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Transcript of International Labour Office Department of Statistics Informal employment: Review of concepts and...
International Labour OfficeDepartment of Statistics
Informal employment: Review of concepts and
methodsElisa M. Benes
Department of StatisticsInternational Labour Office
International Labour OfficeDepartment of Statistics
BackgroundRecognition that:• Informalisation of employment goes far
beyond the informal sector• Rise in various forms of informal (or non-
standard, atypical, alternative, irregular, precarious, etc.) employment in most countries
• Broad concern with social and legal protection of employment
International Labour OfficeDepartment of Statistics
Delhi Group(5th Meeting, 2001)
« The definition and measurement of employment in the informal sector needs to
be complemented with a definition and measurement of
informal employment »
International Labour OfficeDepartment of Statistics
International standards
Guidelines concerning a statistical definition of informal employment (17th ICLS, 2003)
International Labour OfficeDepartment of Statistics
Conceptual framework:Employment in the informal
economy
Production units
Informal jobs Formal jobs
Informal sector enterprises
A B
Other units of production C DEmployment in the informal sector: A + B
Informal employment: A + C
Informal employment outside the informal sector: C
International Labour OfficeDepartment of Statistics
Conceptual framework for informal employment (17th ICLS)
• Objective: Relate enterprise-based concept of employment in the IS in coherent & consistent manner with a broader, job-based concept of IE
• Basis: Employed persons hold jobs having various job-related characteristics, which are undertaken in production units (enterprises) having various enterprise-related characteristics
International Labour OfficeDepartment of Statistics
Conceptual framework for informal employment (17th ICLS)
• Observation unit for employment: Jobs rather than employed persons (reason: existence of multiple jobholding)
• Approach: Total employment classified by (i) type of production unit
and (ii) type of job
International Labour OfficeDepartment of Statistics
Productio
nunits by
type
Jobs by status in employment OAW Employers CFW Employees MPC
I F I F I I F I F
FormalSectorEnterp.
1 2
InformalSectorEnterp.
3 4 5 6 7 8
Households 9 10
International Labour OfficeDepartment of Statistics
Production units by type
• Formal sector enterprises: corporations (incl. quasi-corporate enterprises), non-profit institutions, government units including unincorporated enterprises own by governments, and those private unincorporated enterprises producing goods or services for sale or barter which are not part of the IS
• Informal sector enterprises: as defined by 15th ICLS, excluding households employing paid domestic workers (as recommended by Delhi Group)
• Households: households producing goods exclusively for their own final use, and households employing paid domestic workers
International Labour OfficeDepartment of Statistics
Productio
nunits by
type
Jobs by status in employment OAW Employers CFW Employees MPC
I F I F I I F I F
FormalSectorEnterp.
1 2
InformalSectorEnterp.
3 4 5 6 7 8
Households 9 10
International Labour OfficeDepartment of Statistics
Jobs by type
• Status in employment (ICSE-93)– own-account workers, employers, contributing
family workers, employees, and members of producers’ cooperatives.
– Needed for definitional purposes and considered useful for analytical and policy-making purposes
• Nature of job– informal vs. formal
International Labour OfficeDepartment of Statistics
Productio
nunits by
type
Jobs by status in employment OAW Employers CFW Employees MPC
I F I F I I F I F
FormalSectorEnterp.
1 2
InformalSectorEnterp.
3 4 5 6 7 8
Households 9 10
International Labour OfficeDepartment of Statistics
Type of cells
• Dark– Jobs that, by definition, do not exist (e.g.
contributing family workers in household non-market production units)
• Light– Formal jobs (e.g. employees holding formal
jobs in formal sector enterprises)• Unshaded
– Informal jobs
International Labour OfficeDepartment of Statistics
Definition of informal employment (17th ICLS)
Total number of informal jobs, whether carried out in formal sector enterprises, informal sector enterprises, or households, during a given reference period
International Labour OfficeDepartment of Statistics
Productio
nunits by
type
Jobs by status in employment OAW Employers CFW Employees MPC
I F I F I I F I F
FormalSectorEnterp.
1 2
InformalSectorEnterp.
3 4 5 6 7 8
Hholds 9 10Informal Employment=
Cells 1 + 2 + 3 + 4 + 5 + 6 + 8 + 9 + 10
International Labour OfficeDepartment of Statistics
Components of informal employment
Cells 3 & 4: Own-account workers and employers employed in their own informal sector enterprises– Informal nature of jobs determined by
characteristics of the enterprise
Productio
nunits by
type
Jobs by status in employment OAW Employers CFW Employees MPC
I F I F I I F I F
FS entr 1 2IS entr 3 4 5 6 7 8Hholds 9 10
International Labour OfficeDepartment of Statistics
Components of informal employment
• Cell 8: Members of informal producers’ cooperatives– Informal nature of jobs determined by
characteristics of the cooperative
Productio
nunits by
type
Jobs by status in employment OAW Employers CFW Employees MPC
I F I F I I F I F
FS entr 1 2IS entr 3 4 5 6 7 8Hholds 9 10
International Labour OfficeDepartment of Statistics
Components of informal employment
• Cell 9: Own-account workers engaged in production of goods exclusively for own final use by their household – If considered employed (13th ICLS)
Productio
nunits by
type
Jobs by status in employment OAW Employers CFW Employees MPC
I F I F I I F I F
FS entr 1 2IS entr 3 4 5 6 7 8Hholds 9 10
International Labour OfficeDepartment of Statistics
Components of informal employment
Cells 1 & 5: Contributing family workers working in formal or informal sector enterprises – No written employment contracts; employment not
subject to labour legislation, social security regulations, collective agreements, etc.
Productio
nunits by
type
Jobs by status in employment OAW Employers CFW Employees MPC
I F I F I I F I F
FS entr 1 2IS entr 3 4 5 6 7 8Hholds 9 10
International Labour OfficeDepartment of Statistics
Components of Informal employment
Cells 2, 6 & 10: Employees holding informal jobs, whether employed by formal sector enterprises, informal sector enterprises, or as paid domestic workers by households.NEW
element
Productio
nunits by
type
Jobs by status in employment OAW Employers CFW Employees MPC
I F I F I I F I F
FS entr 1 2IS entr 3 4 5 6 7 8Hholds 9 10
International Labour OfficeDepartment of Statistics
Definition of informal jobs of employees
• Employees are considered to have informal jobs if their employment relationship is, in law or in practice, not subject to national labour legislation, income taxation, social protection or entitlement to certain employment benefits (advance notice of dismissal, severance pay, paid annual or sick leave, etc.)
Note: Definition covers (i) de jure informal jobs and (ii) de facto informal jobs.
International Labour OfficeDepartment of Statistics
Reasons for informal jobs of employees
• Non-declaration of the jobs or the employees• Casual jobs or jobs of a limited short duration• Jobs with hours of work or wages below a specified
threshold (e.g. for social security)• Employment by unincorporated enterprises or by
persons in households• Employee’s place of work is outside the premises of
the employer’s enterprise (e.g. outworkers without employment contract)
• Jobs, for which labour regulations are not applied, not enforced, or not complied with for other reasons
International Labour OfficeDepartment of Statistics
Informal jobs of employees: Operational criteria
Due to large diversity of informal employment
• To be determined by countries in accordance with national circumstances and data availability
• Impact on the international comparability of informal employment statistics recognized by 17th ICLS
International Labour OfficeDepartment of Statistics
Informal jobs of employees: Operational criteria
• Lack of coverage by social security system• Lack of entitlement to paid annual or sick
leave• Lack of written employment contract• Casual/temporary nature of work
Not sufficient
International Labour OfficeDepartment of Statistics
Productio
nunits by
type
Jobs by status in employment OAW Employers CFW Employees MPC
I F I F I I F I F
FormalSectorEnterp.
1 2
InformalSectorEnterp.
3 4 5 6 7 8
Hholds 9 10
International Labour OfficeDepartment of Statistics
Employees holding formal jobs in informal sector
enterprises
• Included in employment in the informal sector• But excluded from informal employment• Significance varies among countries, depending upon
informal sector definitions used
Productio
nunits by
type
Jobs by status in employment OAW Employers CFW Employees MPC
I F I F I I F I F
FS entr 1 2IS entr 3 4 5 6 7 8Hholds 9 10
International Labour OfficeDepartment of Statistics
IndicatorsFramework allows computation of indicators
for IS and IE – Employment in the informal sector
– Informal employment
– Informal employment outside the informal sector
International Labour OfficeDepartment of Statistics
Indicators: Employment in the IS
• Employment in the informal sector– Sum of Cells 3 to 8.
Productio
nunits by
type
Jobs by status in employment OAW Employers CFW Employees MPC
I F I F I I F I F
FS entr 1 2IS entr 3 4 5 6 7 8Hholds 9 10
International Labour OfficeDepartment of Statistics
Indicators: Informal employment
• Informal employment– Sum of Cells 1 to 6 and 8 to 10.
Productio
nunits by
type
Jobs by status in employment OAW Employers CFW Employees MPC
I F I F I I F I F
FS entr 1 2IS entr 3 4 5 6 7 8Hholds 9 10
International Labour OfficeDepartment of Statistics
Indicators: Informal employment outside the IS
• Informal employment outside the informal sector– Sum of cells 1, 2, 9 and 10
Productio
nunits by
type
Jobs by status in employment OAW Employers CFW Employees MPC
I F I F I I F I F
FS entr 1 2IS entr 3 4 5 6 7 8Hholds 9 10
International Labour OfficeDepartment of Statistics
Example: South Africa QLFS, (April-June, 2009)
Indicator sizeInformal Sector Employment
2.1 million
Informal Employment outside of the Informal Sector
2.0 million
Informal Employment 4.1 million
International Labour OfficeDepartment of Statistics
Source: ILO. In Brazil, estimates based on official data from various sources. In Colombia, Ecuador, Mali, Mexico, Panama, Peru
and South Africa: ILO estimates computed from labour force survey micro data. In Moldova and Turkey, labour force survey data.
a/ In Brazil, 2003 data. In Mali, South Africa, Moldova and Turkey, 2004 data. In Colombia, Ecuador, Mexico, Panama and Peru, 2007 data.
b/ In Brazil, Mali, Moldova, South Africa and Turkey, estimates are provided as a percent of total non-agricultural employment. In all
other countries, data are provided as a percent of total employment in urban areas.
(Percent of total non-agricultural employment) b/
Figure 1. Informal Employment and Employment in the Informal Sector in Ten
Selected Countries, latest year available a/
0102030405060708090
Informal employment Employment in the informal sector
International Labour OfficeDepartment of Statistics
(Percent of total male or female non-agricultural employment) b/
Informal Employment by Sex Among Ten Selected Countries, latest year available a/
Figure 2.
0 20 40 60 80 100
Brazil Colombia
Ecuador Mali
MexicoMoldovaPanama
PeruSouth Africa
Turkey
Women Men
Employment in the Informal Sector by Sex Among Nine Selected Countries, latest year available a/
Figure 3.
(Percent of total male or female non-agricultural employment) b/
0 20 40 60 80 100
Brazil
Colombia
Ecuador
Mali
Mexico
Moldova
Panama
Peru
South Africa
Women Men
Source: ILO. In Brazil, estimates based on official data from various sources. In Colombia, Ecuador, Mali, Mexico, Panama, Peru
and South Africa: ILO estimates computed from labour force survey micro data. In Moldova and Turkey, labour force survey data.
a/ In Brazil, 2003 data. In Mali, South Africa, Moldova and Turkey, 2004 data. In Colombia, Ecuador, Mexico, Panama and Peru, 2007 data.
b/ In Brazil, Mali, Moldova, South Africa and Turkey, estimates are provided as a percent of total non-agricultural employment by sex. In all
other countries, data are provided as a percent of total employment in urban areas by sex.
Informal Employment by Sex and Employment in the Informal Sector by Sex
International Labour OfficeDepartment of Statistics
Issues to consider• Potential classification errors
– borderline of status-in-employment categories (own-account workers vs. employees vs. contributing family workers)
• Where agriculture is excluded from IS employment– Need to define informal jobs for Employers, OAW and
MPC in agriculture• Heterogeneity of informal employment within
status-in-employment categories– Need to develop appropriate sub-classifications
International Labour OfficeDepartment of Statistics
Measurement of Informal employment
• Best source: Household surveys (LFS)• Questions needed:
– Questions to identify IS are included – Questions to identify of informal jobs of
employees– All others: Classification of jobs as informal follows
directly from the status in employment of the job and/or the characteristics of the enterpriseNote: Questions also needed for informal jobs held by OAW, employers and MPC in agriculture
International Labour OfficeDepartment of Statistics
LFS: Questions on informal jobs of employees (tested in 2003)
• Q11: Permanent vs. temporary employment• Q12: Existence of written employment contract• Q13: Payment of social security (pension fund)
contributions for the employee by the employer• Q14: Possibility to benefit from paid annual leave or
compensation for it• Q15: Possibility to benefit from paid sick leave • Q16: Possibility to benefit from maternity leave• Q17: Risk of arbitrary dismissal without advance notice
by the employer • Q18: Possibility to receive legal benefits and
compensation in case of dismissal
International Labour OfficeDepartment of Statistics
Informal jobs of employees: Questions used in LFS
• Q13: Payment of social security (pension fund) contributions for the employee by the employer
• Q14: Possibility to benefit from paid annual leave or compensation for it
• Q15: Possibility to benefit from paid sick leave Employees are considered to have informal jobs if
the answer to any of the questions Q13, Q14 or Q15 is ‘ no ’.
Principle: ‘No work, no pay’