REPORT OF THE SEVENTH MEETING OF

THE EXPERT GROUP ON

INFORMAL SECTOR STATISTICS

(DELHI GROUP)

 

1.      Organisation of the meeting

 

            The seventh meeting of the Expert Group on Informal Sector Statistics (Delhi Group) was organised and hosted by the Ministry of Statistics and Programme Implementation, Government of India in New Delhi during the period 2-4 February 2004.

 

1.1             Participants

 

Representatives from seven countries viz. Fiji, France, India, Korea, Malaysia, Namibia and Nepal, the international organizations of ILO, ESCAP, UNSD, UNDP and organisations like Women in Informal Employment – Globalising and Organising (WIEGO), Centre for Development Alternatives (CDA), Centre for Social Development (CSD), Gujarat Institute of Development Research (GIDR), National Council for Applied Economic Research (NCAER), Socio Economic Research Centre (SERC) and Self Employed Women’s Association (SEWA) participated in the meting.  In all 45 participants attended the meeting. List of participants is at Annex-I.

 

1.2             Inauguration

 

Dr. Adarsh Kishore, Secretary, Ministry of Statistics and Programme Implementation, Government of India and Chairman of the Delhi Group welcomed the participants and inaugurated the meeting.  He expressed his gratitude to all the distinguished participants and regretted that the efforts of the Secretariat of Delhi Group to find resources to assist the experts from developing countries have not become very successful though UNDP Delhi and the Ministry of Urban Affairs did make available some funds at the last minute.  He then briefly indicated the developments since last meeting and mentioned that two research studies based on Indian data were completed on the measurement of Informal Economy and the measurement of its linkages with poverty.  It was also mentioned that one of the major tasks of the Group is to evolve an operational statistical definition of informal economy for data collection.  Outlining the agenda before the group, he expressed the hope that the issues would be carefully analyzed and deliberated upon before arriving at suitable recommendations for future programme of work in the field.

 

1.3       Agenda

 

            The agenda adopted for the meeting consisted of the following:

 

                 i)           Inaugural session.

               ii)           TECHNICAL SESSION I: Defining Informal Employment and Methodologies for its measurement.

             iii)           TECHNICAL SESSION II: Improving the quality of Informal Sector Statistics - Country Experiences.

              iv)           TECHNICAL SESSION III: Measurement of Informal Economy through Income and expenditure surveys.

                v)           TECHNICAL SESSION IV: Future work programme.

 

            The detailed agenda of the meeting is at Annex-II.

 

Summary of the deliberations and recommendations

 

SESSION - I

 

            The first session of the meeting was devoted to defining Informal Employment and Methodologies for its Measurement.  The brief summary of the papers presented during the session are produced below:

 

1       Statistical definition of Informal Employment: Guidelines endorsed by 17th ICLS (2003)

         – Ralf Hussmanns, ILO

 

Summary: The paper starts with a definition of the informal sector as adopted by the 15th ICLS and subsequently included in SNA 1993.  Thereafter, it mentions some of the criticisms raised against the definition of informal sector.  There is a feeling that certain categories of persons like casual workers, outworkers, subcontractors, etc. may not got included in the category of informal sector workers.  Further, enterprise based definition may not be in a position to capture all types of activities listed in the 2‑way matrix classifying informal employment by type of production units and jobs by status in employment.

 

            The paper also describes the role of the Delhi Group in working out suitable statistical definitions of informal employment.  It is agreed during the course of presentation that ‘informal sector’ and informal employment’ complement each other.

 

            The other issues covered in the presentation relate to (a) International statistical definition of employment in the informal sector, (b) 17th ICLS guidelines on the definitional aspect (c) Definition of informal employment as per 15th ICLS vis-à-vis 17th ICLS (d) Indicators that can be obtained from 2-way matrix and finally the reasons for maintaining the database for the informal sector.

 

            The paper concludes by highlighting the areas for further work by the Delhi Group and others.  The suggestions, inter-alia, include the following:

 

(a)       Development of a proper methodology to reduce classification errors for jobs at the borderline.

(b)               Further sub-divisions of informal jobs,

(c)               Development of comprehensive statistics on informal employment in the absence of data on informal sector employment.

(d)               Treatment of informal jobs in agriculture, and

(e)               Linkage between informal sector and informal employment vs. underground/illegal production.

 

2       Estimation of Informal Employment in India 1999-2000 through application of ILO conceptual framework on NSS data

         – Dr. N. S. Sastry

 

Summary:    The paper is a direct application of the matrix presented by Ralf Hussmanns in the previous meeting of the Delhi Group.  As a part of introduction, it explains that NSS 55th round Employment Unemployment Survey 1999-2000 (EUS 1999-2000) asked certain questions on the enterprises in which the person worked in a principal or subsidiary status.  This helped in generating estimates of employment in the informal sector and informal employment.  It was also commented that the data generated by EUS 1999-2000 could be used for testing the conceptual framework of informal employment as defined by the ICLS.  After describing the important concepts and definitions of the terms used in the EUS 1999-2000, the author also highlighted the limitations of EUS 1999-2000.  Some of the limitations are for example, response of ‘not known’ to questions on type of enterprise, and not capturing data on type of enterprise for agricultural activities through EUS 1999-2000.

 

            It has been brought out that EUS 1999-2000 helped in generating the abridged version of the matrix as specific details for all categories were not available.  Characteristics of formal employees in informal sector enterprises, informal employees in formal sector and treatment of agriculture for the data analysis were also described at length.  He also spoke about the treatment of workers for whom ‘type of enterprise’ was not known.  The author concluded by presenting key statistics based on the analysis of data as per EUS 1999-2000.

 

3       Measurement of Informal Economy in Malaysia

         – S.A. Rahnan & A.F. Mohammad

 

Summary:    After describing in brief the importance of the informal sector in the national economy, the paper highlights the definition of the informal sector.  It is pointed out that three factors taken together qualify the definition of the Informal employment.  These are: (a) non-registration of the enterprise, (b) small size of the enterprise in terms of employment, and (c) non-registration of employees of the enterprise.  Due to lack of data, only the first two criteria were used in identifying informal sector establishments.  Thereafter, the author describes the sources of data for informal sector, the establishment and household surveys conducted and limitation in terms of coverage.

 

            The preliminary results of data as per Census of Distributive Trade, 2002 are indicated in the paper.  As regards the coverage, it was pointed out that although the census was based on the enumeration blocks of the household sampling frame, certain kinds of activities viz. activities of street vendors, shops temporarily opened during festive seasons, etc. i.e. primarily those without fixed premises were not covered.  Also the trend in the estimates of important characteristics from the Labour Force Surveys (LFS) during the period 1990-2002 was highlighted in the presentation.  The paper advise caution in comparing data from different sources, due to definitional problems.

 

            It was not possible to generate official estimate of the share of informal sector to total economy so far because of certain difficulties.  Using the ratio of mixed income to Gross National Income as a proxy indicator, it appears that the share of the informal sector was on a declining trend from 1987-1997.  It observed that there was need to examine the components of the indicator in greater detail.

 

            The paper concludes by saying that Malaysia is in the process of revising the questionnaire for ensuing LFS, keeping the data requirements for the informal sector in view. 

 

4       Defining informal employment and methodologies for its measurement and some results

         – K. P. Shrestha, Nepal

 

Summary:     The paper starts with a description of the guidelines recommended by the ILO in defining informal enterprises.  The practices followed in the Nepal Labour Force Survey (NLSS) were described thereafter.

 

            The author pointed out that of the definition adopted by Nepal confines to non-agricultural sector only.  Basis for classifying non-agricultural jobs as ‘informal’ was also explained.

 

            Important results as per NLFS 1998/99 were presented in the paper.  These results/statistics include distribution of the employed by sector and sex; currently employed population by sex and age; formal/informal sector of employment of main job; employment in informal sector by ISCO 3-digit code; informal sector workers by sex, locality, employment status, etc; wage difference in formal and informal sector.

 

            The author concludes by making a remark that proper methodology need to be developed to capture the real contribution of informal sector activities.  This is required for national accounting system as well as for maintaining international comparability.

 

SESSION - II

 

            The second session was devoted to improving the quality of Informal Sector Statistics.  Brief summaries of papers presented during the session is presented below:

 

 

 

 

 

1       Data Collection on the Informal Sector: a Review of Concepts and Methods Used Since the Adoption of an International Definition - Towards a Better Comparability of Available Statistics

         - Jacques Charmes

 

Summary: The paper by Mr. Jacques Charmes is a comprehensive review of national informal sector surveys.  The paper includes a region by region analysis of  the  definitions used by the  countries  with a special focus on scope, coverage, methods and measures. Surveys covering limited number of sectors were not considered for this exercise. Prof. Charmes observed that at national level and without taking establishment surveys into account, 32 surveys were conducted that used definitions fitting with the international standard. Among these 32 surveys, 19 were carried out in Africa, 6 in Asia, 5 in transition countries and 2 in Latin America. Main indicators for informal sector were also presented in the paper. This exercise of compilation revealed a lack of data on total employment and on secondary activities (multiple activities). It also brought out inconsistencies in methods of computation of the indicators. The paper concludes that more than ten years after the adoption of the international definition of the informal sector by the 15th International Conference of Labour Statisticians, the compilation and calculation of harmonized indicators and estimates remain difficult and hazardous. The author emphasized that the Delhi Group should recommend a list of strictly defined indicators with precise methods of calculation. In addition, this Group should encourage the systematic compilation of absolute figures required for computation.

 

During the discussions the participants observed that harmonization of concepts was a difficult task and would depend on the degree that international guidelines on the concept are followed by  countries.

 

2       Impact of Policy Changes on the Informal Economy: informalisation - A  Sectoral Perspective

         - Anushree  Sinha and Poonam Munjal

 

The objective of the paper by Ms. Anushree Sinha and Ms. Poonam Munjal was to develop a framework that would enable analysis of the impact of policy changes on male and female workers on households. They considered three perspectives through which the informal sector is defined, which are (a) small – scale production which is identified as unregistered part of a sector in the National Statistics (b) informal ‘factor ownership’ : workers involved in casual work and own-account workers and (c) households: having members involved in informal activities.

 

Labour force data and Consumer expenditure data collected during the NSS 55th round survey (1999-2000) was used in this study. Their findings are (i) a large section of the Indian population is involved in informal operations (ii) there are certain sectors which have more of  informal activities  than others and (iii) there is higher number of poorer households within the informal category.

 

 

 

3       Improving the quality of Informal Sector Statistics : Fiji  Experience

         - Nilima Lal

 

Summary: The paper by Ms. Nilima Lal discusses the status of availability of informal sector statistics in Fiji Islands. Informal sector in Fiji constituted mostly household based activities.  Own-account workers carried out these activities either alone or with the assistance of unpaid family workers or friends. Data on the informal sector were obtained through the Population Census and Employment – Unemployment survey. Ms. Lal brought out the share of informal activities in different sectors of the economy. Informal activities accounted for about 17% of the total GDP in 1995.

 

4       Improving the quality of Informal Sector Statistics: Namibia Experience

         - Panduleni Kali

 

Summary: This paper was presented by Dr. K.V. Rao as Ms. Kali could not reach in time.  It gives salient features of Namibia Informal Sector Survey 2001. Informal sector was restricted to the private sector enterprises having 5 or less paid employees. Agricultural activities were included if these were not solely for home consumption. Professional type enterprises using high technology and domestic servants of private households were excluded. In this survey, informal sector enterprises were identified through a household sample.

 

5       Informal Sector Statistics and Supporting Surveys:  Indonesia Experience

         - Rusman Heriawan

 

Summary: This paper was presented by Mr. J. Dash. According to Mr. Rusman Heriawan the concepts and definition of the informal sector in Indonesia are not adequate. Many border line cases around the informal sector are still being discussed. Data relating to informal sector are obtained through annual National Labour Force Survey, decennial Economic Census and annual Integrated Survey of small Scale Establishments as a follow-up survey of the Economic Census concerning only the establishments without having legal status. Three employment statuses viz. self employed without assistance of other persons, self-employed assisted by family workers and unpaid workers constituted the informal sector under the labour force survey. Establishments not having legal status are classified as the informal sector establishments in the Economic Census which cover all the activities except agriculture. The author is of the view that reconciliation of informal workers working in the informal and formal establishments can be done to obtain more precise estimate of informal sector. The paper presents the results of labour force surveys, economic census and follow-up surveys conducted in Indonesia.

 

6       Informal Sector - the Moroccan Experience

 

Summary: This paper was presented by Dr. G. Raveendran in the absence of the author. The paper traces the history of development of informal sector statistics in Morocco and gives important features of the National Inquiry on the Informal Sector conducted in 1999. Informal sector constituted productive units which did not have a legal status and do not maintain books of account. The National Enquiry on Employment (ENSI) served as a base to identify informal sector units.  ENSI coverd about 48000 households representing different social levels and regions of the country.  Based on ENSI about 9000 informal units were surveyed.  The survey was useful in estimating the contributions of informal sector to national economy.

 

7       The Cameroun Experience of the Informal Sector

         - Appolinaire Kinge

 

Summary: This paper was presented by Dr. G. Raveendranin the absence of the author. The paper by A. Kingne gives salient results of the 1993 1-2-3 inquiry at Yaounde, Cameroun. This inquiry was undertaken in three phases, the first phase was an inquiry on employment, the second on the informal sector and the third was on consumption expenditure, health etc. This inquiry covered informal production units which were not registered or/and did not keep accounts. Employment in the informal sector was characterized by weaker remuneration, and relatively higher mobility.  The paper concludes that the informal economy in Cameroun remains to be explored in all its facets.

 

SESSION - III

 

            The subject of Measurement of Informal Economy through Income and Expenditure Surveys was discussed during the third session.  The papers presented together with their brief summaries are given below:

 

1       Links among Employment in Informal Sector, Poverty and Gender

         – Dr. N.S. Sastry

 

Summary: The Employment and Unemployment Survey (EUS), conducted by the National Sample Survey Organisation in 1999-2000 had included certain probing questions to usual status workers regarding some specific features of the enterprises in which they worked.  This EUS also collected, through an abridged worksheet, data on the consumer expenditure of the households to which the worker belonged.  The information for the survey has been so planned and collected that it has been possible to identify the members of the household who were employed as usual status workers   in the informal sector enterprises.  The information on the gender of the head of the household as well as of each member of the household was also collected.

 

            Using this information, an attempt has been made in the paper to study the links between employment in informal sector, poverty and gender.  The nature and type of work from which a household derives its major income is an important indicator of the activity pattern of its members.  This information enables one to categorise the sample households into ‘household types’, both in rural and urban areas.  By introducing the definition of “household sustaining on employment in informal sector” as a household having at least one usual principal status worker in informal sector and no usual principal status worker outside informal sector, it has become possible to study the extent and prevalence of poverty in the households sustaining on employment in Informal Sector.

 

 

2       Contribution of Informal Sector and Informal Employment in   Indian    Economy

         – Vaskar    Saha,   Aloke   Kar and T. Baskaran

           

Summary: The ‘informal sector’ and ‘informal employment’ are catching up the attention of the labour statisticians as well as the policy makers.  The Delhi Group as well as the ICLS have consistently been working to bring out an internationally accepted definitions of the terms.  While agreeing to the international definitions, this paper hints to underpin the limitations prevalent in India and to operationalise the definitions in the Indian context. In this endeavour, the paper argues in favour of considering the special situations in India, taking the different criteria propounded by the ICLS and agreed by the Delhi Group.

 

            Having defined the ‘informal sector’ and ‘informal employment’  in a way which is best suitable to India,  the paper makes an attempt to estimate the share of the informal sector employment and the informal employment in total employment.  As a next step, the paper further explores the contributions of the informal sector and the informal employment in the total GDP.  In doing so the paper used the ‘informal input’ concept instead of ‘count of workers’, after clearly distinguishing between the two.  The paper also summarises the methodology followed in arriving at the contribution of the informal sector and informal employment and thereby, proposing it as one of the methods to be explored.  The paper observes that the share of informal sector is about 44% while that of informal employment is about 45% in the GDP confining the analysis to only the  non-agricultural segment and  excluding the paid domestic work.

 

3       Non-observed Economy and Methods of its Measurement and Assessment in Statistical Practice of Azerbaijan

         – N. Suleymanov

 

Summary: Some elements of the non-observed economy (NOE) take place in all countries irrespective of their socio-economic structure and level of economic and social development. Even though the prevalence of NOE was recognized in Azerbaijan, during the centralized market regime, its extent was insignificant and it did not represent a major interest for statistical sample survey. In the period of transition from the centralized to a market economy, the social and economic environment has completely changed. The changed scenario has led to growth in the shadow economy and NOE, partly caused by economic reasons associated with development of the market economy and partly on account of an inefficient performance of the financial and tax systems, custom institutions and weak informative and legal regulation, which have not changed in line with the rapidly changing economic conditions.

 

            With the transition to a free market economy and the emergence of a private sector, the number of economic units in Azerbaijan has increased sharply. Though the Law of the Azerbaijan Republic on Statistics, makes statistical reporting obligatory for all relevant economic units, part of the units still avoid the same for some reasons. It has been argued that with a view to reckon with the production of goods and services in the estimates of GDP, there is a need to develop statistical methodology for the purpose.  The paper has identified three areas for  capturing  the NOE, namely (a) own account household production, (b) services of individual producers and (c) the hidden part  of legal production in the corporate sector. Production of goods and services, on account of pursuing the economic activities  falling under the aforesaid areas, is  adjusted using information from household budget surveys and other sample surveys for the purpose of compiling estimates of gross domestic product.

 

4       Estimation of Employment and Value added of Informal Sector in  Pakistan

         - Pietro Gennari

 

Summary:  In this paper an attempt has been made to estimate the contribution of informal sector in terms of its employment and GDP with respect to the Pakistani economy. As a direct estimation of the value added of the informal sector is not possible at the moment, an indirect approach is followed using the 'labour input' methodology, which requires data support from both establishments’ and households’ surveys. A review of data sources that can be currently used for producing statistics on the informal sector is provided.

 

As for the Labour Force Survey, a discussion of the limitations in international comparability of the national definition of informal sector adopted in Pakistan is carried out, along with a detailed examination of the accuracy of its results. Like in many other countries the coverage of the informal sector is not fully harmonized with the Delhi Group recommendations, as the criterion of registration of the enterprise is not implemented and households' employing paid domestic employees are included in the definition. Information concerning the characteristics of the enterprise (above all the one on accountancy practices) is less accurate if collected from employees and this may have quite a significant impact on the size of the sector. The main findings confirm that large differences in working time, compensation and job turnover exist between formal and informal employment and that wage differentials by sex are higher in the informal sector; at the same time, the results point out that the youngest workers and the less educated are over-represented in this segment of the Pakistan economy, while, contrary to expectation, women are not.

 

The major problems concern the estimates of productivity by industry of the workforce engaged in the informal sector: except for manufacturing, virtually no estimates of value added per worker are currently published, even if proxies could be calculated for some industries on the basis of the existing sources, provided that data broken down by firm size would be made available by the FBS. An attempt has been made to use the corresponding estimates of value added per worker of the Indian economy, appropriately adjusted to take into account that wages in Pakistan are nearly the double the ones paid in India. The results of this exercise show that the contribution of the informal sector to total Value added is quite substantial in Pakistan.

 

 

 

 

 

5       International Classification of Activities for Time Use Surveys

         – Ms. Clare Menozzi

 

Summary:    A brief summary of the development of the International Classification of Activities for Time-use Survey (ICATUS) since the Beijing Summit was presented and views were invited regarding the structure and content of the ICATUS and whether any contextual variables relating to the informal sector could be added/supplemented to the existing classification.

 

Session-IV

 

            The fourth session     was devoted to taking stock of work done by the Group so far and to discuss future programme of the Delhi Group.  The highlights of the achievements made by the group and a consensus view on the future course of action are given below:

 

a.         Major achievements of the Delhi Group since its inception in 1997:

 

1)           Stocktaking, discussion and documentation of existing country experiences.

2)           Based on the 15th ICLS resolution, development of a harmonized definition of the informal sector to obtain internationally more comparable statistics.

3)           Refinement of the 15th ICLS definition (e.g. regarding the treatment of households employing paid domestic workers).

4)           Inputs to the revision of ISIC.

5)           Continuous close collaboration with statistics users at national and international level, the ILO Bureau of Statistics, the ESCAP Statistics Division and UNSD Social and Demographic Branch.

6)           Provision of technical feedback to countries for the development of informal sector statistics.

7)           Upon the initiative of the Delhi Group, the conduct, in 1999/2000 of an integrated survey of households in India on employment –unemployment, consumer expenditure and non-agricultural enterprises in the informal sector, which was the largest survey on the informal sector ever undertaken in the world.

8)            Upon the suggestion by the Delhi Group and with support of its members, development by the ILO of a conceptual framework for defining informal employment, which was adopted in the form of international guidelines by the 17th ICLS as a complement to the 15th ICLS resolution.

9)           Organisation of annual meetings on specific topics agreed by the Group, which take stock of the progress achieved and are documented through the publication of meeting reports (including the papers discussed in the meeting).

10)       Conceptual and analytical work done on measuring the links between poverty and the informal sector/informal employment.

 

b.         Topics for future work/meetings of the Delhi Group:

 

1)     Identification, definition and development of a core set of indicators on informal sector and informal employment. An impetus for this work is the importance placed on informal employment by the Task Force on Education and Gender Equality of the United Nations Millennium Project.

2)     Operationalisation of the 17th ICLS adopted definition of informal jobs of employees.

3)     Status in employment: definition and measurement of sub-groups of the various types of informal jobs; development of methods and survey questions to reduce classification errors in respect of employment situation on the borderline of status in employment categories.

4)     Identification of the various types of informal jobs in agriculture.

5)     Devising checklist for the evaluation of data quality of surveys on the informal sector and informal employment.

6)     Further work on the measurement of the contribution of Informal Sector/Informal Employment to GDP including work by Regional & International Organisations.

7)     Contributions to the updating of ISCO 1988 regarding more detailed categories for the description of informal activities.

8)     Future work on conceptual and analytical work done on measuring the links between poverty and in informal employment.