-VAT registered

businesses because of unemployment.

Largest increases in FS, KZN, LP, MP

Provincial distribution of those who started businesses because of unemployment




Licencing arrangementsNon-VAT registered businesses Most non-VAT businesses did not have licences/permits to

operate. Among those who did (64 000 or 12,5% in 2013) one in three had a licence/permit from the Municipal/Provincial authority.

Most non-VAT businesses did not have licences/permits to operate. Among those who did (64 000 or 12,5% in 2013) one in

three had a licence/permit from the Municipal/Provincial authority.

STATS SA


Persons running non-VAT registered businesses:Industry


IndustryNon-VAT registered businesses

The vast majority of non-VAT businesses are in the

Trade industry.

But the proportion in this industry declined by 15,2 percentage points 2001 to

2013

The second largest industry for non-VAT businesses in

2013 was Services (13,1%)

The vast majority of non-VAT businesses are in the

Trade industry.

But the proportion in this industry declined by 15,2 percentage points 2001 to

2013

The second largest industry for non-VAT businesses in

2013 was Services (13,1%)

STATS SA


In 2013, more than half of the 1,5 mill persons running non-VAT registered businesses were men (55,4%).

Businesses in the construction (98,8%) and transport (88,2%) industries were mostly run by men.

Women featured more prominently in Agriculture (63,6%) and Services (58,1%).

In 2013, more than half of the 1,5 mill persons running non-VAT registered businesses were men (55,4%).

Businesses in the construction (98,8%) and transport (88,2%) industries were mostly run by men.

Women featured more prominently in Agriculture (63,6%) and Services (58,1%).

Industry by gender, 2013Non-VAT registered businessesSTATS SA


Persons running non-VAT registered businesses:Source of finance;

Use of raw materials and supplies


Most people running non-VAT businesses needed money to

start their business

Most people running non-VAT businesses needed money to

start their business

Finance neededNon-VAT registered businessesSTATS SA

Most people running non-VAT businesses used their own money to start their business.

Among those who used their own money wage employment was the main source of finance.

Among those who borrowed money - the vast majority got loans from friends or relatives.

Commercial banks are playing an increasing role in financing the operations of small businesses.

Most people running non-VAT businesses used their own money to start their business.

Among those who used their own money wage employment was the main source of finance.

Among those who borrowed money - the vast majority got loans from friends or relatives.

Commercial banks are playing an increasing role in financing the operations of small businesses.

Source of financeNon-VAT registered businessesSTATS SA

Source of own money 2001 2013

Previous / present wage employment 44,0 53,8 Other business 3,2 2,8 Sale of livestock/crops 2,9 2 Sale of other assets 5,1 2,6 Inheritance 5,2 3,1 Pension from work 3,5 4,1

Retirement/severance pay 5,2 4,4 A policy that matured 0,6 0,1

Money paid out from a stokvel 6,1 5,8 Other 24,1 21,3Total 100,0 100,0

Source of borrowed money

Source of own money


In 2013, the Manufacturing industry used the most raw materials. The Trade industry used the most supplies.

In 2013, the Manufacturing industry used the most raw materials. The Trade industry used the most supplies.

Use of raw materials and supplies by industry


Use of raw materials Use of supplies

STATS SA


Persons running non-VAT registered businesses:Employees and labour costs

Note: Labour costs are not adjusted for inflation over the period 2001 to 2013


Own-account workers accounted for the vast majority of people who ran non-VAT registered businesses in both 2001 and 2013.

In 2013, the 370 thousand employers employed 1,0 mil employees which is equivalent to an average of 2,7 employees per employer – up from 2,1 employees in 2001.

Own-account workers accounted for the vast majority of people who ran non-VAT registered businesses in both 2001 and 2013.

In 2013, the 370 thousand employers employed 1,0 mil employees which is equivalent to an average of 2,7 employees per employer – up from 2,1 employees in 2001.

2001 2013Thousand

Employers 309 370Own-account 1 948 1 147Total 2 258 1 517

Employees 661 1 007

Ave number of employees per employer 2,1 2,7

Employers, own-account workers and employees



In 2013, there were 1,0 mill employees in non-VAT

businesses :

800 thousand (79,4%) were paid 207 thousand (20,6%) were unpaid.

In 2013, there were 1,0 mill employees in non-VAT

businesses :

800 thousand (79,4%) were paid 207 thousand (20,6%) were unpaid.

Proportion of paid and unpaid employees


2013 ThousandEmployers & own-account 1 517Paid employees 800Unpaid employees 207

STATS SA


Larger proportions of people running non-VAT businesses had higher labour costs in 2013 –

ranging from 15,8% with costs of R1 501-R3 000 to

10,4% with costs of more than R6 000 in the month prior to the survey.

Larger proportions of people running non-VAT businesses had higher labour costs in 2013 –

ranging from 15,8% with costs of R1 501-R3 000 to

10,4% with costs of more than R6 000 in the month prior to the survey.

Monthly labour costsNon-VAT registered businessesSTATS SA


Persons running non-VAT registered businesses:Turnover and net profits;

Business debtNote: Turnover; Net profits & Business debt are not adjusted for inflation over the period 2001 to 2013

Turnover levels of non-VAT businesses are low - 52,2% had sales below R1 501 per month

Profit margins are also low – 64,9% made net profits below R1 501 per month

Turnover levels of non-VAT businesses are low - 52,2% had sales below R1 501 per month

Profit margins are also low – 64,9% made net profits below R1 501 per month

Turnover & Net profit


Turnover

Net profit


Almost half (46,6%) of people with non-VAT businesses in Agriculture had turnover of R750 or less in the month prior to the survey. In contrast, one in every three (35,2%) of those in Transport had turnover of more than R6 000.

And larger proportions of men compared with women had turnover above R1 500 in the month prior to the survey.

Almost half (46,6%) of people with non-VAT businesses in Agriculture had turnover of R750 or less in the month prior to the survey. In contrast, one in every three (35,2%) of those in Transport had turnover of more than R6 000.

And larger proportions of men compared with women had turnover above R1 500 in the month prior to the survey.

Turnover in the past month, 2013Non-VAT registered businessesSTATS SA


In 2013, in MP, LP, EC & KZN more than

one in every two non-VAT businesses had a turnover of R1 500 or lower in the month prior to the

survey.

In 2013, in MP, LP, EC & KZN more than

one in every two non-VAT businesses had a turnover of R1 500 or lower in the month prior to the

survey.

Turnover in the past month of R0-R1 500 by province




STATS SA

64,9% of non-VAT businesses made net profits belowR1 501 in the month prior to the survey.

In Finance, 18,2% of people with businesses had net profits above R6 000. In Transport 17,4% had net profits at that level

64,9% of non-VAT businesses made net profits belowR1 501 in the month prior to the survey.

In Finance, 18,2% of people with businesses had net profits above R6 000. In Transport 17,4% had net profits at that level

Larger proportions of men compared to women made net

profits above R1 500

Larger proportions of men compared to women made net

profits above R1 500

Net profit in the past month, 2013Non-VAT registered businesses

Less than 5,0% of non-VAT businesses had debts.

The Trade industry accounted for the largest share of business debts each year.

This share has declined from 61,9% in 2001 to 36,2% in 2013.

In 2013, Transport (26,7%) had the second largest share of debts by a large margin.

Less than 5,0% of non-VAT businesses had debts.

The Trade industry accounted for the largest share of business debts each year.

This share has declined from 61,9% in 2001 to 36,2% in 2013.

In 2013, Transport (26,7%) had the second largest share of debts by a large margin.

Business debts by industryNon-VAT registered businessesSTATS SA

2001 2013Had debts 109 71

Total 2 258 1 517

% with debts 4,8 4,7


Persons running non-VAT registered businesses:Financial inclusion;

Type of assistance needed

Financial inclusion, 2013Non-VAT registered businessesBanking institution (%) Source of loans for operations (%)

Access to finance (%) Mechanism for payments (%)

• 79,0% do not have a bank account• 96,8% had loans from friends/family for day-to-day operations• More than 95,0% had no credit facility, or asset finance or a mortgage loan for their business• Among the few who had bank accounts only 33,6% used the internet to make payments

• 79,0% do not have a bank account• 96,8% had loans from friends/family for day-to-day operations• More than 95,0% had no credit facility, or asset finance or a mortgage loan for their business• Among the few who had bank accounts only 33,6% used the internet to make payments

STATS SA


Type of assistance neededNon-VAT registered businessesThe largest changes in the proportions 2001-2013

occurred among those who needed assistance with:

Marketing (13,1 percentage points)Easing of Govt regulations (11,8 percentage points)Better access to loans (11,2 percentage points)

The largest changes in the proportions 2001-2013 occurred among those who needed assistance with:

Marketing (13,1 percentage points)Easing of Govt regulations (11,8 percentage points)Better access to loans (11,2 percentage points)


In every province except LP, there was an increase in the

proportion of persons who wanted assistance

with marketing their business.

In every province except LP, there was an increase in the

proportion of persons who wanted assistance

with marketing their business.

Marketing assistance needed by province



• The number of persons running non-VAT registered businesses declined from 2,3 million in 2001 to 1,1 million in 2009 and increased to 1,5 million in 2013. Over 95% of owners had only one business.

• Non-VAT businesses are predominantly run by black Africans, men, and the less well educated. In 2013, the proportions of the working-age population involved in small businesses were highest in Limpopo (6,3%), Mpumalanga (6,1%), Gauteng (5,0%) and KwaZulu-Natal (4,7%).

•28,3% of non-VAT businesses had no electricity; 10,1% had a flush toilet off site, 33,2% only had a pit latrine while as many as 8,0% had no toilet facilities available. This suggests that many are survivalist in nature.

• Most businesses were in the Trade industry – ranging from 1,6 million in 2001 (69,6%) to 821 000 (54,4%) in 2013.

• The main reason why people started businesses was due to unemployment. This was reported by 60,6% of persons who ran non-VAT registered businesses in 2001 and by 69,2% of persons in 2013.

Highlights

• In every province, except Gauteng and Northern Cape, and reflecting the effects of the global recession – over the period 2001 to 2013, there was an increase in the proportion of people who stated unemployment as the main reason for being involved in non-VAT registered businesses.

• The vast majority of people who started businesses used their own money to do so (over 70,0%). However, in 2013 there was an increase in the proportion who were able to get loans from commercial banks.

• Assistance with marketing was the type of assistance most needed by business operators - the proportion needing this type of assistance rose from 27,4% in 2001 to 40,5% in 2013. In addition, as many as 21,5% wanted an easing of Government regulations – up from 9,6% in 2001. • Turnover levels and profit margins are relatively small for most non-VAT business operators.

• As many as 79,1% of persons running non-VAT businesses did not have a bank account. And over 90% had no credit facilities, no asset finance or mortgage loans for their business operations.

Highlights contd.,

stats sa the south africa i know, the home i understand survey of employers & the self- employed...

Documents

informal sector accounts

home i understandyear

nonvat businesses

formal sector employment

highlightsthe south

informal sectordefinition

informal sectorsese

qlfs resultsthe south