Development Account Projects
Interregional cooperation on the measurement of the informal sector and informal employment
Background:
The informal sector represents a fundamental component of the economic structure of many developing countries and countries in transition. In these countries, informal-sector enterprises are an important provider of employment and income opportunities not only in rural but also in urban areas. On the other hand, the income and quality of work of people engaged in the informal sector are in general considerably lower than those of workers in the formal sector. Despite their importance, the informal sector and informal employment are poorly covered, if at all, by official statistics. Even less information is available on the contribution of the informal sector to economic growth. Last but not least, the few data available are not fully comparable at the international level and are mostly collected on an ad hoc rather than a regular basis, hampering the construction and comparative analysis of harmonized time series and intercountry analysis.
Among the consequences of the lack of data on informal activities in official statistics of both developing countries and countries in transition are distorted figures for the real economy, such as implausibly low female participation rates, a significant underestimation of gross domestic product (GDP) per capita and a tendency to overestimate the share of the population that lives below the official national poverty line. The lack of data on the informal sector and informal-sector economic activities complicates economic planning, at the national and international levels, as well as the design, monitoring and evaluation of programmes policies aimed at promoting gender equality, eliminating child labour, creating employment and reducing poverty.
The project addresses all aspects of these issues surrounding measurement of the informal sector and informal employment and attempts to place these new data within a framework covering the economy as a whole. The advocacy component should facilitate the provision of regular funds for statistical activities related to the informal economy and contribute to a durable self-sustaining upgrade of national statistical systems and national statistical offices; the data-collection and data-dissemination components seek to create a critical mass of countries that regularly collect and disseminate statistics on the informal sector and informal employment and integrate these estimates in the compilation of their national accounts. The main beneficiaries of the project will be the economic and social policymakers and statistical officials in developing countries and countries in transition.
The project will be executed by the Economic and Social Commission for Asia and the Pacific (ESCAP), jointly with the Economic Commission for Latin America and the Caribbean (ECLAC), the Economic and Social Commission for Western Asia (ESCWA) and the Department of Economic and Social Affairs, as well as in partnership with the International Labour Organization (ILO), the United Nations Development Fund for Women, Women in Informal Economy Globalizing and Organizing, the Delhi Group, and the Self-Employed Women’s Association. The project will contribute to improved knowledge management through the production of training materials and collection of best practices that can be utilized by a broader group of developing countries and countries in transition that are not directly involved in the project activities.
Objective:
To improve data on the informal sector and on informal employment for the promotion of evidenced-based social policies at the national and interregional levels.
Expected accomplishments:
- Raised awareness among the national statistical offices and other government agencies of participating countries of the importance of collecting and disseminating data on the informal economy and of compiling exhaustive estimates of GDP, and application for economic and social policy analysis
- Improved technical capacity in the national statistical offices of participating countries to collect, compile, analyse and disseminate data on the informal economy in line with international methodological standards and to compile exhaustive estimates of the GDP
Implementation status:
During this preliminary phase of the project, activities were dedicated to strategic planning and organizing among partners, and on establishing a consensus on the methodological background for technical assistance activities. An interregional project Steering Committee was created, and its first meeting was held on 15 September 2006. The Committee undertook the task of identifying necessary preparatory tasks and distributing responsibility among the regional commissions and partner organizations. Each regional commission is expected to report upon progress regularly to the Committee in order to ensure consistency and quality of outputs. The Committee also has the responsibility to reach agreement on standardized data collection and estimation methodologies and a common operational definition for the informal sector, in order to facilitate comparability of data collection outputs in line with recommendations from ILO and the Delhi Group. During the reporting period, ESCAP, in collaboration with UNSD, made substantial progress towards this goal through literature reviews and consultations with experts in the area. It is expected that a common consensus on the content for project guidelines for the country data collection activities will be achieved by early 2007.
A timeline for project objectives was produced, and project countries were identified. Negotiations and information sharing were initiated between the commissions and project countries, clarifying details such as required inputs and feasible timing of activities in the countries. Also, a comprehensive list of relevant references and potential resource persons was compiled, and trainings were held to build internal capacity at ESCAP for ensuring technical assistance of high and up-to-date standards. Furthermore, progress was made towards completing a compilation of materials for use in advocacy workshops, planned for mid-2007.
