Informality and Informal Employment in Malaysia - MIER · Informality and Informal Employment in...
Transcript of Informality and Informal Employment in Malaysia - MIER · Informality and Informal Employment in...
Informality and Informal Employment in Malaysia
Department of Statistics, Malaysia (DOSM) 21 November 2017 Hotel Continental, Kuala Lumpur
National Economic Outlook Conference 2018-2019
2 Department of Statistics, Malaysia (DOSM)
Informality and Informal
Employment in Malaysia
Source: Informal Sector
Workforce Survey Report
Informal Employment
Characteristics
Other Related Statistics
Challenges and Way Forward
The Objectives ...
3 Department of Statistics, Malaysia (DOSM)
The informal sector ...
Plays a significant
part, and
increasingly so, in
many developing
countries
On what the
‘right’ levels of
informal sector
should take in
the economy?
Studies informal
employment in
the context of
Malaysia
Informal Sector
Workforce Survey
Report conducted
by the Department
of Statistics
4 Department of Statistics, Malaysia (DOSM)
Concepts and Definition…
Based on the concept accepted by
the 15th ICLS 1993 and 17th ICLS
2001 with reference made to SNA
1993
Informal
Sector
According to the Hussmanns
(2002, p.18) Informal
Employment
Taken from the Informal Sector
Workforce Survey
(DOSM, 2015, p. 71)
Malaysia’s
Informal
Employment
Informal employment: Cells 1 to 6 and 8 to 10
Employment in the informal sector: Cells 3 to 8
Informal employment outside the informal sector: Cells 1, 2, 9 and 10
5 Department of Statistics, Malaysia (DOSM)
Informal Sector in Malaysia is defined as…
All or at least one of the goods or
services produced are meant for sale or
barter transaction.
The enterprise is not registered with the Companies
Commission of Malaysia (CCM) or any other
professional bodies, including the Local Authority (LA).
The size in terms of employment is less than 10
persons and is not registered under specific forms
of national legislation.
Source: Baharudin, Othman, Che Pah, Chellamuthu and Musa (2011, p. 35)
6 Department of Statistics, Malaysia (DOSM)
Nature
Invisible
Size
Small-scale
Trend
Unpredictable
Transition
Gig economy
Informal Sector is difficult to be measured...
7 Department of Statistics, Malaysia (DOSM)
Based on the ILO, Informal Employment is …
own-account workers employed in their own informal sector enterprises
employers employed in their own informal sector enterprises
contributing family workers, irrespective of whether they work in formal or informal sector enterprises
members of informal producers’ cooperatives
employees holding informal jobs in formal sector enterprises, informal sector enterprises, or as paid domestic workers employed by households;
own-account workers engaged in the production of goods exclusively for own final use by their household, if considered employed
Source: Hussmanns (2002, p.18)
8 Department of Statistics, Malaysia (DOSM)
Across the World..
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0
Albania
Armenia
Costa Rica
Dominican Republic
Ecuador
El Salvador
Guatemala
Malaysia
Moldova, Republic of
Occupied Palestinian Territory
Russian Federation
Serbia
South Africa
Thailand
Informal employment as a percentage of total employment in 2015-2016
Informal employment in many developing countries remains largely significant
Malaysia’s 11.4% is lower than many other countries
SEA Data from 2008-2010:
Indonesia, Philippines: about 60-70%
Vietnam: 43.5%
Thailand: 42.3%
9 Department of Statistics, Malaysia (DOSM)
Transition of Malaysia’s Economy...
0.0
10.0
20.0
30.0
40.0
50.0
60.0
1960 1970 1980 1990 2000 2010 2011 2012 2013 2014 2015e 2016p
Composition of Malaysia’s Gross Domestic Product by Sector (%)
Agriculture Mining & Quarrying Manufacturing Construction Services
Structural
change of
Malaysia’s
economy,
from based
on
Agriculture
to Services
sector
10 Department of Statistics, Malaysia (DOSM)
Size of Informal Employment in Malaysia…
8.0 10.0 9.3 9.2 9.7 11.2 11.4
63.1 62.9 63.7 64.5 65.6 67.3 67.9
3.3 3.7 3.3 3.1 3.0 3.1 3.1
2006 2009 2010 2011 2012 2013 2015
Informal employment as a percentage of totalemployment outside agricultureLabour participation rate
Unemployment rate
• Growing at a slow rate
• 2010: Slight decrease as the
economy recovers from 2009’s
recession
11
Gender Distribution...
• Globally, a popular topic in
informality – women are always a
majority
• Consistent fair share between the
men and women in the employment
in the informal sector
• Women had comparably higher
share of employment than in total
employment
• Franck (2012) suggested that many
women do not wish to enter the
formal sector because of familial
responsibilities
Men ('000) Women ('000) Men Women
2012 616.7 427.3 59.1% 40.9%
2013 643.4 640.9 50.1% 49.9%
2015 714.00 689.10 50.9% 49.1%
Gender distribution of employment in the informal sector, 2012-2015 Source: Informal Sector Workforce Survey, DOSM
Men Women
2010 64.8% 35.2%
2011 64.2% 35.8%
2012 63.7% 36.3%
2013 62.6% 37.4%
2014 62.0% 38.0%
2015 61.8% 38.2%
2016 61.6% 38.4%
Gender distribution of total employment in Malaysia, 2010-2016 Source: Labour Force Survey, DOSM
Department of Statistics, Malaysia (DOSM)
12
Industry Distribution…
As a percentage of total employment in
non-agricultural sectors
As a percentage of informal
workforce in non-agricultural
sectors
Industry 2013 2015 2013 2015
Total 100.0 100.0 100.0 100.0
Manufacturing 9.2 9.6 16.0 15.9
Construction 19.9 22.1 19.5 20.6
Services 10.9 10.7 63.9 63.0
Wholesale and retail trade; repair of motor
vehicles and motorcycles 10.3 10.7 17.6 17.9
Transportation and storage 8.8 8.9 4.2 3.9
Accommodation and food and beverage
service activities 17.5 19.2 13.8 15.7
Administrative and support service
activities 12.8 10.7 5.5 4.8
Human health and social work activities 42.5 34.3 15.7 15.0
Other services industries 3.5 3.2 7.2 6.7
Others 1.8 1.5 0.6 0.4
Share of employment in the informal sector in non-agricultural sectors by industry, Malaysia, 2013-2015 (%)
Department of Statistics, Malaysia (DOSM)
13
Type of Workplace Distribution…
2010 2011 2012 2013 2015
At home 25.9 32.7 34.7 42.6 42.7
Factory/office/workshop/shop/kiosk/etc
(independent from home) 16.7 15 15.1 13.5 8.4
Market or street stalls 12.8 12.7 10.1 10.6 15.1
No fixed location (mobile) 42.2 36.8 38.7 31.8 33.7
Others 2.5 2.8 1.3 1.5 -*
Share of employment in the informal sector in non-agriculture sector by type of workplace, Malaysia, 2010-2015 (%) Source: Informal Sector Workforce Survey, DOSM
Most common is “at home” and “no fixed location”
Department of Statistics, Malaysia (DOSM)
*Starting 2015, no ‘Others’ categories are classified.
14
Occupation Distribution…
Share of employment in the informal sector in non-agriculture sector by
occupation, Malaysia, 2013-2015 (%) Source: Informal Sector Workforce Survey, DOSM
Semi-skilled jobs
dominated.
Specifically, craft and
related trades workers
have the highest share
of employment in
informal sector. However
services and sales
workers have the
highest share in the
informal workforce.
Department of Statistics, Malaysia (DOSM)
As a percentage of
total employment
in non-agricultural
sectors
As a percentage of informal
workforce in non-
agricultural sectors
2013 2015 2013 2015
Managers and Professionals 2.5 1.6 3.7 2.4
Technicians and associate
professionals 4 3.5 3.9 3.5
Service and sales workers 18.8 19.5 41.2 44.0
Craft and related trades
workers 29.3 31.2 32.8 34.8
Elementary occupations 12.8 11.8 13.0 10.6
Others 2.6 2.4 5.5 4.6
15
Employment Status Distribution…
Department of Statistics, Malaysia (DOSM)
Status in employment as a percentage of employment in
total employment in non-agricultural sectors (%) 2013 2015
Employer 7.0 6.0
Employee 2.9 2.8
Own account worker 62.2 55.1
Unpaid family worker 24.9 30.0
Status in employment as a percentage of employment in
informal workforce in non-agricultural sectors (%) 2013 2015
Employer 2.6 2.3
Employee 20.7 19.0
Own account worker 70.4 70.3
Unpaid family worker 6.3 8.4
Share of employment in the informal sector in non-agriculture sector by status in employment, Malaysia, 2010-2015 Source: Informal Sector Workforce Survey, DOSM
Department of Statistics, Malaysia (DOSM) 16
Educational Attainment Distribution…
No formal education;
4.9
Primary; 23.1
Secondary; 63.4
Tertiary; 8.6
No formal education;
4.3
Primary; 22.3
Secondary; 61.6
Tertiary; 11.8
Share of employment in the informal sector in non-agriculture sector by state, Malaysia, 2013-2015 Source: Informal Sector Workforce Survey, DOSM
2013 2015
Department of Statistics, Malaysia (DOSM) 17
Distribution by State…
As a percentage of informal workforce in
non-agricultural sectors As a percentage of total employment in
non-agricultural sectors
Total (‘000) 1,403.10 12,313.80
Total (%) 100 100
Johor 10.1 11.7
Kedah 8.9 6.2
Kelantan 12.2 4.5
Melaka 3.0 3.1
Negeri Sembilan 2.6 3.4
Pahang 4.8 4.3
Pulau Pinang 4.3 6.7
Perak 7.7 7.0
Perlis 0.9 0.7
Selangor 17.6 25.1
Terengganu 5.0 3.1
Sabah 11.4 9.3
Sarawak 7.6 7.4
W.P. Kuala Lumpur 3.7 6.9
Share of employment in the informal sector in non-agriculture sector by state, Malaysia, 2015 Source: Informal Sector Workforce Survey, DOSM
18
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2006 2009 2010 2011 2012 2013 2014 2015 2016
Own account worker and unpaid family worker
Own account worker
Unpaid family worker
Informal employment (non-agriculture sectors)
Own Account Workers & Unpaid Family Workers…
• Possible second indicator of
informal employment in
Malaysia
• Also an indicator of informal
employment in the formal sector,
when it comes to own account
workers
Department of Statistics, Malaysia (DOSM)
19
Other Statistics Related to Informality
2006 2009 2010 2012 2013 2015
Informal employment as a percentage
of total employment outside Agriculture
(%)
8.0 10.0 9.3 9.7 11.2 11.4
Own account worker and unpaid family
worker as a percentage of total
employment (%)
21.9 21.5 20.6 21.2 21.8 22.2
Labour participation rate (%) 63.1 62.9 63.7 65.6 67.3 67.9
Unemployment rate (%) 3.3 3.7 3.3 3.0 3.1 3.1
2006 2009 2010* 2012 2014 2016
Average annual growth rate of median
income of B40 (%) 6.7 3.4 - 8.3 15.9 5.8
Median income of B40 (RM) 1,345 1,440 - 1,847 2,537 2,848
Main statistics of informal employment, employment and B40 income in Malaysia Source: Informal Sector Workforce Survey, Labour Force Survey and Household Income Survey Report and Basic Amenities Report, DOSM
* The Household Income Survey was not conducted in 2010-2011
Department of Statistics, Malaysia (DOSM)
20
Challenges & Way Forward…
Department of Statistics, Malaysia (DOSM)
Survey is costly and seems redundant
due to small size
• Brings limitations to analysis process
Possible impact of informal sector to
the economy
• More research needs to be conducted
Regulate transition to gig economy
Among gov. initiatives are e-Rezeki, e-Usahawan &
1Malaysia Support for Housewives that provide
incentives and training to increase income of
informally employed
Cost
Research
Regulation
21
Conclusion…
Department of Statistics, Malaysia (DOSM)
Informal employment is
small compared to other
countries
…but still growing at a
low rate
There is an increase of
informal workforce with
tertiary education.
Hence research and policy
restructuration need to be
conducted accordingly
REFERENCES
• Baharuddin, N. Othman, M., Che Pah, P.W, Chellamuthu, D., Musa, R. (2011). Informal Employment in Informal Sector Enterprises in Malaysia. Journal
of the Department of the Statistics Malaysia, 2, 34-45.
• Chen, M.A. (2012). The Informal Economy: Definitions, Theories and Policies. Women in Informal Employment Globalizing and Organizing.
• Department of Statistics Malaysia. (2005). Informal Sector Workforce Survey Report. Putrajaya, DOSM.
• Department of Statistics Malaysia. (2016). Household Income and Basic Amenities Survey Report. Putrajaya, DOSM.
• Department of Statistics Malaysia. (2016). Labour Force Survey Time Series Data. Retrieved 17th November 2017 from
https://www.dosm.gov.my/v1/index.php?r=column/ctimeseries&menu_id=NHJlaGc2Rlg4ZXlGTjh1SU1kaWY5UT09
• Franck, A. K. (2012). Factors motivating women's informal micro-entrepreneurship: Experiences from Penang, Malaysia. International Journal of
Gender and Entrepreneurship, 4(1), 65-78.
• Hussmanns, R. (2002). Defining and Measuring Informal Employment. International Labour Office, 1-18.
• International Labour Office. (2002). Resolution Concerning Decent Work and The Informal Economy. Paper presented at the Ninetieth Session of
Conference of the International Labour Organization.
• International Labour Office. (2013). Women and Men in the Informal Economy: A Statistical Picture Second Edition. Geneva: ILO.
• International Labour Office. (2017). Informal Employment. Retrieved 17th November 2017 from
http://www.ilo.org/ilostat/faces/oracle/webcenter/portalapp/pagehierarchy/Page3.
jspx?MBI_ID=524&_adf.ctrlstate=17y8j6mai_4&_afrLoop=181767714525155&_afrWindowMode=0&_afrWindowId=null.
• Sethuraman, S. V. (1998). Gender, informality and poverty: a global review. Gender Bias in Female Informal Employment and Incomes in Developing
Countries.
• Yusof Kasim, M., & Jayasooria, D. (2001). Informal economy, micro-finance and non-governmental organisations in Malaysia. Humanomics, 17(1), 134-
140.
22 Department of Statistics, Malaysia (DOSM)
23 Department of Statistics, Malaysia (DOSM)
A popular view, especially among governments, is that a shift from the informal to formal is most helpful in the betterment of the economy.
…is that a shift from the informal to formal is most helpful in
the betterment of the economy. ILO retains this as their
primary policy objective as a reduction in informal
employment can lead to better and more decent work
(Kucera and Roncolato, 2008; ILO, 2002)
… a study on informality is essentially to address the
opportunities and incentives of informal workers
and enterprises that are outside the formal structures
governing taxes, workplace regulations and social
protection schemes (Huitfeldt, Sida and Jutting, 2009)
Higher focus on the informal sector will help study poverty and
inequality, as many studies claimed strong links between
informality, poverty and inequality (Chen, 2012)
…becomes a buffer for those who are unable to enter the
formal labour market as they lose jobs or unable to find work
suitable to their qualifications (ILO, 2013)
Literature ...