Measuring the informal economy: From employment in the informal sector to informal employment

Measuring the informal economy: From employment in the
informal sector to informal employment
Working Paper No. 53

Ralf Hussmanns

Policy Integration Department
Bureau of Statistics
International Labour Office
Geneva



December 2004


Working papers are preliminary documents circulated
to stimulate discussion and obtain comments

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Measuring the informal economy: From employment in the
informal sector to informal employment

Contents
Page
Preface……………………………………………………………………………………………… iii
1.
Introduction........................................................................................................................... 1
2.
Definitions .............................................................................................................................. 3
2.1
International statistical definition of employment in the informal sector .....................
3
2.2
International statistical definition of informal employment .........................................
4
2.3
Related issues................................................................................................................
7
2.3.1 Jobs at the borderline of status-in-employment categories.................................
7
2.3.2 Further sub-divisions of informal jobs ...............................................................
8
2.3.3 Statistics on informal employment in the absence of data

on informal sector employment..........................................................................
8
2.3.4 Informal jobs in agriculture ................................................................................
8
2.3.5 Informal sector/employment vs. underground/illegal production ......................
9
3.
Measurement ......................................................................................................................... 11
3.1
Labour force surveys as a source of data on informal sector employment/
informal
employment....................................................................................................
11
3.2
Survey questions ...........................................................................................................
13
3.2.1 Employment in the informal sector ....................................................................
13
3.2.2
Informal
employment .........................................................................................
16
References ......................................................................................................................................... 19
Annex I.............................................................................................................................................. 21
Annex II............................................................................................................................................. 25
Working paper No. 53
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Working paper No. 53

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Preface
The development of statistics on the informal economy helps to improve labour statistics
and national accounts. The informal economy plays an important role for employment
creation, income generation and poverty reduction in many countries, especially
developing and transition countries. Statistics on the informal economy are needed as an
evidence-based tool for research and policy-making. They enhance the visibility of the
many workers in the informal economy and of their economic contribution.
The purpose of the present working paper is (i) to explain the international statistical
definitions of employment in the informal sector and of informal employment, which were
adopted by the Fifteenth and Seventeenth International Conferences of Labour Statisticians
(ICLS) in January 1993 and December 2003, and (ii) to illustrate the practical application
in household surveys of these definitions in providing examples of their translation into
survey questions.
This Working Paper contributes to follow-up being given across the International Labour
Office to conclusions on Decent Work and the Informal Economy, adopted by the
International Labour Conference at its 90th Session in June 2002. These conclusions called
upon the ILO to “assist member States to collect, analyse and disseminate consistent,
disaggregated statistics on the size, composition and contribution of the informal economy
that will help enable identification of specific groups of workers and economic units and
their problems in the informal economy.” (International Labour Conference, 90th Session,
2002, Provisional Record No. 25, paragraph 37(n)). The aim is to have statistics that will
inform the formulation of appropriate policies and programmes. An informal Working
Group on the Informal Economy, chaired by Anne Trebilcock, Deputy Director of the
Policy Integration Department, encourages analysis across the various technical
specialities of the ILO, including statistics.
Prepared by Ralf Hsmanns, Senior Statistician and Head of Employment and Wages
Statistics of the ILO Bureau of Statistics, this working paper builds on papers presented by
the author to the Seventh Meeting of the Expert Group on Informal Sector Statistics (Delhi
Group), which was held in New Delhi from 2-4 February 2004, and to the Seminar “Non-
observed Economy: Issues of Measurement”, which was organised jointly by the Federal
Service of State Statistics of the Russian Federation and the Central Statistical Office of
Poland and held in Saint Petersburg from 23-25 June 2004.
Working papers of the Policy Integration Department are meant to stimulate discussion.
The ILO will therefore welcome all comments and suggestions concerning the contents of
this paper. They should be addressed to the Director, Bureau of Statistics, International
Labour Office, CH-1211 Geneva 22, Switzerland, fax. no. + 41 22 799 6957,

e-mail: sat(at)ilo(dot)org


A. Sylvester Young
Director
Bureau of Statistics
Policy Integration Department
International Labour Office

December 2004
Working paper No. 53
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