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Informal Sector

The informal sector represents a fundamental component of the economic structure of many developing countries. Informal sector enterprises are a key form of organization of production and an important provider of employment and income opportunities in both rural and urban areas. In parallel to the many jobs created in the informal sector (i.e., employment in the informal sector), various forms of informal (or unprotected) employment in the formal sector have shown fast growth over recent years. Studies have shown that, in many developing countries, the informal sector could account for over 50% of non-agricultural employment and nearly 30% of non-agricultural GDP. Even in many countries with economy in transition, the size of the informal sector is estimated to be around 10% (in the case of Kyrgyzstan, as high as 25%).

Measurements of the informal sector and informal employment (informal employment in the formal sector and employment in the informal sector) are important in improving labour statistics as well as in contributing towards exhaustive measures of GDP. Despite their overwhelming importance, the informal sector and informal employment are poorly covered, if at all, by official statistics. Standard establishment and labour force surveys usually capture, or separately identify, only a small fraction of those whose livelihood relies on working in the informal sector or in unprotected jobs. In many developing countries and countries with economy in transition, informal sector is yet to be integrated into national accounts and less information is available on the contribution of the informal sector to economic growth. Even in cases where some data are available, they are often not comparable at the international level and are mostly collected on an ad hoc basis, hampering the construction of harmonized time series and comparative analysis across countries.

The lack of data on the informal sector and informal employment in official statistics often results in distorted estimates of the real economy. For example, without taking into account informal activities, estimates of female economic participation rates could be implausibly low, gross domestic product (GDP) significantly underestimated, and the share of population living below national poverty line overestimated. Lack of information also leads to limited public understanding of many social and economic issues related to informal economic activities, including the differentials in earnings and working conditions between formal and informal employment; social protection arrangements; the characteristics of informal enterprises in the use of technology, access to credit, training and markets; and the input-output relations between formal and informal sector enterprises. These data and measurement problems, in turn, weaken the formulation, implementation and evaluation of policies and programmes aimed at promoting gender equality, eliminating child labour, generating decent work for all and reducing poverty.

The typical characteristics of the productive units in the informal sector - small, high mobility and turnover, seasonality, lack of recognizable features for identification, and the reluctance of information sharing - explains partly why it is often difficult to cover the informal activities with conventional statistical data collection. Since 1993, a series of international efforts has been made to promote the development of a standard definition and measurement tools in this area. The 15th International Conference of Labour Statistics (15th ICLS) in 1993 established international criteria for defining the informal sector, providing considerable flexibility to countries in defining and measuring the informal sector. The 17th ICLS (2003) introduced the concept of informal employment to complement the concept of informal sector.

Based on the framework of international definition, the UN Expert Group on Informal Sector Statistics (the Delhi Group) - constituted in 1997 - has endeavored to harmonize national definitions of the informal sector to improve international comparability. Recognizing the limits of harmonization, the Delhi Group identified a subset of the informal sector that could be defined uniformly and for which countries could produce internationally comparable data. The United Nations Statistics Division (UNSD) is also in the process of updating the 1993 System of National Account (SNA) to provide guidance on the treatment of informal sector in national accounts.

Over the years, with the assistance of ILO, many countries have started collecting and working with data on the informal sector and informal employment, and accumulated extensive experience. Among the set of data collection instruments, labour force surveys - for measuring the size of informal employment and monitoring working conditions - and the mixed household-enterprise surveys - for collecting comprehensive data about the informal sector - have gained increasing importance.

About the project

Interregional Cooperation on the Measurement of Informal Sector and Informal Employment was a multi-year and multilateral Development Account project. The project was implemented by ESCAP as the lead agency, in collaboration with ECLAC and ESCWA. The main objectives of the project were (i) to increase availability of data on informal sector and informal employment and (ii) to improve analysis of this data to calculate the contribution of informal sector to employment and to GDP.

The first component of the project was to raise awareness among the national statistics offices and other government agencies in the participating countries of importance of collecting and disseminating informal sector and informal employment data and incorporating it into employment and GDP estimates. The second component was to enhance capacity to collect, compile, analyze and disseminate informal sector and informal employment data complying with international methodological standards. The expected outputs were published informal sector and informal employment data and a country report covering data collection, compilation, dissemination and analysis experience throughout the project. The project also, contributed to the conceptual work on informal sector by proposing a standardized data collection strategy and producing internationally comparable data.

Project Resources

1. Background Documents

Author/ Organization	Title	Document	Year Publication
ESCAP	Project Doc: Interregional Cooperation on the Measurement of Informal Sector and Informal Employment	prodoc-0607a-16aug06.pdf	2006
ESCAP	Presentation: Interregional Cooperation on the Measurement of Informal Sector and Informal Employment	measurement-informal-sector-escap.pdf	2006

2. Technical Papers

Author/ Organization	Title	Notes	Document	Year Publication
ESCAP and UNSD	The “1-2” Survey: A data collection strategy for informal sector and informal employment statistics	Working Paper No. 1	working-paper-no1.pdf	2009
ESCAP	Compilation of output and gross value added from sample survey data on Household Unincorporated Enterprises with At Least Some Market Production (HUEMs)	Working Paper No. 2	working-paper-no2.pdf	2009
ESCAP	Defining and Measuring Informal Employment and the Informal Sector in the Philippines , Mongolia , and Sri Lanka	Working Paper No. 3	working-paper-no3.pdf	2010

3. Questionnaires

3.1 Generic Questionnaires

Author/ Organization	Title	Document	Year Publication
Statistics Division, ESCAP	Phase 1 of "1-2" Survey	generic-questionnaire-phase1.pdf	2007
Statistics Division, ESCAP	Phase 2 of "1-2" Survey	generic-questionnaire-phase2.pdf	2007

3.2 Country Questionnaires

3.2.1 Mongolia

Author/ Organization	Title	Document	Year Publication
National Statistical Office	Labour Force Survey - 2007	lfs-questionnaire-mongolia.pdf	2007
National Statistical Office	2007 Survey on Household Unincorporated Enterprises & the Informal Sector	questionnaire-on-huems-mongolia.pdf	2007

3.2.2 Palestine

Author/ Organization	Title	Notes	Document	Year Publication
Central Bureau of Statistics	Labour Force Survey Part 4	Module on informal employment and for identifying HUEMs	informal-sector-form-c-palestine.pdf	2009
Central Bureau of Statistics	Household Project Questionnaire	Phase II	household-questionnaire-palestine.pdf	2009

3.2.3 Philippines

Author/ Organization	Title	Notes	Document	Year Publication
National Statistical Office	ISH Form 2-2008	Labour Force Survey	ish-form2-phl.pdf	2008
National Statistical Office	Informal Sector Survey ISS Form 1-2008	Labour Force Survey Module (Phase I)	iss-form1-phl.pdf	2008
National Statistical Office	Informal Sector Survey ISS Form 2-2008	HUEM Survey	iss-form2-phl.pdf	2008
National Statistical Office	Integrated Household Surveys, Form 2	Labour Force Survey	labor-force-survey-form2-phl.pdf	Expires: 2008
National Statistical Office	National Timetable of Activities	FIES 2006 (2nd visit), LFS 2007	national-timetable-activities-phl.pdf	2006
National Statistical Office	Family Income and Expenditure Survey Form 1	FIES 2003 (1st visit)	2003-fies-form1-phl.pdf	2003

3.2.4 Saint Lucia

Author/ Organization	Title	Notes	Document	Year Publication
Central Statistical Office	Enhanced Labour Force Survey	Phase 1	enhanced-lfs-st.lucia_.pdf	2008
Central Statistical Office	Household Unincorporated Enterprises and Informal Sector	Phase 2	huem-is-questionnaire-st.lucia_.pdf	2008
Central Statistical Office	Labour Force Survey		lfs-st-lucia.pdf	2007

3.2.5 Sri Lanka

Author/ Organization	Title	Notes	Document	Year Publication
Department of Census and Statistics	Labour Force Survey Module on HUEMs (2008)	Survey module on Household Unincorporated Enterprises Having Market Output 2008/2009 (Phase 1)	phase1-sri-lanka.pdf	2008
Department of Census and Statistics	HUEM Questionnaire	Survey module on Household Unincorporated Enterprises Having Market Output 2008/2009 (Phase 2)	phase2-sri-lanka.pdf	2008
Department of Census and Statistics	Labour Force Survey-2007	Survey module on HUEMs	huem-lfs-survey-sri-lanka.pdf	2007
Department of Census and Statistics	Sri Lanka Labour Force Survey Questionnaire	Revision of Survey Schedule on literacy, household economic activities, and informal sector employment and under employment	labour-force-schedule-sri-lanka.pdf	2006

4. Tabulation Plans

4.1 Recommended Tabulation Plans

Author/ Organization	Title	Document	Year Publication
ESCAP	Tables for Consistency Checks	tables-consistency-checks.pdf
	Phase 1: Recommended Tabulation Plan (Set 1)	tabulation-plan-phase1-set1.pdf
	Phase 1: Recommended Tabulation Plan (Set 2)	tabulation-plan-phase1-set2.pdf
	Phase 2: Recommended Tabulation Plan	tabulation-plan-phase2.pdf

4.2 Recommended Table Headings

Author/ Organization	Title	Notes	Document	Year Publication
WIEGO/ILO	Recommended Tabulation Variables	June 2009	table-headings.pdf	2009
	Basic Tables		basic-tables-lfs-is-ie.pdf

5. Workshop Materials	Date	Avenue
5.1 Workshops organized by implementing Regional Commissions
Workshop on Interregional Cooperation on the Measurement of Informal Sector and Informal Employment ( isie-ws-report-3-4dec09.pdf )	3-4 December 2009	Bangkok
Regional Workshop on the Measurement of Informal Sector and Informal Employment	30 Nov. - 2 Dec. 2009	Bangkok
Regional Workshop on Informal Sector Surveys in the Caribbean Subregion (report.pdf)	12-13 October 2009	Saint Lucia
Workshop on Informal Employment and Informal Sector Data Analysis, Tabulations and Country Reports	28-29 May 2009	Bangkok
Workshop on Estimating Household Unincorporated Enterprises with some Market Production (HUEMs) and Informal Sector Value Added Using 1-2 Survey Data	25-27 May 2009	Bangkok
Workshop on Informal Employment and Informal Sector Data Collection II: Evaluation, Processing and Utilization of Data from ‘1-2’ Surveys (ieis_workshop-report_14-16may2008.pdf)	14-16 May 2008	Bangkok
Workshop on Informal Employment and Informal Sector Data Collection: Strategy, Tools and Advocacy	13-15 April 2008	Amman
National Advocacy Workshop on Measurement of the Informal Sector and Informal Employment (report.pdf)	3 December 2007	Castries
Workshop on Informal Employment and Informal Sector Data Collection: Strategy, Tools and Advocacy	19-21 September 2007	Bangkok
5.2 Other Workshops
Workshop on Integrated Economic Statistics and Informal Sector for the ECO Member Countries	10-13 November 2007	Tehran
Unified Data Collection on the Informal Sector, ESCAP( unified-data-collection.pdf )	10-13 November 2007	Tehran

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