THE INFORMAL SECTORin the 1993 SNA, Rev.1 AEG IVO HAVINGA, UN Statistics Division CAROL CARSON, Project Manager Session on the Non-observed Economy Joint National Accounts Meeting April 25-28, 2006 Geneva 1
Plan of the presentation • Informal sector in the SNA Update process • Context: Why is the informal sector an important issue for the update of the 1993 SNA? • Definition of the informal sector: differences between the ICLS (ILO) concepts of employment in the informal sector/informal employment and the SNA framework • Draft annotated outline of a chapter on the informal sector in the 1993 SNA, Rev.1 • Looking ahead
Thus far in the update process • Building on earlier discussions, the January-February AEG agreed that… • differences in terminology should be reconciled, • differences in the definitions of market and non-market should be considered, • questions of comparability should be explored, • the new SNA chapter should provide a good introduction without attempting include all the material of a handbook. • The Statistical Commission, last month, welcomed the chapter on the informal sector
Context: Policy relevance of measurement of the informal sector • Links to development objectives on… • income generation, • employment creation and • poverty reduction and to the design and monitoring of targeted support programs • Informal sector’s contribution to non-agricultural GDP • 27 percent in northern Africa • 41 percent in Sub-Saharan Africa • 29 percent in Latin America • 31 percent in Asia
Context: Selected developments in methods and practicesince 1993 • Papers of Delhi Group on Informal Sector Statistics • UN handbook Household Accounting: Experience in Concepts and Compilation, Volume 1: Household Sector Accounts • Measuring the Non-observed Economy: A Handbook by OECD, IMF, ILO and CISSTAT • UNECE manual Non-observed Economy in National Accounts
Context: Calls for guidelines • Issue in the work on the 1993 SNA; placed on the research agenda • Statistical Commission 2004 reiterated collaboration between UNSD and the Delhi Group on informal sector • Forthcoming publication Surveys of Informal Sector and Informal Employment • Collaborative effort of ILO and members of Delhi Group • Chapter on uses of informal sector data for national accounts purposes
Definition of the informal sector • Differences between ICLS and SNA… • in terminology • in segmenting the economy • in the use of enterprise-based criteria • in the universe of household enterprises would be key points for discussion in the new chapter. What are these differences?
Terminology • The ICLS use of “sector” does not match the definition in the SNA. • The word “informal” has several meanings: • May imply a formal-informal sector distinction between household enterprises. • Can refer to exhaustiveness of data collection practices as well as a production unit with specific characteristics.
Terminology (2) • The ICLS use of “households” is narrower than the meaning in the national accounts framework. • National accountants consider the “formal” segment of enterprises to be confined to institutional sectors other than the household sector.
Segmenting the economy • ICLS uses non-registration to identify informal enterprises within household enterprises; in many countries this may coincide with lack of legal status and of accounts. • ICLS refers only to production units that engage labor as input; national accounts refer also to those that do not use labor inputs.
Use of enterprise-based criteria • Criterion for market production • SNA: market producers are those that sell “most or all” of their production on the market at economically significant prices. • ICLS: uses the phrase “some or all”. • Conceptual and practical advantage of “some or all”criterion.
Use of enterprise-based criteria (2) • Possible grouping for macroeconomic statistics on the informal sector: Household enterprises with employment Enterprises with market production Informal sector enterprises Other household enterprises Enterprises with only production for own final use Household enterprises without employment
Universes of household enterprises • With and without labor input (SNA) versus with labor inputs (ICLS) (noted above) • All economic activities (SNA) versus non-agricultural activities (ICLS) • …
Points for discussion • What are views … • about the differences listed—for example, which are most important in practice? • about the ICLS “some or all” criterion used in identifying market producers? Does it have potential as an application for analysis and policy? • about international comparability—should further attempts be made to identify groupings, including the informal sector, that have greater cross-border and cross-region comparability?
Draft outline of chapter • Introduction • The informal sector: a broad statistical perspective • Definition of the informal sector • Other concepts • Measurement
Points for discussion • Are there relevant topics that are missing from the outline? • Are there views about the balance to be struck—that the chapter should be an introduction, not a handbook? What could be omitted from the outline?
Looking ahead • AEG sub-group • Collaboration with ILO and Delhi Group • Forums to test plans and drafts (e.g., UNECE April, Delhi Group, regional meetings)
Thank You Ivo Havinga at firstname.lastname@example.org Carol Carson at email@example.com