United Nations Economic Commission for Africa
African Centre for
Statistics
Informal Sector and Informal
Employment Measurement in
African Countries
Workshop on Household Surveys and Measurement of Labour
Force
14-18 April 2008, Maseru, Lesotho
Dimitri Sanga, Ph.D.
Senior Statistician
 Background
Outline
 Objectives
 Definition
and concepts: practices in
African countries
 Surveys on the informal sector
 Keys content and questions to
capture the informal
sector/employment
 The way forward
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Background
3
Background
 The
informal sector plays an important
role in economies of developing
countries including African economies:
 Production
Income distribution
Employment creation
4
Background (Cont’d)
 The
lack of information on the
informal economy in official statistics
limits the assessment of the real
economy:
Measurement of GDP
Women participation in the economy
Women participation in the labour force
 Multiplicity
of measurement methods:
Limits international comparability
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Background (Cont’d)

ACS resolved to contribute to ongoing
discussions on the development of an
integrated methodology for measuring the
informal sector/employment that:
Complies with internationally recognized
concepts and definitions
Reflects African realities
Builds on ongoing efforts: Delhi Group and the
UN Development Account on the Informal
Sector
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Objectives
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Overall objective
To present an overview of current
practices and methodologies for
measuring the informal sector and
employment in African countries
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Specific objectives
 Review
the definitions and concepts used
by African countries
 Review methodologies used to survey the
informal sector and informal employment
in Africa
 Suggest a way forward in terms of
“harmonizing of the measurement of the
informal sector and employment in
African countries”
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Concepts and
definitions: practices in
African countries
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Various definitions
Several definitions for the informal sector
 Most important:

The 15th International Conference of Labour
Statisticians
The recommendation of the Delhi Group in Rev.1
of the SNA 1993
The OECD definitions of the non-observed
economy

These various definitions include the
following criteria :
Size of the unit below a specified level of
employment
Non-registration of the enterprise or its employees
Lack of bookkeeping
Absence of a contract or social security
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Various definitions
Essentials

Legal organization
No separate legal entity from
the owner

Type of accounts
No complete set of accounts

Product destination At least some market output
(for sale or barter)
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Various definitions
Additional: Scope

Employment size
Specific to country

Non-registration
Specific to country
Optional

Kind of economic
activity
Possible exclusion of:
 Agriculture and related
activities
 Paid domestic services
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Review of practices in African
countries
Variability in the definition of the informal
sector and informal employment
 Difficulties in international comparisons of
corresponding statistical survey results
 Variability based on:

Survey methodology (surveyed units)
Size in terms of employment
Inclusion of the agriculture sector
Registration criteria
Minimum age of the potential active individual
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Variability: Survey methodology

Botswana, Tanzania and Namibia
Mixed household-enterprise surveys
Definition based on the informal production unit
(IPU) (similar to that of the 15th ICLS)

In South Africa:
October Household Survey: HS with an
employment and an informal sector segment
 Partially captures informal employment (as defined
by the 17th ICLS) and informal production units

1-2-3 surveys (many FR speaking countries)
A three phases survey that measure the informal
economy differently in each of them
Def. includes those of both the 15th and the 17th
ICLS
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Variability: Size

Namibia, Botswana, Zambia and Tanzania:
Minimum threshold: 5 employees (increased to 11
in Dar-es-Salaam for manufacturing)

1-2-3 surveys or the OHS in South Africa: no
size criterion

Five-employee threshold:
Recommendation of the Delhi Group
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Variability: Agriculture sector
 Tanzania
and Namibia include
agriculture in the informal sector if:
The activity is for barter
And if the other criteria of the informal
sector definition are met
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Variability: Registration
1-2-3 surveys, Botswana: formal bookkeeping to
define informal production units
 Zambia: employment is informal if it is not
covered by social security
 South Africa: registration for the purpose of
paying VAT
 Madagascar (1-2-3 survey): an enterprise is
considered registered if it has a statistical
identification number
 Kenya:

Administrative procedures
And the possession of a license that guarantees the
exercise of a professional activity
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Variability: minimum age
Tanzania : 5 years
 Zambia: 10 years
 South Africa (OHS): 15 years
 ILO minimum age of employment:

15 in general
18 for hazardous work
Age lower than the legal minimum impacts on the
number of informal jobs for comparison purposes
International comparisons should be made for a
specific age group, such as the 16-64 age group
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Variability: Others
 Botswana
limits the definition of the
informal sector to units that do not have a
fixed location or whose activity is
temporary
 Namibia and Tanzania: exclude
professionals such as physicians, notaries
and lawyers from the informal sector
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Surveys on the
informal sector
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Direct methods of measuring the
informal sector
Sampling surveys: direct methods to measure
the informal sector/employment
 Units of observation: enterprise, establishment,
individual or household
 Main surveys:

Labour force or employment surveys
Household surveys
Establishment surveys
Mixed household-enterprise survey
1-2-3 surveys
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Employment or labour force
surveys
 Some
typical examples in Africa:
The employment segment of Living
Standards Surveys (LSS) of the LSMS (WB):
Cote d’Ivoire, Ghana, Madagascar, Morocco,
Malawi, and Tanzania
Phase 1 of the 1-2-3 survey
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Establishment surveys


Collect information on the operation of the
informal production unit, its characteristics and
its operating accounts
Provide information on:
Formal bookkeeping, registration...
Production, added value, intermediate consumption,
sales figures, work remuneration, income taxes and
other taxes paid to public authorities....

Widely used by national accountants :
Added value, intermediate consumption and technical
coefficients

Criticized for its weak coverage of all economic
activities that may be undertaken informally
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Mixed household-enterprise
surveys
Collect additional information: other sociodemographic characteristics of the heads of
IPUs
 Typical example:

Phase 2 of the 1-2-3 survey: survey of IPUs
 Gross
operating surplus
 Number of employees
 Relationship between employees and the head of the
IPU
 Socio-demographic characteristics of employees…
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The consumption surveys

Measure the share of the informal economy in
household supplies

Typical example: Phase 3 of the 1-2-3 Surveys
Collects data on household consumption
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Key content and
questions to capture
the informal sector
and employment
27

Key questions: employment
surveys
To capture informal employment or serve as
the sampling frame for the mixed household –
enterprise survey , LFS or employment
segments of HS should:
Contain filter questions to find out who has a job,
in the ILO sense, during the reference period
 Even
for those who worked for one hour during the
reference period
 If negative response: over the past seven days, has the
individual carried out an activity included in given list of
economic activities
 If the response is still negative: is the person on leave,
on sick leave, on maternity leave, temporarily out of
work, and so on
This series of questions ensures to include all
persons who are actively employed
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
Key questions: employment
survey (Cont’d)
For those considered to be actively employed:
 Socio-professional category
 Type of entity they work for
 Work schedule during the week

In the case of a private enterprise:
 Workforce of the entity that the individual is working for
 Whether the entity is registered

For leaders of enterprises:
 Do they formal bookkeeping for the payment of duties and
taxes?

For employees and other independent workers:
 Written work contract
 Entitled to paid leave, sick leave
 Employer pays an employer’s contribution for their
retirement pension
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Key content: mixed householdenterprise surveys
 For
the purpose of preparing national
accounts, the survey should collect
information on:
Production and intermediate consumption:
sales of products processed, stocks, services
delivery…
Expenses by category: energy, transport,
telecommunications…
Composition of the labour force according
to socio-professional category
The branch of activity of the unit
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The way forward
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StatCom-Africa Working Group



Fist meeting of the Statistical Commission
for Africa: 21-23 January 2008
Setting up of six working groups including
one on the measurement of the informal
sector
Composition during the first meeting:
 Ghana, South Africa, Uganda, AFRISTAT and
UNECA
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StatCom-Africa Working Groups

Recommendations:
 Real need for harmonization of definitions and
methodologies within the region
 Necessity to revisit existing methodologies
carried out by South Africa, India, Ghana,
AFRISTAT, etc.
 Need to deepen the discussions on the informal
sector by the working group under the leadership
of AFRISTAT
 Called upon other countries to join the group to
reinforce the pertinence of the discussions since
the informal sector is very important in the region
 Called upon StatCom-Africa to earmark funds to
support the informal sector the working group to
meet
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Thank you!
African Centre for Statistics
Visit us at http:www.uneca.org/statistics/
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