Prepared by Sharita Serrao

1
Interregional Cooperation on the Measurement of
Informal Sector Informal Employment The 1-2
Survey Approach

• Prepared by Sharita Serrao
• Presented by Artur Andrysiak
• Statistics Development and Analysis Section
• ESCAP
• E-mail andrysiak_at_un.org

2
Structure of the Presentation

• Project background Interregional Cooperation
  on the Measurement of the Informal Sector
  Informal Employment
• Data Collection Methodology The 1-2 Survey
  Approach
• The Concept of Household Unincorporated
  Enterprises with at least some Market Production
  (HUEMs) Informal Sector (IS)
• Compilation of Output Value added for HUEMs

3

• Project Background

4
Project Facts

• Development Account Project Interregional
  Cooperation on the Measurement of Informal
  Sector and Informal Employment
• Duration 2006-2009
• Leading agency ESCAP
• Implementing agencies ECLAC, ESCAP, ESCWA
• Steering Committee UNSD, Regional Commissions,
  ILO, ADB, Delhi Group and WIEGO
• Country Partners
• ECLAC Saint Lucia
• ESCAP Mongolia, Philippines, Sri Lanka
• ESCWA Palestine (West Bank and Gaza Strip)
• All these countries have existing quarterly
  labour force survey programmes

5
Project Objectives

• Improve availability of sound internationally
  comparable informal sector informal employment
  data
• Strengthen analysis for evidence-based
  socio-economic policies at national
  international levels
• Social policies (poverty reduction, promotion of
  gender equality, elimination of child labor,
  etc.)
• Employment generation policies
• Industrial policies in favour of SMEs (marketing
  support, technology transfer support, reduction
  of capital and/or labour costs, etc.)

6
Project Activities

• Statistical capacity building training advisory
  missions production of guidelines data
  collection through the 1-2 Survey data analysis
• Data dissemination advocacy tabulation plans
  databases workshops regional interregional
  level
• Knowledge management project website production
  of training materials collection of best
  practices

7
Expected Outputs Project Countries

• Internationally comparable data on HUEMs, IS
  informal employment
• Estimations of output value-added of HUEMs and
  IS to GDP
• Country Reports covering
• 1-2 Survey methodology implementation data
  analysis for dissemination
• Estimation methodology and estimates of informal
  employment and employment in the IS
• Estimation of output value-added of HUEMs IS
• Dissemination of results advocacy for further
  data collection (in-country workshops)

8
Expected OutputsProject Level

• Capacity building of NSOs training workshops
  interregional regional workshops
• The 1-2 Survey - data collection strategy paper
• Technical paper on informal employment
• Technical paper on developing a harmonized
  definition of HUEMs based on the data collection
  strategy
• Guidelines for data dissemination with tabulation
  plan and a list of key indicators
• Guidelines for estimating HUEM and IS value added
  using 1-2 Survey data
• Project report cross-country comparative
  analysis substantive evaluation of the
  methodology

9

• Data Collection Methodology

10
The 1-2 Survey Approach

• Data is collected in two phases
• First phase rides on the Labour Force Survey
• Identify HUEMs through household LFS by including
  data items on HUEMs, IS informal employment
• Second phase - HUEM Survey
• Option 1 Survey all HUEMs identified through
  Phase I
• Option 2 Select sub-sample of HUEMs collect
  data
• Ultimately Integrate these into regular data
  collection system

11
The1-2 Survey Approach
12
Objectives of Phase I Questionnaire

1. Measurement Objectives
2. Sampling Frame Objectives (for Phase II)
Identify HUEMs
Informal employment
Employment in the informal sector
Identify informal sector enterprises
13
Phase I Questionnaire

• Prerequisites
• Standard questions to classify
• persons as employed, unemployed, not in labour
  force
• all jobs of employed persons status in
  employment main activity (ISIC) of enterprise
  where employed

• HUEM Module
• Place of work fixed premises non-fixed
  premises
• Legal organization of enterprise
• Type of accounts (proxy for employees)
• Product destination
• Only HUEMs identified through own-account workers
  employers will be surveyed in Phase II

• Informal Sector Module
• To be preceded by HUEM module questions.
• Refers to enterprise in which person has a job
• Employment size
• Registration

• Informal Employment Module
• For employees
• Whether or not employee enjoys specific types of
  benefits (8 items included in generic
  questionnaire parameters vary in different
  countries)
• Data collected for main secondary jobs

14
Adaptation of Phase I Questionnaire in Project
Countries

• Mongolia, Palestine, Saint Lucia
• HUEM /informal sector and informal employment
  questions
• inserted in the regular LFS
• Philippines
• HUEM /informal sector and informal employment
  questions in a
• separate questionnaire module
• Sri Lanka
• Informal employment questions already included in
  the regular LFS
• HUEM /informal sector questions in a separate
  questionnaire
• module

15
Measurement Objectives of the HUEM Survey

• HUEM Survey Phase II

1. HUEM Characteristics a.
Organization/Structure
2. National Accounts a. HUEM GDP b.
Informal Sector GDP
3. Policy-related variables (optional) a.
Business environment b. Finance
16
Phase II Questionnaire

• Additional Components
• Business environment
• Financing
• Problems and prospects
• Social Protection

• Core Questions
• Business organization main activity place of
  work registration type of accounts etc
• Employment compensation
• Production sales
• Expenditure
• Capital formation

17
Adaptation of Phase II Survey in Project
Countries

• HUEM questionnaire designed as a separate survey
  questionnaire in all 5 countries
• Mongolia Palestine conducted the two phases of
  the survey without any time lag
• The Philippines was the only project country to
  create a sub-sample of HUEMs for Phase II
• Philippines Palestine included agricultural
  HUEMs in Phase II

18
Scope of the Projects Data Collection
Methodology

• Statistical unit is the HUEM
• Data collected on HUEMs, regardless of location,
  industry employment size
• Collect a broad range of data items from HUEMs
  including IS criteria such as registration,
  employment size etc.
• Comparative analysis of the data across countries
  to identify commonalities

19

• The Concept of HUEMs the IS

20
The Concept of HUEMs IS

• 15th ICLS Resolution IS enterprises are a
  subset of HUEMs
• Relationship between HUEMs, other Household
  Unincorporated Enterprises
• and the Informal Sector

Household Enterprises Household Enterprises Household Enterprises Household Enterprises Household Enterprises Household Enterprises
Producing at least some goods services for market Producing at least some goods services for market Producing at least some goods services for market Producing at least some goods services for market Producing goods services for own final use Producing goods services for own final use
Non-agricultural Non-agricultural Agricultural Agricultural Goods Services
Formal sector Informal sector Formal sector Informal sector Agriculture, forestry, fishing Paid domestic services
Formal sector Informal sector Formal sector Informal sector Other activities Owner occupied dwelling services
Criteria Legal Organization Book Keeping
Practice Product Destination
Household Unincorporated Enterprises with at
least some Market Production (HUEMs)
21
The Concept of HUEMs IS

• Additional Criteria for Identifying Informal
  Sector Enterprises
• Universe of HUEMS

Informal own-account enterprises
Other own-account enterprises
Own-account HUEMs
Other enterprises of employers
Enterprises of informal employers
HUEM of Employers
Informal Sector
How is this boundary defined? Additional
criteria size non-registration etc
22
The Concept of HUEMs IS

• Some Challenges Harmonizing Definition of IS
• Criteria reflect national considerations
  circumstances e.g.
• Diversity of registration procedures,
  difficulties in gathering information, and
  flexibility in applying the criterion
• Scope of size criterion cut-off size differs
  in countries
• Other considerations
• Optional inclusion of agricultural production
  units in the scope of data collection exclusion
  can result in incomplete measure of the IS across
  industries geographical areas
• Discrepancies in the use of terminology
  concepts between 15th ICLS, 2008 SNA etc
  conceptual differences in terms like sector,
  households enterprises

23
Refined Definition of HUEMs

• Project countries have agreed that (conclusions
  at ESCAP workshops in May 2009)
• The concept of HUEMs should be recommended as an
  international standard to facilitate the study of
  the informal sector
• The definition of HUEMs should be narrowed to
  exclude units that produce output for the market
  incidentally, and therefore, refers to units
  selling or bartering a significant part of
  their produce on a regular basis, and excludes
  subsistence farmers, and non-agricultural
  households which have incidental sales
• It was agreed that the criteria to select
  household unincorporated enterprises for
  interviewing during Phase II of the 1-2 Survey
  should be
• a. Employer or own-account worker
• b. Legal status unincorporated
• At least selling or bartering some goods and
  services in the market
• It was recognized that these criteria imply that
  the coverage of Phase II, in addition to HUEMs,
  should be broadened to include quasi-corporations
  

24
Refined Definition of HUEMs

• It was recognized that countries may have their
  own national definitions for informal sector
  (related to registration, size etc.) and for
  informal employment (related to benefits, type of
  contract etc.) based on national
  regulations/practices It would be for countries
  to decide if they want to bifurcate HUEMs into
  informal HUEMs (i.e. informal sector) and formal
  HUEMs
• Agriculture is a part of the HUEM sector, even
  though it may be excluded by definition from the
  informal sector in some countries. Countries
  should, therefore, collect information on the
  output and value added of agricultural HUEMs for
  national accounts to be exhaustive

25
Refined Definition of HUEMs
26
Refined Definition of HUEMs

• Therefore, HUEMs which are broader in scope, are
  defined at a level higher than the informal
  sector
• To create a broader grouping in the
  household sector that is internationally
  comparable
• To allow for more systematic exhaustive
  data collection for national accounting
  purposes

27

• Compilation of Output
• Value Added for HUEMs

28
Gross Output
Destination Destination Destination Destination Destination
Total value Export Sales to others Own intermediate consumption Own final consumption Own gross capital formation
I. Products sold after transformation
N Product name
1... .
3 Imputed own production goods produced for own use as intermediate consumption
4 Imputed own production of goods produced for own use as capital formation
5 Imputed own production of goods produced for own use as final consumption
II. Total trade margins Products sold without transformation cost of products purchased for resale
III. Services offered (taken from 4.4, GQ)
N Product name
1... ..
3 Imputed owner-occupied housing services
4 Imputed domestic services with paid staff
5 Imputed services on money lending
29
Gross Value Added
Total value
Gross output Total Total value of output of goods and services produced (GTMS)
Less ICT Total Total intermediate consumption (IC1IC2)
GVA Total Gross value added (Gross output less ICT)
Less 15 Other taxes on production (item 15 from 5.3, GQ)
Less 01 Wages and salaries (from 3.2, GQ)
Less 02 Social insurance (from 3.3.1, GQ)
Less 03 Bonuses allowances (from 3.3.2, GQ)
Less Consumption of fixed capital (for owner-occupied dwellings and premises and other capital assets)
Equal Net mixed income

Employment Total working hours (taken from 3.2, GQ)
30
Intermediate Consumption
Origin Origin Origin
N Expenditures on raw material and stocks (taken from 5.1, GQ) Total value Import Other enterprises and households Own production
1 Name of product
...
IC1 Sum of expenditure on raw materials (1234...) Origin Origin Origin
N Other business expenses (taken from 5.3, GQ) Total value Import Other enterprises and households Own production
07 Water
08 Electricity
09 Rental payments (machinery, structures)
13 Repair maintenance of facilities equipment

16 Imputed insurance services charged on the establishment (service charges only)
17 Licenses, other fees
19 Imputed service charges on interest payment (only FISIM)
Origin Origin Origin
Total value Import Other enterprises and households Own production
IC2 Sum of expenditure on other business expenses ((67...18)
ICT Total intermediate consumption (IC1IC2)
31

• Thank You