Viet Vu
Consultant to United Nations’ Statistics Division
15-17 March 2010
Importance of reliable measurement of informal
activities at regional levels in developing countries
 At national level (*)
 On the basis of statistics on the informal economy that are still
unreliable, ILO provides the following tentative picture of its
relevance.
 In developing countries, informal employment makes up 48% of
non-agricultural employment in North Africa, 51% in Latin
America, 65% in Asia, and 72% in Sub-Saharan Africa.
 If agricultural employment is included, the percentages rises, in
some countries like India and many sub-Saharan African countries
beyond 90%.
 Estimates for developed countries are around 15%.
 At regional level:
 Share of informal activities in many regions are higher than the
national average;
 Thus, reliable measurement of informal activities at regional levels are
important to the measurement of GRPs.
(*) Source:
http://www.ilo.org/public/english/bureau/inst/publications/discussion/dp19308.
pdf
Households as statistical units in SNA production
framework: refined definition
Area
subject
to 1-2
survey
SNA household sector
HUEM units
Agriculture
(commercial
agriculture)
SNA corporations
sector
Non-HUEM
units:
Household
Incorporated
•Producing only
quasiNon-Agriculture
for own final uses
enterprises
corps.
•Subsistence
farmers
Informal Formal Informal Formal
statistical units: household enterprises that do not incorporate
SNA general
government
sector and
NPISH sector
Nonmarket units
(general
government,
NPISH)
This is the
part of the
system that
the ILO is
interested in
General practices in economic
statistics
 Corporations sector: corporations, whether large or small
are independent legal units and therefore must register
with authorities, they can be subject to sample survey. The
main requirement is that the list frame must be frequently
updated. This list frame include basic information:




Address
Number of employees
Sales
Major activity classified by ISIC.
 Household sector: all unincorporated activities of the
households must be measured in national accounts,
whether they are “informal” as defined by the ILO or by
ESCAP project or not.
Household production activities
 Non-HUEMs: Household unincorporated enterprises producing only
for own final consumption. This includes subsistence farmers.
 HUEMs: are household unincorporated enterprises as defined by the
SNA, but:
 (1) with “primary objective of generating employment and
incomes to the persons concerned” as defined by the ILO in
the resolution of the 15th ICLS (SNA2008, 25.37); and
 (2) “with at least some production for sale or barter
(SNA2008, 25.46)”.
 HUEMs as defined above must have entrepreneurial spirit in the sense
that:
 Produce for the market on a regular basis; therefore HUEMs
 Should exclude the unincorporated household units that have some
incidental sales, and subsistence farmers who must sell some of their
outputs on the market to pay for nonfood survival needs.
Household activities measurement:
ATERNATIVE I
 Non-HUEMS for own final consumption: Based on normal
agricultural survey at regional levels


Agriculture: Land use are x Yield rate per unit of land
Livestock: Output of live animals + imports = animals slaughtered +
exports + change in animal stock
 HUEMS: 1-2 survey (UNESCAP’s proposal) include:


Stage 1: Utilize Labour Force’s survey (surveying households) to
identify HUEMS (unincorporated units produced for the market)
Stage 2: Survey HUEMS for labour, output, intermediate
consumption and value added.
 Extrapolation using 1-2 survey and employment in Labour
Force survey
Household activities measurement:
ATERNATIVE I (extrapolation)
 Assumption 1: Informal employment = LFS employment less ES
employment
 Assumption 2: productivity of informal activity with respect to
productivity of small incorporated enterprises remain the same as in the
benchmark year and lower.
 Value added per employee of HUEMs less or equal to a given percentage of
value added of small incorporated enterprises
 Assumptions 1 and 2 are used to estimate value added for HUEMs.
 ADVANTAGES OF THE METHOD:
 If LFS and ES employment are available quarterly and for all regions, it is
possible to estimate GRP quarterly.
 DISADVANTAGES OF THE METHOD:
 LFS focuses on employment of persons at given locations, not location of
employment. Additional information is needed to allow for the reclassification
of employment by place of residence to employment by place of work.
Household activities measurement: ATERNATIVE
II: full-fledged household survey: Case of Laos
(Diary still used in Japan)
Any given
household except
expatriates and
military barrack
Questionnaires to
get following
information for
the year
Farm activity: quantity,
values by types of
agricultural output:
crop, livestock, poultry
Agricultural
production
household
Nonfarm activity:
sales, number of
employees
Household
purchases and
sales of
household
durables and
semidurables
Nonfarm business
production
household
Nonproduction
household
Diary of
transactions in
one month of the
year
Material and
labor cost of
household own
construction of
new buildings
and extension
Household
income and
transfers,
borrowing and
lending, with
interest rate (for
last week)
Household activities measurement:
Alternative II
Classify a given
recorded household
transaction
What is the purpose of the
transaction (sale, purchase,
own produced, etc.)?
For Business
for Agriculture
For personal use
Agricultural activity
(See table 2.10)
Nonfarm business activity
(See table 2.11)
Extrapolation should also be based on LFS
Nonproduction activity for
household final
consumption expenditure
(table 2.12)
An integrated survey program to satisfy
both national and regional accounts
 Benchmark surveys: every five years. Benchmark
household survey (whatever form) may take place every
five years.
 Quarterly and annual estimation, separately for:






Agriculture (cultivated land area and yield rate)
Other non-agricultural own final consumption (a fixed ratio of
agriculture?)
Unincorporated informal activities: employment
Incorporated activities: sampling survey
Government activities: budget data
Non-profit institutions serving HH: employment
 Countries need to collect employment data by developing
both regular Establishment Survey and Labor Force Survey.
Probably the most economic way to collect information on
household activities.
Application on regional value
added estimation/extrapolation
 Assumption: Informal employment is assumed to be the
difference between LFS employment and ES employment.
 Productivity adjustment: Productivity difference between
formal and informal activities by activity need to be
introduced to estimate corporate employment equivalent.
This can be done at:
 Industry average for corporations or
 Industry average for only small incorporated enterprises if
data are regularly available.
 Use corporate employment equivalent to estimate regional
output and value added.