1. Workshop on Household Surveys and Measurement of Labour Force
Informal Sector and Informal Employment Measurement in African Countries
Workshop on Household Surveys and Measurement of Labour Force
14-18 April 2008, Maseru, Lesotho
Dimitri Sanga, Ph.D.
Senior Statistician

2. Outline Background Objectives
Definition and concepts: practices in African countries
Surveys on the informal sector
Keys content and questions to capture the informal sector/employment
The way forward

3. Background 3

4. Background
The informal sector plays an important role in economies of developing countries including African economies:
Production
Income distribution
Employment creation

5. Background (Cont’d)
The lack of information on the informal economy in official statistics limits the assessment of the real economy:
Measurement of GDP
Women participation in the economy
Women participation in the labour force
Multiplicity of measurement methods:
Limits international comparability 5

6. Background (Cont’d)
ACS resolved to contribute to ongoing discussions on the development of an integrated methodology for measuring the informal sector/employment that:
Complies with internationally recognized concepts and definitions
Reflects African realities
Builds on ongoing efforts: Delhi Group and the UN Development Account on the Informal Sector 6

7. Objectives 7

8. Overall objective
To present an overview of current practices and methodologies for measuring the informal sector and employment in African countries 8

9. Specific objectives
Review the definitions and concepts used by African countries
Review methodologies used to survey the informal sector and informal employment in Africa
Suggest a way forward in terms of “harmonizing of the measurement of the informal sector and employment in African countries” 9

10. Concepts and definitions: practices in African countries10

11. Various definitions Several definitions for the informal sector
Most important:
The 15th International Conference of Labour Statisticians
The recommendation of the Delhi Group in Rev.1 of the SNA 1993
The OECD definitions of the non-observed economy
These various definitions include the following criteria :
Size of the unit below a specified level of employment
Non-registration of the enterprise or its employees
Lack of bookkeeping
Absence of a contract or social security 11

12. Various definitions Essentials Legal organization
No separate legal entity from the owner
Type of accounts
No complete set of accounts
Product destination
At least some market output (for sale or barter) 12

13. Various definitions Additional: Scope Employment size
Specific to country
Non-registration
Optional
Kind of economic activity
Possible exclusion of:
Agriculture and related activities
Paid domestic services 13

14. Review of practices in African countries
Variability in the definition of the informal sector and informal employment
Difficulties in international comparisons of corresponding statistical survey results
Variability based on:
Survey methodology (surveyed units)
Size in terms of employment
Inclusion of the agriculture sector
Registration criteria
Minimum age of the potential active individual 14

15. Variability: Survey methodology
Botswana, Tanzania and Namibia
Mixed household-enterprise surveys
Definition based on the informal production unit (IPU) (similar to that of the 15th ICLS)
In South Africa:
October Household Survey: HS with an employment and an informal sector segment
Partially captures informal employment (as defined by the 17th ICLS) and informal production units
1-2-3 surveys (many FR speaking countries)
A three phases survey that measure the informal economy differently in each of them
Def. includes those of both the 15th and the 17th ICLS 15

16. Variability: Size Namibia, Botswana, Zambia and Tanzania:
Minimum threshold: 5 employees (increased to 11 in Dar-es-Salaam for manufacturing)
1-2-3 surveys or the OHS in South Africa: no size criterion
Five-employee threshold:
Recommendation of the Delhi Group 16

17. Variability: Agriculture sector
Tanzania and Namibia include agriculture in the informal sector if:
The activity is for barter
And if the other criteria of the informal sector definition are met 17

18. Variability: Registration
1-2-3 surveys, Botswana: formal bookkeeping to define informal production units
Zambia: employment is informal if it is not covered by social security
South Africa: registration for the purpose of paying VAT
Madagascar (1-2-3 survey): an enterprise is considered registered if it has a statistical identification number
Kenya:
Administrative procedures
And the possession of a license that guarantees the exercise of a professional activity 18

19. Variability: minimum age
Tanzania : 5 years
Zambia: 10 years
South Africa (OHS): 15 years
ILO minimum age of employment:
15 in general
18 for hazardous work
Age lower than the legal minimum impacts on the number of informal jobs for comparison purposes
International comparisons should be made for a specific age group, such as the age group 19

20. Variability: Others
Botswana limits the definition of the informal sector to units that do not have a fixed location or whose activity is temporary
Namibia and Tanzania: exclude professionals such as physicians, notaries and lawyers from the informal sector 20

21. Surveys on the informal sector21

22. Direct methods of measuring the informal sector
Sampling surveys: direct methods to measure the informal sector/employment
Units of observation: enterprise, establishment, individual or household
Main surveys:
Labour force or employment surveys
Household surveys
Establishment surveys
Mixed household-enterprise survey
1-2-3 surveys 22

23. Employment or labour force surveys
Some typical examples in Africa:
The employment segment of Living Standards Surveys (LSS) of the LSMS (WB): Cote d’Ivoire, Ghana, Madagascar, Morocco, Malawi, and Tanzania
Phase 1 of the survey 23

24. Establishment surveys
Collect information on the operation of the informal production unit, its characteristics and its operating accounts
Provide information on:
Formal bookkeeping, registration...
Production, added value, intermediate consumption, sales figures, work remuneration, income taxes and other taxes paid to public authorities....
Widely used by national accountants :
Added value, intermediate consumption and technical coefficients
Criticized for its weak coverage of all economic activities that may be undertaken informally 24

25. Mixed household-enterprise surveys
Collect additional information: other socio-demographic characteristics of the heads of IPUs
Typical example:
Phase 2 of the survey: survey of IPUs
Gross operating surplus
Number of employees
Relationship between employees and the head of the IPU
Socio-demographic characteristics of employees… 25

26. The consumption surveys
Measure the share of the informal economy in household supplies
Typical example: Phase 3 of the Surveys
Collects data on household consumption 26

27. Key content and questions to capture the informal sector and employment27

28. Key questions: employment surveys
To capture informal employment or serve as the sampling frame for the mixed household – enterprise survey , LFS or employment segments of HS should:
Contain filter questions to find out who has a job, in the ILO sense, during the reference period
Even for those who worked for one hour during the reference period
If negative response: over the past seven days, has the individual carried out an activity included in given list of economic activities
If the response is still negative: is the person on leave, on sick leave, on maternity leave, temporarily out of work, and so on
This series of questions ensures to include all persons who are actively employed 28

29. Key questions: employment survey (Cont’d)
For those considered to be actively employed:
Socio-professional category
Type of entity they work for
Work schedule during the week
In the case of a private enterprise:
Workforce of the entity that the individual is working for
Whether the entity is registered
For leaders of enterprises:
Do they formal bookkeeping for the payment of duties and taxes?
For employees and other independent workers:
Written work contract
 Entitled to paid leave, sick leave
Employer pays an employer’s contribution for their retirement pension 29

30. Key content: mixed household-enterprise surveys
For the purpose of preparing national accounts, the survey should collect information on:
Production and intermediate consumption: sales of products processed, stocks, services delivery…
Expenses by category: energy, transport, telecommunications…
Composition of the labour force according to socio-professional category
The branch of activity of the unit 30

31. The way forward 31

32. StatCom-Africa Working Group
Fist meeting of the Statistical Commission for Africa: January 2008
Setting up of six working groups including one on the measurement of the informal sector
Composition during the first meeting:
Ghana, South Africa, Uganda, AFRISTAT and UNECA 32

33. StatCom-Africa Working Groups
Recommendations:
Real need for harmonization of definitions and methodologies within the region
Necessity to revisit existing methodologies carried out by South Africa, India, Ghana, AFRISTAT, etc.
Need to deepen the discussions on the informal sector by the working group under the leadership of AFRISTAT
Called upon other countries to join the group to reinforce the pertinence of the discussions since the informal sector is very important in the region
Called upon StatCom-Africa to earmark funds to support the informal sector the working group to meet 33

34. Thank you! African Centre for Statistics
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