Statistical Picture

Size & Significance

To inform economic and social policies, statistics on the size, composition, contribution, and other dimensions of the informal economy are needed. But, as a new area of statistical development, only limited data have been available on informal employment and the informal economy until recently. What follows is a summary of available data on the size and composition of the informal economy in developing countries and non-standard work in developed countries.

Regional Estimates
Developing Countries

Informal employment is particularly significant in developing countries, where it comprises one half to three quarters of non-agricultural employment: specifically, 48 per cent in North Africa; 51 per cent in Latin America; 65 per cent in Asia; and 72 per cent in sub-Saharan Africa. If South Africa is excluded, the share of informal employment in non-agricultural employment rises to 78 per cent in sub-Saharan Africa. If comparable data were available for other countries in South Asia in addition to India, the regional average for Asia would likely be much higher. If informal employment in agriculture is included, as is done in some countries, the proportion of informal employment greatly increases: from 83 per cent of non-agricultural employment to 93 per cent of total employment in India; from 55 to 62 per cent in Mexico; and from 28 to 34 per cent in South Africa.

Throughout the developing world, informal employment is generally a larger source of employment for women than formal employment and generally a larger source of employment for women than for men. Other than in North Africa, where 43 per cent of women workers are in informal employment, 60 per cent or more of women workers in the developing world are in informal employment (outside agriculture). In sub-Saharan Africa, 84 per cent of women non-agricultural workers are informally employed compared to 63 per cent of men; and in Latin America the figures are 58 per cent of women in comparison to 48 per cent of men. In Asia, the proportion is 65 per cent for both women and men.

For more detail, see a summary of these and other findings from the 2002 ILO statistical book entitled Women and Men in the Informal Economy: A Statistical Picture. 

For more detailed statistics and research findings, see regional reviews by WIEGO members on informal employment in Africa (Heintz and Valodia 2008), in Latin America (Tokman 2008), and in South Asia (Chen and Doane 2008).

Developed Countries

During the second half of the twentieth century, it was widely assumed that most workers in developed countries had and would continue to have a standard job: that is, a full-time, year-round, permanent wage employment for one employer with adequate statutory benefits and entitlements. However, since the 1980s, many once-formal jobs have been informalized or casualized in both Western Europe and North America. In the United States, for example, there has been a marked shift from long-term firm-worker attachment towards short-term employment relationships (Stone 2007).

Various concepts or definitions are used in developed countries referring to workers whose work arrangements deviate from the so-called “standard” norm, including:

1. those whose employment is arranged through an employment intermediary: temporary agency workers and contract workers
2. those whose employment is not full-time: part-time workers
3. those whose employment is not long-term: contingent workers
4. those whose employment is not protected: precarious workers

The most common concept or term is “non-standard” workers. As commonly used, the term “non-standard work” includes a) wage employment without a contract or only an insecure contract and without worker benefits or social protection for formal enterprises; and b) self-employment without employees. The common categories of non-standard wage work are temporary work, fixed-term work, and part-time work. Increasingly, inter-firm sub-contracted work in the service sector (such as janitorial services and home care) and in the manufacturing sector (such as garment making and electronic assembly) is also included.

What follows is a brief summary of trends in three categories of non-standard work in Western Europe during the 1990s, based on research by Françoise Carré (ILO, 2002).

Part-Time Work: Since the early 1970s, there has been a marked growth in the proportion of part-time workers in total employment. By 1998, part-time workers accounted for 16 per cent of total employment in European Union (EU) countries and 14 per cent of total employment in Organization of Economic Cooperation and Development (OECD) countries. In virtually all EU and OECD countries, the incidence of part-time work is much higher among women than men: in some countries it is twice as high. By 1998, women represented 82 per cent of all part-time workers in EU countries. Further, rates of part-time work are high for women, but not men, in their prime working years. In terms of sectors, part-time workers concentrate in service-producing industries, notably the wholesale and retail trade sectors. In terms of occupations, part-timers concentrate in service and sales, clerical, and manual labour. In terms of earnings, the median hourly earnings for part-time workers are lower than for full-time workers in most sectors. Part-timers may be concentrated in different occupations than full-timers. The overall earnings of part-time workers are quite a bit lower than for full-time workers even within the same sectors.

Temporary Employment: For the EU as a whole, and for a majority of EU countries, the share of workers in temporary employment, including both direct hire and agency hire, increased from the mid-1980s to the late 1990s. By 1998, temporary employment accounted for around 10 per cent of total employment in EU countries. Temporary employment, like part-time work, is primarily a female phenomenon, although there is wide variation among EU countries. In all countries except Austria, the incidence of temporary employment among women is higher than among all workers. And, like part-time work, temporary employment is concentrated in the service-producing industries. Interestingly, in regard to temporary agency employment, women account for the majority of temporary agency workers in countries where such employment concentrates in services while men account for the majority of agency temps in countries where such employment concentrates in manufacturing and construction: that is, “the gender composition of employment mirrors that of the sectors in which temporary agency assignments take place.”

Self-Employment: Self-employment, including both employers and own account workers, has increased in many OECD countries over the past 25 years. Indeed, outside of agriculture, self-employment has grown at a faster rate than total employment in 14 (out of 24) OECD countries where data was available. Also, as self-employment has been growing, so has the share of own account self-employment within total self-employment.

As a result, in OECD countries today, more self-employed persons are own account workers than employers. In 1997, women comprised one in three self-employed persons in OECD countries and this proportion is growing. For EU countries as a whole, the incidence of own account work is greater for men (11%) than for women (7%). But, in some countries, a higher proportion of women than men are own-account workers. Age is a factor in own account work: with workers aged 45 and above more likely than younger workers to be own account workers. Outside of agriculture, the self-employed as a whole are concentrated in wholesale and retail trade, repairs, hotels and restaurants. During the 1990s, however, the growth in self-employment was concentrated in financial intermediation, real estate, renting and business services, followed by community, social, and personal services.

More Recent National Statistics

More and more countries are collecting data on informal employment both inside and outside the informal sector. The available data are being compiled and analyzed for an updated version of the 2002 ILO publication called Women and Men in Informal Employment: A Statistical Picture, which will be published in late 2011. Meanwhile, recent tabulations of data on informal employment from a few developing countries, based on direct measures, are presented here.

For the 2005 UNIFEM publication, Progress of the World’s Women: Women, Work, and Poverty, national data in six developing countries – Costa Rica, Egypt, El Salvador, Ghana, India, and South Africa – was analyzed using a common tabulation framework. Informal employment is widespread in all five countries: ranging from just under half of total employment in Costa Rica to over 90 per cent in Ghana and India (Chen et al. 2005).

A recent tabulation of data from another six developing countries (including India) indicates that, in 2003/4, informal employment represented over threequarters of non-agricultural employment for both women and men in Ecuador (urban), India, and Mali; over half in Brazil and South Africa; around one third in Turkey; and less than one quarter in the Republic of Moldova. In all countries, except the Republic of Moldova, the percentage of informal employment in non-agricultural employment was higher among women workers than men workers.

Table 1
Informal Employment as Percentage of Total Non-Agricultural Employment, By Sex
(2003–2004)

Sources: For all countries except India, ILO Department of Statistics; for Brazil, ILO estimates based on official data from various sources; for Mali and South Africa, ILO estimates computed from labour force survey micro data; for the rest, ILO estimates based on labour force survey data; for India, estimates provided by Jeemol Unni based on the Survey of Employment and Unemployment. This table was prepared by Ralf Hussmanns of the ILO Statistics Department and published in the United Nations, 2010 The World’s Women 2010: Trends and Statistics (United Nations Publication, Sales No. E.10XVII.11) p.89.

Notes: (a) *The sum of the components “employment in the informal sector” and “informal employment outside the informal sector” exceeds total informal employment due to the presence of formal employment in the component “employment in the informal sector;” (b) ** Data refer to persons aged 5 or over.

Mexico
A recent tabulation of annual data from Mexico indicates that the share of informal employment in total employment declined by 2.5 per cent between 2003 and 2006. Within overall informal employment, the share of agricultural informal employment fell by 2.5 per cent, the share of non-agricultural employment in informal enterprises fell by 1.7 per cent, while the share of non-agricultural informal employment outside informal enterprises grew by 1.6 per cent. Over the same period of time, the estimated contribution of the informal workforce to total GDP grew slightly (by 0.6%). Among all informal workers, the contribution of informal non-agricultural workers within and outside informal enterprises grew by 0.7 and 1.1 per cent, respectively, while the contribution of informal agricultural workers declined by 1.1 per cent.

Table 2
Share of Informal Employment, Non-Agriculture and Agriculture,
in Total Employment and Total GDP, Mexico
(2003-2006)

Composition & Segmentation

Composition

Since most of the agricultural workforce in developing countries is informal, it is important to bear in mind the basic distinctions between agricultural and non-agricultural as well as rural and urban informal employment. Cutting across these basic divides, informal employment is further segmented by employment status.

In developing countries, self-employment comprises a greater share of informal employment (outside of agriculture) than does wage employment, ranging from 60 to 70 per cent of informal employment, depending on the region. In most countries for which data are available, women (as well as men) in informal employment are more likely to be in self-employment than in wage employment.

But the informal economy, especially in developing countries, is more highly segmented than the simple wage employment versus self-employment dichotomy would suggest. The main segments of informal employment, classified by employment status, are as follows:

• employers: owner operators of informal enterprises who hire others
• employees: unprotected employees with a known employer: either an informal enterprise, a formal enterprise, a contracting agency or a household
• own account workers: owner operators of single-person units or family businesses or farms who do not hire others on a continuous basis
• casual labourers: wage workers with no fixed employer who sell their labour on a daily or seasonal basis
• industrial outworkers: sub-contracted workers who produce from their homes or a small workshop
• contributing family workers: family workers who work in family businesses or farms without pay

In sum, the informal economy includes a range of self-employed people who work in small and unincorporated or unregistered (i.e., informal) enterprises, including:

• employers who invest their own capital in running informal enterprises and who hire others
•  own account workers who do not hire others and who contribute both their own capital and labour to the enterprise (both single-person operators and the heads of a family business or farm)
• contributing family workers (in family businesses or farms) who contribute their own labour and may or may not contribute their own capital

But the informal workforce also includes several types of wage workers:

• a wide range of wage workers: such as employees in informal enterprises; casual day labourers in construction and agriculture; temporary, part-time, and contract workers without employment-based social protection or other benefits
• workers who are neither fully dependent wage workers nor fully independent self-employed persons: disguised wage workers such as industrial outworkers who work on a sub-contract for a piece rate but are responsible for all non-wage costs of production; and dependent contractors such as commission agents who sell goods on a commission for others or taxi- and truck-drivers who rent vehicles from a company that determines their working hours and routes

Segmentation

There are marked differences by sex in the composition of the informal economy. The set of data analyses in six countries commissioned for the 2005 UNIFEM publication entitled Progress of the World’s Women: Women, Work, and Poverty found that, with respect to non-agricultural informal employment, women are more likely than men to work as own account workers, domestic workers, and contributing family workers, while men are more likely to work as employers and wage workers (Chen et al. 2005). In contrast, men are more likely to work as employers and wage workers (ibid.); and generally comprise the majority of informal agricultural workers. However, in many countries women still account for a large share of own account agricultural workers and a majority of unpaid workers on family farms. Typically, few women are employed as informal agricultural wage workers. Figure 1 illustrates graphically this common partner of segmentation. 

Figure 1
Segmentation of Informal Employment by Employment Status and Sex

In sum, for the informal workforce as a whole, both agricultural and non-agricultural, available data suggest a common segmentation by employment status and sex across many developing countries, as depicted in the iceberg figure above (Chen et al 2005). Most informal employers and employees are men, most industrial outworkers and unpaid contributing family workers are women, while either women or men dominate in own account work or casual day labour, depending on the sector and the country. One notable exception is informal wage work in those countries where paid domestic work is an important category of female informal employment: in most such countries, women are more likely than men to be informal wage workers.