#InformalTalks post-webinar 1 Q&A and webinar 2 on July 26

Thank you all for all these pertinent questions. I have grouped them to make some collective reply but addressing all details (I hope so). Please don't hesitate to add new comments or questions if the response is not clear enough.

Note also that questions related to projects and policies will be addressed at the occasion of next webinar.

 

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How about difficulties in measurement especially in developing countries? (MZ)
what would be the traditional economic solutions to try to measure it ? (CC)

 

The difficulties in measurement, especially in developing countries have been dealt with by the adoption of international definitions and the inclusion of the criteria included in these definitions within the questionnaires of household surveys. As explained during the webinar, the definition of informal sector is based on characteristics of the economic unit (or enterprise) for which the person works whereas the definition of informal employment is based on characteristics of the job.

Most – if not all - household surveys are now designed to collect these criteria. However one difficulty is that dependent works may not know some of the characteristics of the enterprise in which they work: is this enterprise registered? Does it hold a complete set of accounts? Does the employer pay the social contributions?

One of the recommended survey methodologies by the 1993 International Conference of Labour Statisticians (ICLS) was the so-called “mixed surveys”: a household survey at the first stage (preferably a labour force survey, but also an income-expenditure surveys or a living conditions survey) which includes questions for identifying the definitional criteria and identifies all activities of household members that can be defined as ‘informal’. In a second stage, carried out immediately or as soon as possible, an enterprise questionnaire is administered for all these activities at the workplace: this requires to be able to find out exactly where the activity takes place. Another mixed approach consists in an exhaustive enumeration of all establishments at country level, followed by a sample survey of micro and small establishments and doubled by a household survey to identify and survey the home-based and mobile activities of household members.

Another difficulty of these surveys is the reliability of data collected on incomes. Micro enterprises hardly knows about their annual turnover or income and even they know it, it is clear that they are not willing to declare it. This is why these surveys are flexible as regards the reference period (the day for a street vendor for instance, the week or the month for a mechanical repairer, etc.) and collect information on seasonal variations. In methodological surveys carried out in Tunisia as early as the end of the 1970s, it was shown that the direct declaration was in average half the actual level of turnover or profit (measured by the volume of intermediary consumption or the level of productivity) as if in the direct declaration, the respondent tended to underestimate his (her) performance by dividing by 2, which is the easiest (if we exclude the division by 10, that would be unreliable).

All these representative statistical surveys need however to be accompanied (preceded or followed) by qualitative surveys (anthropological or sociological) to better understand the living and working conditions of these populations, by types of crafts (vendors, carpenters, mechanical repairers, etc.) and by categories of worker (the owner, the paid employee, the apprentice).

Moreover there are some categories of workers who deserve special attention because of their invisibility: street vendors or waste collectors (very visible, but very mobile), home-based workers, domestic workers, and last but not least women especially in agriculture, where their work is often considered as purely domestic and unpaid.

 

Can the informal economy 's definition be comprise also of the nature of the workforce, the employees, since out of our experience with the improving livelihood of artisans in Côte d'Ivoire, we noted that children were employed by master craftsmen. This is to consider that  informal economy 's role in the increasing of child labour, even if not allowed by national an international laws? (LB)

 

Important question! Most of the official household surveys collect information on the working age population (usually 15 and +). In the past some countries used to collect information for 6 years old and +. Since the focus has been put on child labour thanks to the ILO campaigns, data on child labour are now collected through special surveys on this topic, so that many labour force surveys do not address this question any more. And it is not easy to compare the findings of these child labour surveys with regular labour force or household surveys, because of differences in periods, concepts, definitions, scope and coverage.

But definitely child labour is an important dimension of the informal economy. It should be noted that in this regard surveys on micro and small enterprises of the informal sector do not limit the working age in data collection, as it is the whole workforce mobilised by the economic unit that is captured, with special focus on apprenticeship.

Anyhow, even if counting child labour in employment in the informal economy would increase the overall number of participants, in terms of rates it would end up into a low increase in the rate of employment in the informal economy because adding children in the numerator would be partially compensated in adding the same number at the denominator.

 

Where does precarious work fit in the spectrum in developed countries, as it is not illegal but growing? (VN)
I have an important question for me. Is there a universal definition of the informal economy or a definition according to the level of development of society? (FM)
In 2015 recommendations, there is the use of word "illegal" - referring to informal employment in formal sector. What implications might it have for the workers as well as the employers? (PR)
However, I want to know is informal work understood in the same way in different countries? Are small or small street vendors considered as actors of informal work? (TK)

Statistics on precarious jobs are interesting for characterising the labour markets in developed countries, however they are not strictly comparable with informal employment statistics in that they corresponds to written contracts and benefits of social protection. Therefore they should not be presented on the same level as statistics on informal employment. The recent ILO publication on women and men in the informal economy (2018, unlike the previous editions) however attempted to do so, using the EU surveys on Income and Living Conditions (EU-SILC) but I have some doubts about the reliability and adequacy of such figures for developed countries. The growth of precarious jobs in developed countries corresponds to the flexibilisation of labour markets and labour laws that adapted to maintain these kinds of jobs within the legal framework: this is exactly the aim of flexibilisation. Informality in developed countries better fits with illegal work that by definition cannot be observed directly because it is hidden. Estimates of illegal work in developed countries exist and several publications deal with this phenomenon but they cannot be comparable with data on developing countries that result from direct surveys.

I don’t know to which 2015 recommendations you refer as the most recent are the 2003 guidelines for a definition of informal employment (https://www.ilo.org/wcmsp5/groups/public/---dgreports/---stat/documents…) that do not refer to illegal work. It might be a posterior interpretation of what labour statisticians had in their minds in 2003 (I perfectly know what they meant because I chaired the session that adopted these guidelines and it is the developed countries that preferred “guidelines” to “resolution” because they did not intend to use this new definition.

Finally informal work is understood the same way in different countries to the extent they use the international definitions. Many scholars however continue to use the concept in their own individual conception, often ignoring the international definitions and often referring to the shadow economy or the non-observed economy, which are totally different concepts indirectly measured through macro-modelling that by a sort of magic produce a share of GDP from putting together rates of growth, rates of unemployment and other variables describing the legal and institutional framework.

The economic units of the informal sector are understood in a very wide sense: from micro-enterprises in various crafts, to street vendors, hawkers, home-based workers, waste-pickers, etc.

 

Are researchers on informal economy linking to/ have views on work on 'living income' (not living wage) that ISEAL members are working on? (VN)

I am not aware of existing links between researchers on informal economy and the concept of “living income” developed by ISEAL members. But it is for sure that both develop views that could be cross-fertilising. Richard Anker (a former ILO researcher) and Martha Anker developed a methodology to make easier and more comparable estimates of living wages (https://www.elgaronline.com/view/9781786431455/chapter02.xhtml)

It is true that around the world, the legal minimum wages have lost the initial objectives that prevail when the concept was coined. And because of their impact on the whole hierarchical structure of wages they have often been disconnected from the trends in living standards and in prices. Moreover in many countries, income and expenditures surveys or budget-consumption surveys remain scarce.

Informal sector surveys have often collected data on wages and income in the informal sector that can be useful in this regard, though not systematically compiled at world level because of non-harmonised tabulations or classifications and comparing informal wages and incomes with minimum wages therefore seem vain. In particular own account workers’ income are difficult to compare with minimum wages or average wages because they include the contributing (unpaid) family workers in the calculation. Moreover pluri-activity or multiple jobs can change the individual situations, but data are rarely available. I am sure that more systematic exchanges with ISEAL on such topics could be very interesting. Let us then try to develop such exchanges if you wish.

is that true that the informal economy is worldwide spread, especially to poor countries ? For instance, informal economy related to recyclable waste collection (South America, Asian countries)?  (CC)

The informal economy is world wide spread as indicated during the webinar, with a more specific and narrower interpretation in developed countries (see above) and it has been shown that it is negatively correlated with GDP per capita and positively correlated with poverty. Recyclable waste collection is an important value chain in all countries (with a local production that cannot be delocalised, and final transformed products that can be valued on international markets; and also very sophisticated goods from developed countries that are delocalised in developing countries for recycling purposes because of environmental laws in developed countries).

 

Do currently women unpaid work is not a part of the discourse but it is indirectly contributing to economy? Wouldn't that be counted in informal economy? we have a percentage of women working in the informal economy compared to their  total participation in the labour force by region  ....also if we compare with men,  would they be disproportionately represented in the informal economy? (NG)

There are two types of unpaid work: one that is included into the GDP, and another one that is not included. The System of National Accounts (SNA), which is the methodology of compilation of GDP, universally accepted, considers that all the production of goods for own final use by the producers should be captured in the GDP: subsistence agriculture (and animal husbandry, fishing, etc.), plus all manufactured goods for own final use (or own capital formation, for instance own-construction of housing, or small dams, etc.). Another not well-known unpaid work captured in the GDP is water fetching or firewood fetching, activities considered as extractive (primary) activities. Furthermore work performed by contributing (unpaid) family workers (in agriculture as well as in manufacturing and services activities) is also counted in the GDP (it is the meaning of “contributing”).

Only unpaid domestic services for household consumption or volunteering for other households are excluded from the compilation of GDP. These activities are not measured by traditional labour force surveys; they are captured by time-use surveys and attempts of valuation of such activities show that their inclusion in the GDP would increase it from 30 to 50% and even more depending on the methodology used.

If you are interested by these topics, I can provide some useful references.

At this stage, the SNA recommends the establishment of satellite accounts of household production and several countries (developed, transition) have already done it. But progressively, the idea of including the household production in the SNA central framework makes its way. The 2013 ICLS (ILO) new resolution on work, employment and labour underutilisation is a preliminary step in this direction (https://www.ilo.org/global/statistics-and-databases/standards-and-guide…). See also the Stiglitz, Sen, Fitoussi report on the measurement of economic performance in 2009 (http://ec.europa.eu/eurostat/documents/118025/118123/Fitoussi+Commissio…

 

Mercy to you to put this platform of exchanges on line. This experience is a model of harnessing the geographic realities of informal work. In my opinion this form of activities is really important to a fringe of people seeking employment. Before, it was thought that it was a matter of school dropouts and the unschooled. However, we see that everywhere else in the world it has grown. A majority of graduates invade this sector. Therefore, the authorities should focus on this sector, which is also a contribution to the gross domestic product. (TK)

Right. When the concept of informal sector was coined at the beginning of the 1970s, it was mainly a matter of unschooled children or school dropouts, but now with the progress of literacy and schooling, it affects also the graduates who, in search of jobs fitting with their acquired skills, experience unemployment and accept to undertake informal jobs in the meantime – a period that can last longer than expected. This is why governments often tackle informality by providing young unemployed graduates with credit for creating small businesses of various types.