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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:

The project generated three tangible outcomes. First, it adapted the “1-2” survey approach to methods and tools to measure the informal sector and informal employment. That resulted in improved and tested questionnaires, field designs, weighting and estimation procedures and tabulation plans for a two-phased survey based on an existing labour force survey (LFS) in the first phase and a household unincorporated enterprise survey in the second. The project established that this methodology is a cost-effective data collection strategy that could be implemented by national statistical systems of developing countries.

Second, the participating national statistical offices (NSO) of Mongolia, Palestine, the Philippines, Saint Lucia and Sri Lanka gained critical knowledge, skills and experience in designing and implementing the “1-2” survey. They designed and used the tools to conduct nationally-representative surveys (except in Palestine due to political instability). The project provided advisory services in their implementation and technical workshops brought together the project countries to share their experiences.

Third, a series of national, regional and interregional workshops raised awareness of the importance of collecting and disseminating data on the subject among agencies and relevant stakeholders of other member States in the implementing regions.

Project Resources: http://www.unescap.org/stat/isie/project-resources/index.asp