The Development of Statistics on the Informal Economy

Developing Concepts and Definitions

At the 1991 International Labour Conference, the informal sector was a topic for tripartite debate. This was the first time the informal sector was featured as a major agenda item in an international conference. In 1992, the ILO Bureau of Statistics prepared a report called “Statistics on Employment in the Informal Sector” as the basis for discussion at the International Conference of Labour Statisticians (ICLS) the following year. The 1993 ICLS adopted an international statistical definition of the “informal sector” that, subsequently, was included in the revised international System of National Accounts (1993 SNA). In order to fit into the framework of the System of National Accounts and provide for a separate accounting of Gross Domestic Production (GDP) in the informal sector, the definition was based on characteristics of production units or enterprises rather than of employment relations (See Resolution Concerning Statistics of Employment in the Informal Sector).

The ICLS also recognised that an enterprise-based definition would not capture all dimensions of informal employment. The Conference recommended that further work was needed on the employment-based dimensions of informality. In the mid 1990s, the ILO, the International Expert Group on Informal Sector Statistics (called the Delhi Group) and the WIEGO network together began to broaden the concept and definition to incorporate certain types of informal employment that had not been included in the earlier definition. In 2003, the ICLS adopted an international guidelines concerning a statistical definition which includes informal wage employment outside informal enterprises. The larger concept is referred to as informal employment. (See Guidelines Concerning a Statistical Definition of Informal Employment).

To further work on statistics on the informal sector and informal employment, an international expert group on Informal Sector Statistics was formed in 1997 by the United Nations Statistical Commission. As the statistical system of India is the host for this group, it is called The Delhi Group. The convenors of the Delhi Group have invited both statisticians and users groups such as WIEGO and SEWA to participate in its expert group meetings. The meetings of the Delhi Group provide an international forum to exchange experience in the measurement of the informal sector and informal employment, document data-collection practices, including definitions and survey methodologies and recommend measures for improving the quality and comparability of informal sector statistics. The Delhi Group, the ILO Department of Statistics and WIEGO collaborated on the preparation of Measuring Informality: A Statistical Manual on the Informal Sector and Informal Employment. The manual provides practical guidance on each stage of the survey process, from designing and conducting a survey to tabulating and disseminating data. A final chapter is on the use of data on the informal sector and informal employment for national accounts statistics.

In 2003, the United Nations Statistical Commission called for an update of the 1993 System of National Accounts to address new developments in the economy, advances in methods, and evolving user needs, including the informal economy. Volume 2 of the System of National Accounts 2008 for the first time contains a chapter entitled “Informal aspects of the economy". This chapter argues that statistics on the informal sector have an important role in the preparation of a country’s national accounts. Direct survey data on the informal sector provide an improved basis for estimating the relevant parts of the household sector and a more exhaustive measure of Gross Domestic Production (GDP) than the indirect estimates that were used. This chapter represents an important step toward the preparation of estimates of the contribution of the informal sector to GDP and also the preparation of satellite accounts on the contribution to GDP of informal employment. Such estimates have been implemented in Mexico as part of the preparation of the country's national accounts. In July 2014, the National Institute of Statistics and Geography (INEGI) made available the first estimates of the Informal economy in the Mexico GDP for the years 2003 -2012. They show the contribution of both the Informal Sector and informal employment to the Gross Value of Production in the country. Read more.

Role of Advocates/Users of Statistics

During the mid-1990s, activists organizing informal workers began collaborating with researchers and statisticians to improve statistics on the informal economy. In advocating for appropriate policies in support of informal workers, activists found that they needed statistics to highlight the number and significance of informal workers as a whole and of specific categories of informal workers. Such efforts were also important to statisticians who needed a strong demand for new statistics to justify their development.

In 1995, the Self-Employed Women’s Association (SEWA) of India and an international alliance of home-based workers (called HomeNet) needed statistics on homework worldwide for their lobbying efforts for an international convention on homework. The researchers, who were asked to collect statistics on homework, found that only seven countries – Morocco, Japan, and five countries in Europe – had the category of homeworker in their official labour force statistics (Chen, Sebstad, and O’Connell 1999). Because so few official statistics were available, the researchers collected and analysed available data from ad hoc studies around the world. The statistics they collected helped to convince delegations to the International Labour Conference that homeworkers were a significant part of the workforce, especially in key export industries. The International Convention on Homework was adopted in 1996.

Recognizing the importance of the joint action of activists, development practitioners, researchers, and statisticians, representatives of SEWA and HomeNet joined other experts on the informal economy to form a global network called Women in Informal Employment: Globalizing and Organizing (WIEGO) in 1997. One of WIEGO’s five programme themes focuses on the development of statistics on the informal economy a part of official statistics and on making these statistics available to a wide set of users. In implementing these objectives, the statisticians and researchers in the WIEGO network work closely with the International Labour Organization, the United Nations Statistics Division, the Delhi Group and other relevant international and national organizations.

In 1997, SEWA started a collaborative research project on the informal economy in India with the National Council of Applied Economics Research (NCAER) and the Gujarat Institute of Development Research (GIDR). This project included a study on the size and contribution of the informal economy in Ahmedabad city that compared official data with the results of a special sample survey. This study demonstrated the desirability and feasibility of better capturing the informal economy in sample surveys. Subsequently, the National Sample Survey Organisation (NSSO) of the Government of India commissioned the principle investigator of the Ahmedabad study to assist the NSSO to design special modules to measure the rural and urban informal economy.

These modules were administered in the 1999-2000 round of the National Sample Survey. For a summary, see Chapter 3 (p. 33) of the first edition of Women and Men in the Informal Economy: A Statistical Picture.

Increasing the Number of Countries with Data on Informal Employment

During the 1990s, countries in addition to India undertook major new initiatives to collect data on the informal sector and informal employment. For example, Brazil, Mali, Mexico, South Africa, Tanzania, and Turkey developed surveys to measure the informal economy. In the case of South Africa, the effort to better measure the informal economy was part of a larger effort to develop the post-apartheid national statistical system. For Mexico, the effort to better measure the informal economy was part of a larger effort to monitor the impact of the North America Free Trade Agreement (NAFTA) and on-going privatisation of the economy. For summaries of findings from these two efforts, see Chapter 3 (p. 33) of the first edition of Women and Men in the Informal Economy: A Statistical Picture.

By providing technical assistance and training to countries, the ILO Department of Statistics in cooperation with ILO field offices has over the years contributed to increasing the number of countries which regularly collect and disseminate data on employment in the informal sector and informal employment. Another initiative, led by the Institute for Research and Development (IRD) of France, increased the number of countries collecting data on the informal sector –especially in West Africa (see WIEGO Working paper # 9.  In addition, two projects - Interregional Cooperation on the Measurement of Informal Sector and Informal Employment, which was coordinated by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and a project of the Asian Development Bank (ADB) - have been undertaken to improve the available data, especially in Asia. The countries where surveys were undertaken in the ESCAP coordinated project were: the Philippines, Mongolia, Sri Lanka, St. Lucia and West Bank and Gaza; in the project of the Asian Development Bank the countries were Armenia, Bangladesh and two provinces of Indonesia.

A project on Informal Employment, Poverty and Growth in India and China, which WIEGO helped initiate, contributed to the collection of data on informal employment and employment in the informal sector through the China Urban Labor Survey (CULS), which was carried out in six cities in China. The survey was directed by the Chinese Academy of Social Sciences working closely with the city offices of the National Bureau of Statistics of China .and coordinated by an international advisory committee with members from the ILO, the World Bank and WIEGO.  See China Project.

A regional training course on Statistics on Informality: Informal economy, work and employment was held 6-10 July 2015 at the Statistical Institute for Asia and the Pacific (SIAP) in Chiba Japan. This regional course aimed to promote and improve the collection of data and statistics on informal employment and employment in the informal sector as an integral part of national labour force statistics in Asia and the Pacific. The course was organized by the Statistical Institute for Asia and the Pacific (SIAP), a regional institution of the United States Economic and Social Commission for Asia and Pacific (ESCAP), in collaboration with the Statistics Division of ESCAP, International Labour Organization (ILO); Women in Inforrmal Employment: Globalizing and Organizing (WIEGO); and the Ministry of Internal Affairs and Communications, Government of Japan (MIC). Twenty two statisticians and labour ministry officials participated from 13 Asian countries: Bhutan, China, Fiji, India, Indonesia Malaysia, Maldives, Mongolia, Pakistan, Philippines, Solomon Islands, Sri Lanka, Thailand. See Regional Course on Statistics on Informality: Informal economy, work and employment.

Publications and a database

Additional numbers of countries collecting data on informal employment and employment in the informal sector as well as improvements in the quality of these data ,have made possible new efforts in the analysis and dissemination of the data.

  • Women and Men in the Informal Economy: A Statistical Picture (1st edition) This 2002 ILO/WIEGO publication provides the first statistical picture of the informal economy world-wide using the available data. At the time national data were so limited that national estimates of informal employment could only be determined by an indirect, residual approach and were based on only 25
  • The ILO--WIEGO Database on Informal Employment consists of tables with data for 47 countries related to informal employment and employment in the informal sector.
  • Women and Men in the Informal Economy: A Statistical Picture (2nd edition) The 2013 ILO-WIEGO publication reflects important advances over the earlier publication:1) more countries and better data, 2) statistics on and new methods to identify categories of urban informal workers based on official data – specifically, on domestic workers, home-based workers, street vendors and waste pickers; 3) updated statistics on non-standard work in developed countries ( own-account self-employment, temporary and part-time employment).
  • Statistics on the Informal Economy: Definitions, Regional Estimates and Challenges, WIEGO Working Paper No. 2, contains regional estimates of informal employment in the sub-regions of developing countries. The estimates are based on a more sophisticated and robust analytic approach containing both direct and indirect measures see link. This Working Paper also includes recent estimates of informal employment in developed countries.