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Development Account Projects

Interregional Cooperation on the Use of Data on Informal Sector and Informal Employment in National Accounts

Background:

In most developing countries informal employment – including both jobs in the informal sector and informal jobs in formal enterprises – constitutes a far larger component of the workforce than formal employment. Estimates suggest that it comprises 50 to 75% of non-agricultural employment. Specifically, it is estimated to comprise 48% of non-agricultural employment in North Africa, 51 % in Latin America, 65 % in Asia, and 75 % in Sub-Saharan Africa. In addition, studies have shown that, in many African countries, the informal sector could account for 35% to 45% of non-agricultural GDP. Availability of data on the informal sector would provide for more exhaustive and accurate estimates of the GDP, as well as for analyses of the sources of GDP growth and the relative sensitivity of the informal sector to various economic policies.

The project will be implemented by the African Centre for Statistics (ACS) of ECA together with ESCAP, ESCWA and ECLAC in collaboration with ILO, and UNSD, in eight pilot countries, of which four in Africa and two in the ESCAP region. It will promote interregional cooperation among UN Regional Commissions and other key international partners, including AFRISTAT, all of them sharing the common objective of improving the processing of data collection on informal sector and enhancing evidence based policy formulation and implementation. The project is directly linked to the Medium Term Plans of the four key implementing agencies: sub-programme 9 of ECA (Statistics), sub-programme 7 of ESCAP (Statistics), sub-programmes 10 and 12 of ECLAC (Statistics and Economic Projections; sub-regional activities in the Caribbean) and sub-programme 6 of ESCWA (Comparable statistics for improved planning and decision-making).

The informal sector is important in the production of goods and services. For many countries the contribution of informal enterprises to Gross Domestic Product (GDP) is substantial. Estimates of the average share of the informal sector in non-agricultural GDP are between 35 and 45 % in Africa. That a large number of developing and transition countries prepare such estimates reflects the importance of the informal sector in their total GDP. The goods and services produced and consumed in the informal sector are particularly important for the poorer segments of the population in Africa. Data and measurement of activities, products and services in the informal sector are therefore essential for effective monitoring of progress towards achieving the poverty related targets of the MDGs. ECA is therefore keen to improve data and measurement of the informal sector in African countries due to the importance of informal sector and informal employment in the region.

This project will directly benefit from the knowledge sharing activities of similar projects, including technical materials, guidelines and best practices to be produced and disseminated by the project. ECE, in close collaboration with UNSD and ESCAP, has implemented a DA project with the objective of strengthening the statistical capacity of member countries of the UN Special Program for the Economies of Central Asia (SPECA) to monitor demographic, social and economic progress toward the implementation of the Millennium Declaration.

Objective:

This project aims to improve availability of timely socio-economic analyses on the informal sector and informal employment – in particular their contribution to Gross Domestic Product (GDP), and employment – for the promotion of evidence-based policy formulation at the national level, providing for exchange of knowledge among participating regions.

Expected Accomplishments:

  • Improved technical capacity in the NSOs of participating countries to process data on the informal sector, using mixed surveys, and to compile exhaustive GDP estimates in line with international standards.
  • Enhanced capacity of national statistical systems to produce regular (yearly) labour balance sheets that include informal employment, and satellite accounts on informal sector, based on mixed surveys and in line with the 2008 System of National Accounts (SNA 2008).
  • Increased number of countries which develop socio-economic policies and sectoral strategies through the use of timely and comparable data on informal sector and informal employment and annual estimates of GDP that include real levels of poverty and related social and labour issues.

Implementation Status:

Project implementation commenced in 2011.