Viet Vu Consultant UN STATISTICS DIVISION

1. HOUSEHOLD SECTOR, iNFORMAL SECTORConceptual framework, data collection for value added compilation Viet Vu Consultant UN STATISTICS DIVISION 1

2. Content of presentation • Conceptual framework • Statistical units for SNA household production: households as unincorporated enterprises. • Statistical units for Household Enterprises Producing At Least Some Goods and Services for Markets (HUEMs). • Further clarification: is “some goods and services for market” sufficient? • Informal sector as a sub-sector of HUEMs • Specification of activities engaged in by HUEMs • Data collection and compilation of value added • Framework for the collection of economic data. • 1-2 Survey technique. • Compilation of value added. • Data extrapolation by use of labour force survey

3. CONCEPTUAL FRAMEWORK

4. Statistical units for the household sector production: unincorporated enterprises • Household units as non-producing consumers: • earn their income by providing their labor services to other producers, or by receiving transfers from other institutional sectors such as the government, NPISHs, financial corporations and other households. • do not even own dwellings in order to produce services of owner-occupied dwellings. • Household units as unincorporated enterprises: • are households which produce goods and services for own consumption and for the market. • can be farmers, small retail traders and manufactures, money lenders, owners of owner-occupied dwellings, households with paid domestic staffs.

5. Households as statistical units in SNA production framework: refined definition Area subject to 1-2 survey This is the part of the system that the ILO is interested in

6. Household Enterprises Producing At Least Some Goods and Services for Markets (HUEMs): Definition • HUEMs: are household unincorporated enterprises as defined by the SNA, but: • (1)with “primary objective of generating employment and incomes to the persons concerned” as defined by the ILO in the resolution of the 15th ICLS (SNA2008, 25.37); and • (2) “with at least some production for sale or barter (SNA2008, 25.46)”. • HUEMs as defined above must have entrepreneurial spirit in the sense that they pursue production for the market on a regular basis; therefore HUEMs should exclude the unincorporated household units that have some incidental sales, and subsistence farmers who must sell some of their outputs on the market to pay for nonfood survival needs. • Non-HUEMs: Household unincorporated enterprises producing only for own final consumption.

7. HUEMs and their characteristics • HUEMs are defined at a level higher than the informal sector so as to help collect data for national accounting more systematically and exhaustively and at the same time to create a broader grouping in the household sector that are internationally comparable purposes. • HUEMs can then be sub-divided by countries according to their own country specific criteria on status of registration, size of employment, types of activities (non-agricultural only for example), terms of employment (entitled to benefits beyond wages and salaries) as guided by the ILO: • Formal sector • Informal sector • Another reason for HUEMs to be singled out for survey is as the SNA wrote: • “…there is broad agreement that no single criterion on its own is sufficient to determine what is meant by informal; several criteria must be considered.” (SNA2008, 25.18)

8. Informal own-account enterprise Other own-account enterprises Own-account HUEMs Informal enterprises of employers Other enterprises of employers HUEMs of employers Informal Sector Additional criteria: size, non-registration UNIVERSE OF HUEMs

9. What should be considered a HUEM? • Conditions: • HUEM must sell (or barter) at least some of its produce on the market • However, many farmers are commercial farmers who produce mainly for the market like growing and processing tea, coffee, rubber plants, coconut trees, bananas, pineapples or engaging in husbandry etc. • They always have to sell some of their products to market to earn money for other survival needs • Questions: • Should farmers be included as HUEMs? • Should all farmers be treated as HUEMs? • Proposal: • All subsistence farmers should be excluded. • Only units that aims at producing for the market can be HUEMs. Household with only incidental sales are eliminated.

10. Refined definition of HUEM • HUEM is an unincorporated enterprise that regards itself as engaging in enterprising and sell (or barter) at least some of their output on the market, whether they are owned by one or more than one family member, and whether they are individually owned by a household or in partnership with other households. • Agricultural HUEM: produces a significant amount of agricultural products for the market. The word "significant" can be understood in the sense that the agricultural HUEM is not just selling what it cannot fully consume, or selling just for the sake of having income to pay for his own survival needs, e.g. clothes, health and educational needs, etc. • Non-Agricultural HUEM: output sold should not be incidental but significant enough for the household to regard itself as engaging in enterprising.

11. Conceptual framework: Activities of HUEMs

12. Conceptual framework: Activities of HUEMs • Scope of Activities: • Activities of HUEMs scan fully all the activities defined by ISIC4, except those that can only be provided by the government or international organizations. • A non-agricultural HUEM can engage in both agricultural and non-agricultural activities. • Imputation:Any type of HUEM can produce the following services that cannot be measured directly but must be indirectly measured and imputed: • Owner-occupied dwellings services • Domestic services with paid staff • Money lending • Outputs produced to be used for intermediate consumption (new 2008 SNA), gross capital formation and final consumption.

13. Types of outputs produced by HUEMs • Output of goods and services for sale: • Normal goods and services • Money lending • Output of goods to be used as intermediate consumption (SNA2008). • Output to be bused as gross capital formation (e.g. dwellings, production utensils). • Output to be used as final consumption: • Owner-occupied dwellings services • Domestic services with paid staff

14. Data collection and data extrapolation

15. Measurement issues • Comparability: To compare the output and value added produced by HUEMs or by the informal sector with respect to the total economy, the full scope of activities they engage in, in principle, must be measured, including imputations. • Strategy of measurement: • Direct measurement by survey: can be applied for construction, manufacturing, services except those that need imputation. This is particularly essential for supplemental agriculture (backyard). • Indirect Measurement: can be applied to: • Plants and animals that need long time to maturity: use proxies to allocate national output given acreage and animal heads. • Owner-occupied dwellings, money lending, domestic services with paid staff.

16. Measurement issues • Allocation of national output for “long time to mature” plants and animals • Others: direct survey. Direct measurement through HUEMs. Households as statistical units By imputations with proxies obtained by surveys

17. Universe of Enterprises List-frame segment Area-based frame segment Large units Small units With fixed premises Without fixed premises Public sector Private sector Not in business register In business registers contain only corporations Contains HUEM units 1-2 survey

18. Step1: Identify HUEMs in a Household/Labor Force Survey or Area Sampling Survey Indicate the status of enterprising

19. Step 2: Survey HUEMsStep 3: Blowing up to the economy total by employment

20. Countries participate in the ESCAP’s pilot project • Mongolia • Philippines • Sri Lanka • Palestine • Saint Lucia • Vietnam tested in Hanoi and Hochiminh city and working independently of ESCAP’s project.

21. An example result

22. First stage: Samples • Total active individuals in sample: 9,993 • Working in private sector: 7,502 • Corporations: 1,825 (agricultural units not candidate of HUEMS • IDI, not registered, don’t know: 5,677 • Enterprise sells/barter regularly HUEMs: 1,559 • Enterprise sells/barter from time to time: 2,480 • No sales/barter 1,570 • don’t know 53 • HUEMs do not include units that have only incidental, irregular sales • Definition of informal ILO: At least some outputs sold or barter. • Definition used by Mongolia is not the same as ILO’s. • HUEMs do not include units that have only incidental, irregular sales

23. Second stage: Samples Sample might be too small to provide reliable data on input ratios

24. Compilation of output and value added for HUEMs

25. Gross output Must be directly surveyed Proxies must be directly surveyed

26. Value added

27. Intermediate consumption Must be imputed as outputs

28. Extrapolation of HUMs value added by activities

29. Using employment for extrapolation • Extrapolation technique: Value added per working hour of the base year x hours of employment hours of the current period = value added of the current period in constant price. Extrapolation by activity. • Labor force survey (LFS): This is a household survey. It examines if an individual is in the labour force, and then whether he is employed or unemployed during the reference period. • Establishment survey (ES): This survey of producing units to count jobs employed by the establishment. Survey of HUEMs is an ES. • Differences: • LFS counts individuals, each individual being counted only once. However, ES counts jobs held in each production unit therefore an individual may be counted more than once if that person holds two or more jobs. • Employment status data in LFS include people on the basis of place of residence regardless of where they work, whereas establishment data report people at their place of work. • Preference: ES survey to link actual employment to actual valued added at actual place of work.

30. Problems with using LFS • For total economy: Distortion will not happen at the total economy level, if employment by working hours is used. • For local economy: Distortion may happen if a region is small so that workers in one region may work in another region. • For avoidance of distortion: • LFS requests information on both working hours at the place of residence and at the place of work for each person interviewed. • hypothesis that working hours in HUEMs and LFS are close enough such that the data obtained in LFS can be used for estimating output and value added in a specific local level needs to be tested.

31. Thank You