Regional Course on SDGs Indicators: Measuring decent work
using microdata from labour force surveys
Measuring informality - Concepts and measurement of informality
Tite Habiyakare, Senior Statistician,ILO Regional Office for Asia and the PacificChiba (Japan)
30 September – 4 October 2019

Contents
1. Summary conceptual framework
2. Informal sector
3. Informal jobs
4. Key derived variables
5. Key questions and flowcharts
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1. Summary conceptualframework

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International statistical standards
on IE
 Resolution concerning statistics ofemployment in the informal sector (15thICLS, 1993)
http://www.ilo.org/global/statistics-and-databases/standards-andguidelines/resolutions-adopted-by-international-conferences-oflabour-statisticians/WCMS_087484/lang--en/index.htm

 Guidelines concerning a statistical definitionof informal employment (17th ICLS, 2003)
http://www.ilo.org/global/statistics-and-databases/standards-andguidelines/guidelines-adopted-by-international-conferences-of-labourstatisticians/WCMS_087622/lang--en/index.htm

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4Relevance (1): in the SDGs
 An SDG indicator:• 8.3.1 Proportion of informal employment in
non-agriculture employment, by sex;
 Selected to measure SDG Target 8.3:
• Promote development-oriented policies that support
productive activities, decent job creation,entrepreneurship, creativity and innovation, andencourage the formalization and growth of micro-,small- and medium-sized enterprises, including
through access to financial services.

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Relevance (2): labour market & GDP
 An important contribution to jobs creation:• Informal employment was 68.2% of employment in theAP region in 2016 (2018 APESO, p.32);
 Considerable contribution to national account andthe GDP:
• High proportions of the GDP are generated by theinformal economy (for countries that have done suchcomprehensive estimates; e.g.: up to 46.3% of theGDP in India in 2008; source: ILO/WIEGO, 2013).

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6Two separate concepts: IS & IE
 Informal sector (IS): enterprise-based (ref. thecharacteristics of the establishment); Informal employment (IE): job-based (ref. thecharacteristics of the job).
• Employment in the informal economy is used as a third
separate concept, resulting from a combination of the twoabove.

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Employment in the informal economy
Two components (and 2 statistical units):
 Employment in informal sector enterprises (Informal sectoremployment) Employment in informal jobs (Informal employment)

Informal jobs
outside of IS••

Informal sector
Informalemployment
employment

Formal jobs inIS enterprises

Two different aspects of informalization of employment
Important to keep separate as often require different policies
Employment in the Informal Economy:= Informal sector employment + informal employment outside of Informal Sector

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82. Concepts: informalsector

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Informal sector enterprises: 15thICLSPrivate unincorporated enterprises (SNA: householdunincorporated enterprises)• Owned by individual household members, several members of thesame household, or members of different households•

Not constituted as separate legal entities independently of theirowners, and no separate/ no complete sets of accounts availableEstablishment size in terms of employment below acertain threshold (based on national practices; Delhi
Group: less than 5 employees, for internationalreporting)AND/OR enterprise not registered.

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10Relation between SNA institutional
units & production units
Institutional units by sector
SNA 2008
Corporations (market units)

Production units by type(15th ICLS)
Formal sector enterprises

Government units (non-market units)
Non-profit institutions (non-market units)
Household unincorporated
Informal sector enterprises
market enterprises (market units)
House- Producers of goods mainly for own use

House
holds
holds Households producing mainlyHousefor own final use
holds(but also sell / barter some output)
Producers of goods exclusively for own use

Employers of paid domestic workers
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Classification: Production units bytype
 Formal sector enterprises: corporations (incl.
quasi-corporate enterprises), non-profit
institutions, government units, and thoseprivate unincorporated enterprises that meetformalization criteria;
 Informal sector enterprises: as defined by
15th ICLS, but excluding households
employing paid domestic workers (17th ICLS); Households: households producing goods
exclusively for their own final use, andhouseholds employing paid domestic workers.
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3. Concepts: informal jobs

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Informal employment
Definition -17th ICLS (2003)
Total number of informal jobs,
whether carried out in formal sector enterprises,
informal sector enterprises
or households,
during a given reference period(17th ICLS Guidelines, Para 3)
Informal jobs: operational definition depends on, status in employment (ICSE-18);
 characteristics of the job (benefits).
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Informal employment
Definition -17th ICLS (2003)
 Self-employed• Employers, own-account workers & members of
producers’ cooperatives
 Formal/ informal nature of job depends on characteristics oftheir enterprise Have informal jobs if their enterprises are part of the informal

sector Contributing family members
 Employment usually not subject to labour legislation, nocontractual relationship All have informal jobs regardless of whether the enterprise isformal or informal.
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Informal employment
Definition -17th ICLS (2003)
 Employees• Have informal jobs if their employment relationship is, in law orin 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.)• Criteria most commonly used: Lack of contributions to social security system by employer
 Lack of entitlement to paid annual leave Lack of entitlement to paid sick leave

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Summary conceptual framework

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Summary definition of IE

Source: ILO (2013), Manual on the informal sector & informal employment, p.42
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4. Key derived variables

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Variables to create (1) Employment: inside a variable such as Labour
force status classification (employed,unemployed, outside the labour force)- ilo_lfs;
 Informal and formal sector: variable called
Aggregated institutional sector, using the mainjob (formal sector, informal sector, household)ilo_job1_ins_sector;
 Informal and formal employment: variable Natureof the job (formal, informal employment)ilo_job1_ife.

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Variables to create (2)Other intermediary variables that may be needed
for the calculation of key derived variables: Status in employment: variable Aggregatedstatus in employment, with main categories(employees or wage workers, employers*, ownaccount workers*, and contributing familyhelpers);

 Etc.
(*) May include Members of cooperatives in countries where they exist(depending on whether they have employees or not).

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5. Key questions andflowcharts

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22Key questions: informal economy
Informal sector employment (ISE)• Institutional sector• Legal organization /type of ownership• Registration of enterprise• Type of accounts kept
• Taxation• Size• Industry (if excluding agriculture)• Type of place of work

Informal jobs
• Status in employment• Job-related benefits(employees)o Contribution by employer topension funds / retirement
schemeso Paid annual leaveo Paid sick leaveo Medical or health coverage, orother job-based benefits as pernational context
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Informal Sector Model Flowchart
Institutional sector
Government,Corporations,NGO, IO etc

Other, DK,NA, Not
asked

Farm or private business(unincorporated)

Privatehousehold

Bookkeeping
Keeps accounts for reportingto the Government

Does not keep
accounts

Other, DK,NA, Not
asked

Registration
Registered atnational level

Not registered atnational level

Households

Status in employment(producingexclusively for own
final use)

Employees

Other, DK,NA, Not
asked
Other

Social security contribution
Yes

No

Place of work
Other

Non-fixed premisesSize
6 or more, otherilostat.ilo.org

Formal sector

Informal sector

5 or less24 24Informal Employment Model FlowchartStatus in employment
Employees

Yes

Employer contributions No
to social security

Contributing
family workers

Type of production
unit

DK, NA

Benefit from paid annual No, DK,NAleaveYes

Benefit from paid sickleave

Employers,
own accountworker, MPC

No, DK,NA

Informalunit/
Householdunit

FormalInformaljob

Formaljob

Yes

Formal job

Informal job

Informaljob

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25References
 ILO (2018); Women and Men in the Informal Economy: A
Statistical Picture; Geneva, 2018, 3rd Edition;
 ILO (2013); Measuring informality: A statistical manual onthe informal sector and informal employment; Geneva,October 2013;
 ILO (1993); Resolution concerning statistics of employment
in the informal sector; Geneva, January 1993;
 ILO (2003); Guidelines concerning a statistical definition of
informal employment; Geneva, November 2003.

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