Labor Statistics: Informal Employment

1. Labor Statistics: Informal Employment UNECE Statistical Division

2. Informal Employment Definitions • Initially, the concept of the informal sector was an analytical concept for research purposes. • Now, it is being used as a statistical concept for data collection purposes, referring to activities not covered – or insufficiently covered, by the existing traditional sources of statistical data.

3. Informal Employment What does “informal” mean? • The ‘informal economy’ refers to “all economic activities by workers and economic units that are not covered or insufficiently covered by formal arrangements” • Informal sectorenterprises: • Unincorporated enterprises: enterprises owned by individuals or households that are not constituted as separated legal entities independently of their owners, and for which no complete accounts are available that would permit a financial separation of the production activities of the enterprise from the other activities of its owner • Size is below a certain threshold (five employees?) • All or at least some of the goods or services produced are meant for sale or barter. Market orientation • Defined by national circumstances • Lack of registration • Enterprises engaged in agriculture could be included but good to identified them separately from the non-agriculture enterprises

4. Informal Employment How“informal” relate to employment? There are two “informal” concepts that affect employment: • Employment in the informal sector • Informal employment

5. Informal Employment How does“informal” relate to employment? Employment in the informal sector all persons who, during a given reference period, were employed in at least one of the informal sector enterprise, irrespective of their status in employment and whether it was their main or a secondary job

6. Informal Employment How does“informal” relate to employment? Informal Employment Persons employed in the informal sector + persons employed in “informal” jobs. Informal jobs: • non-standard, atypical, irregular, precarious, unprotected • not covered by existing regulations (social protection, benefits The first criterion is based on the production unit, the second criterion on the type of job

7. Informal Employment How does“informal” relate to employment? Employment in the informal sector and Informal employment are concepts, which refer to different aspects of the ‘informalisation’ of employment and to different targets for policy-making. They are both useful for analytical purposes and, hence, complement each other. Statistics users and others often tend to confuse the two concepts because they are unaware of the different observation units involved: enterprises on the one had, and jobs on the other.

8. Informal Employment Total Employment Informal employment Informal jobs in formal enterprises and households Employment in the informal sector

9. Informal Employment An example: Moldova 2003

10. Informal Employment Status in employmentand informal employment • Employees • Employers • Own-account workers • Contributing family workers • Members of producers’ cooperatives Self-employment

11. Informal Employment Informal Employmentcomprises: • Own-account workers and employers employed in their own informal sector enterprises. • Contributing family workers, irrespective of whether they work in formal or informal sector enterprises. • Employees holding informal jobs, whether employed by formal sector enterprises, informal sector enterprises, or as paid domestic workers by households. • Members of informal producers’ cooperatives. • Own-account workers engaged in the production of goods exclusively for own final use by their household (such as subsistence farming or do-it-yourself construction of own dwellings)

12. Informal Employment Informal employment and status in employment

13. Informal Employment Informal employment consists of a large and diverse category of workers which can be divided in to more homogenous categories according to the status of the employment. • Informal self employment • Informal wage employment

14. Informal Employment Informal employment and status in employment in Moldova 2003

15. Informal Employment Gender and informal employment • Informal employment comprises one half to three-quarters of non-agricultural employment in developing countries. • Data disaggregated by informal and formal employment and employment status provide new information on the difference in the opportunities of women and men in the labor market: • Informal employment is generally a larger source of employment for women than formal employment • In most developing countries it is a larger source of employment for women than for men • Women are concentrated in the more precarious types of informal employment • Average earnings from these types of informal employment are low

16. Informal Employment In developed countries, informal employment exists and is growing Examples include: • Own-account self employment, • part-time employment • temporary wage employment • including fixed term/contract, casual, seasonal and on-call work and work through a temporary agency

17. Informal Employment

18. Informal Employment Increasing importance in countries in transition • Previously, informal activities were illegal and even forbidden. • Now these activities have an increasing role in creating jobs, providing income, and producing goods and services.

19. Informal Employment Share of formal and informal employment by sex and industry, Moldova 2003

20. Informal Employment Issues in data collection and dissemination • Data collected through the Labor Force Surveys can be used to address informal sector and informal employment through a special module • If questions on the size of the enterprise and whether the enterprise is registered are asked, then statistics on employment in the informal sector can be prepared. • Additional questions on the nature of the job can identify informal jobs

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