1 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Informal sector employment and informal employment in South Africa Yandiswa Mpetsheni Executive Manager: Labour Statistics Statistics South Africa 28 September 2009

2 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Presentation Outline Objective of the presentation Sources of informal sector employment in South Africa –October Household Survey –Labour Force Survey –Quarterly Labour Force Survey Survey of the employers and self-employed Informal employment

3 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Objective of the presentation To discuss how informal sector employment and informal employment are measured in South Africa

4 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Sources of data and periodicity 1.October Household Survey (OHS) 1994 – 1999 (annual) 2.Labour Force Survey (LFS) 2000 – 2007 (March, September) 3.Quarterly Labour Force Survey (QLFS) from Jan 2008 to date – Quarterly frequency 4.Survey of Employers & Self-employed (three year frequency)

5 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Scope and coverage Surveys household based Coverage: dwelling units Reporting levels: National and provincial

6 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 October Household Survey (OHS)

7 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 October Household Survey Formal/Informal sector definition was based on registration of the business entity. Question used to compute informal sector employment was as follows: –Do you consider your work/business to be formal or informal

8 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 October Household Survey 1994 – 1996 : formal/informal distinction only for employers and self employed persons – 1999 : same questions asked of everyone employed OHS definition of the informal sector was based on the registration of the business entity

9 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Challenges with OHS definition Registration concept not clear for some respondents Definition difficult for employees who did not know if the businesses they were employed in were registered Self- perception question was used to measure the formal/informal sector employment and thereby there was no objective criteria.

10 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Labour Force Survey (LFS)

11 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Labour Force Survey Formal/Informal self-perception plus the following questions: Size: Asked of all employed From 2000: UIF, Location VAT registration LFS used the self-perception question on the informality of the business to measure the informal sector

12 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Challenges with LFS definition Self- perception question was used to measure the formal/informal sector employment. Employees did not always know if business they were working in was registered or not. The registration concept was not clear as it included any registration (eg medical associations, VAT, etc)

13 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Quarterly Labour Force Survey (QLFS)

14 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 QLFS Informal sector comprises: – Employers, own-account workers and persons working unpaid in their household business ( where the business is not registered for VAT or income tax) – Employees (not registered by their employers for income tax and working in establishments of less than 5 employees)

15 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Employed Employers; Own- account; Working unpaid in hhold business Registered for VAT or Income tax No Informal sector Employees Income tax deducted by employer No Size of establishment less than 5 employees Yes The informal sector in the QLFS

16 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 What informed the choice of objective measure Need to be clear of what registration comprised (VAT registration and income tax registration) Consistent with the establishment register Need to use an objective criteria rather than self perception in defining the informal sector.

17 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Survey of employers and the self-employed (SESE)

18 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Survey of Employers and the Self-Employed Two-stages: 1.LFS questionnaire (2001, 2005) - All employed persons 2.QLFS questionnaire (2009 and every 3 years thereafter) 3. SESE questionnaire: Persons operating a business(es) with or without a partner AND the business not registered for VAT (annual turnover of R1 mil or more) Report on individuals and the characteristics of their businesses

19 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Questions in SESE Location of the business premises Set of accounts Access to finance Employees (paid/unpaid, earnings) Expenditure Profit/turnover

20 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Informal employment

21 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Informal employment First published in 2008 Done on quarterly basis through the QLFS

22 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Definition Informal employment comprises all persons employed in the informal sector, all persons helping unpaid in a household business, all persons employed in private households and employees in the formal sector who are not entitled to any of the following benefits: medical aid from the employer, contribution to pension by employer and a written contract.

23 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Informal Employment Informal sector Employers, own-account, employees Informal employment* Helping unpaid in their household business Employed: Market production activities Employed in private households : - Entitled to medical aid or - Contribution to pension - written contract * Excludes employers and own-account workers who are in the formal sector that do not have either medical aid or pension plans. Formal Sector Employees No

24 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Questions asked Pension or retirement fund Paid leave Contribution to UIF Medical aid access Written contract

25 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Informal employment results Apr-Jun 2008Jan-Mar 2009Apr-Jun 2009 Employed (Both sexes)100.0 Formal employment Informal employment Other employment Employed (Women)100.0 Formal employment Informal employment Other employment Employed (Men)100.0 Formal employment Informal employment Other employment

26 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Apr-Jun 2008 Jan-Mar 2009 Apr-Jun 2009 Total employment100.0 Formal sector (Non-agricultural) Informal sector (Non-agricultural) Agriculture Private households Formal and Informal Sector employment

27 ISE Workshop – Tanzania, 27 Sep – 02 October 2009 Questions?