Inter-related, NOT Interchangeable Informality Informal economy Informal sector Informal employment Inter-related, NOT Interchangeable

Informality as you see it In your own language what terms refer to: informality, informal economy, informal sector, informal employment Definitions: informal economy, informal sector, informal employment Do these currently exist, officially, whether in law or as an official statistical definition in your country? For those that exist, how do you define them?

Guidance … Work Employment Informal employment Recommendation concerning the transition from the informal to the formal economy (ILC R204, 2015) Resolution concerning statistics of work, employment and labour underutilization (19th ICLS, 2013) Work Measuring informality: A statistical manual on the informal sector and informal employment (ILO, 2013) Resolution concerning statistics of the economically active population(13th ICLS, 1982) Resolution concerning statistics of the economically active population(13th ICLS, 1982) Employment Guidelines concerning a statistical definition of informal employment (17th ICLS, 2003) Resolution concerning statistics of employment in the informal sector (15th ICLS, 1993) Informal employment Employment in Informal sector

Informal Economy … associated with Entrepreneurial activities/enterprises: capable of independent dynamic growth Survivalist activities/enterprises: not capable of dynamic growth without support Subordinated activities/enterprises/workers: dependent on or exploited by large formal sector ; e.g. value chains of production Criminal-underground activities/units: dealing with illegal goods or services or activities which are not declared to avoid paying taxes,etc. Note to Marge: Transform into a set of questions– T or F?

Those not covered or insufficiently covered by formal arrangements “… the term “informal economy” refers to all economic activities by workers and economic units that are – in law or in practice – not covered or insufficiently covered by formal arrangements” Economic units in the informal economy … to get to this point Those not covered or insufficiently covered by formal arrangements Workers in the informal economy Recommendation 204

Formal Arrangements Procedures established by the government To regulate the actions and functions of economic units To recognise the economic units and protect their legal rights To carry out economic activities, to engage in commercial contracts, to safeguard their intellectual and physical property, etc. Procedures to report economic activities, employees In order to pay taxes (on production, on sales) In order to cover employees for social security, etc.

Two Aspects; Two Statistical Units Informal employment (worker/job-based) Informal sector (enterprise-based) Two different aspects of informal economy Important to keep separate as often require different policies Important to understand the relation between them

… “Non-Observed Economy”

Employment in the Informal Economy Production units Informal jobs Formal jobs Informal sector enterprises A B Other units of production C D Employment in the informal sector: A + B Informal employment: A + C Employment in the informal economy: A + B + C The identification of the informal sector is crucial in all concepts

Minimum Set of Data Items on the Informal Economy Number of economic units that are in the informal sector (informal sector units) Production, value added (Input to SNA) Number of informal sector entrepreneurs Number of workers and jobs in the informal sector

Significance of the Informal Economy The informal economy is large by whatever measure is used: share of total employment share of total enterprises share of total GDP Note to Marge: Transform into visual

INFORMAL ECONOMY– KEY MACRO-ECONOMIC INDICATORS IN MEXICO Informal Economy as a Share of GDP, by Component. Series 2003-2015 Year Informal Economy Informal Sector Other Forms of Informality 2003 27.2 11.8 15.4 2004 26.5 11.3 15.2 2005 26.3 15.0 2006 25.6 10.7 14.9 2007 25.5 10.4 15.1 2008 25.3 9.5 15.8 2009 26.8 12.3 14.5 2010 26.2 11.7 14.6 2011 25.7 14.0 2012 25.4 11.2 14.2 2013 24.9 13.6 2014R 23.9 12.8 2015P 23.6 R Revised figures as from date indicated. P Preliminary figures as from date indicated. Source: INEGI. SNA, Measuring the Informal Economy; October 11, 2017, from http://www.inegi.org.mx/est/contenidos/proyectos/cn/informal/default.aspx

Size and composition of the informal economy % informal employment (estimates for 2016) Note: based on 118 countries representing 90 percent of global employment and estimated missing values. Estimates for 2016. Harmonized definition of informal employment (no registration or no complete set of accounts to define the informal sector and informal employment among own-account workers and employers; no social security gained through employment or, in case of missing, neither annual paid leave, nor paid sick leave to define informal employment among employees; all contributing family members are in informal employment). Limited number of countries for the Arab States, not displayed on this graph. Source: ILO calculations based on national household surveys

Reflections on: What you know about the informal economy policy issues in your country and how your statistical definitions serve policy needs What are your data needs and prospects for collecting the data on the informal economy