International standards
concerning
labour market concepts and
definitions
Farhad Mehran
Economic Development Board (LMRA project)
Bahrain, 9 May 2006
Three lectures on labour market data
Labour market concepts and definitions:
ILO international standards (9 May 2006)
Sources of labour market data: A national
statistical programme (June 2006)
Combining data from different sources:
Principles of labour accounting (July 2006)
2
Labour market concepts and
definitions
ILO international standards (5’)
Slide
4
Employment, unemployment (20’)
Slides 5-20
Underemployment, inadequate
Slides 21-28
employment (10’)
Status in employment (5’)
Slides 29-36
Wages (15’)
Slides 37-44
Hours of work (10’)
Slides 45-52
Private/Public sectors (10’)
Slides 53-56
Informal/Formal sectors (5’)
Slides 57-64
GDP and Labour market (5’)
Slides 65-66
Labour productivity (5’)
Slides 67-68
 Bibliography
 Slides 69-70
 Index
 Slides 71-72
p. 1
pp. 2-5
pp. 6-7
pp. 8-9
pp. 10-11
pp. 12-13
p. 14
pp. 15-16
p. 17
p. 17
p. 18
p. 18
3
International labour statistics
Scope of labour statistics
– Economically active population, employment, unemployment,
underemployment
– Income from employment, wage rates, earnings, labour cost
– Normal hours of work, usual hours of work, actual hours worked, and
hours paid for
– Informal sector employment, and informal employment
– Occupations
– Status in employment
– Occupational injuries and diseases
– Labour disputes (& child labour, forced labour, decent work)
International standards
– ILO Convention 160 & ILO Recommendation 170
– ICLS Resolutions
– ILO Manuals on concepts and methods
http://www.ilo.org/public/english/bureau/stat/standards/index.htm
4
Elements of the statistical system
Status in
employment
ICSE 1993
Labour cost,
Productivity
Worker-employer relationship
Wages,
Hours of work
Person
Activity during
reference period
Economically
active population
ICLS 1982
Job
Main tasks
and duties
Occupational
category
ISCO-1988
Establishment
Main goods
and services
produced
Branch of
economic activity
ISIC Rev 3
Enterprise
Nature of
legal entity
Institutional
sector
SNA 1993
5
Economically active population
Definition: All persons of either sex who furnish the supply of
labour for the production of economic goods and services as
defined by the UN systems of national accounts and balances
during a specified time-reference period. 1,2
Long reference
period (e.g.
one year)
Short reference
period (e.g.
one week)
Usually
active
population
Currently active
population
(labour force)
1
ILO, Resolution concerning statistics of the economically active population, employment, unemployment
and underemployment, Thirteenth International Conference of Labour Statisticians, Geneva, October 1982.
2
Hussmanns, R., Mehran, F., and Verma, V., Surveys of Economically Active Population, Employment,
Unemployment and Underemployment: An ILO Manual on Concepts and Methods, ILO, Geneva 1990.
6
(Translated in Arabic, Persian, Portuguese, Russian, and Spanish.)
Pop15+
Conceptual framework
ICLS 1982
Labour
force
Employed
Inactive
Unemployed
of which
Underemployed
7
Definition of employment
Employed
Paid
employment
At work
With a job
but not at work
Selfemployment
At work
With an
enterprise
but not work
8
Definition of “at work”
AT WORK = Performed some work for
wage or salary, or profit or family gain, in
cash or in kind during the reference period
WORK = Engagement in economic activity
SOME WORK = Work for at least one hour
during the reference period
9
Definition of “economic activity”
SNA production boundary
Production of
goods and services
Goods
For market
Services
For own final
consumption
For market
For own final
consumption
Collecting
Fire woods
Carrying water
at long distances
10
Definition of “Absence from work”
Persons with a job but not at work = in paid
employment if formal job attachment
Continued receipt of wage or salary
Assurance of return to work
Limited elapsed duration of absence
Persons with an enterprise but not at work
= in self employment if
Continued existence of enterprise
Specific reason for absence
11
Treatment of particular groups
Students, homemakers, pensioners
engaged in economic activity
Contributing family workers (unpaid family
workers)
Producers for own and household
consumption
Apprentices and trainees
Members of the armed forces
12
Standard definition of
unemployment
Without work during reference week
Currently available for work
Actively seeking work in recent
period
Two exceptions
Future starts
Lay-offs
Reference periods
Job search period
Interview date
(Last four weeks)
Basic
reference
period
Last week
Availability period
(Last week + 2 weeks)
Active steps to seek work
Registration at public or private employment
exchange (for the purpose of obtaining a job offer)
Application to employers
Checking at worksites, farms, factory gates,
market or other assembly places
Seeking assistance of friends or relatives
Looking for land, building, machinery or
equipment to establish own enterprise
Arranging for financial resources
Applying for permits and licenses, etc.
15
Reasons for not seeking work
Illness, disability, pregnancy
Child care, family responsibilities
School or other training
Already found work to start later
Awaiting recall to former job
Awaiting replies from employers, results of competitions
Awaiting busy season
Believing no suitable work available (in area or relevant to one’s skills)
Lacking employers’ requirements (qualifications, experience, age, etc.)
Could not find suitable work
Do not know how or where to seek work
Not yet started to seek work
Other reasons (bad weather, holidays, awaiting national service call, near
retirement age, etc.)
16
Extended definition of
unemployment
Partial relaxation of “seeking work”
criterion
Persons temporarily laid off without formal
job attachment
Discouraged workers
Seasonal workers awaiting busy season
17
MoL/BCSR
Labour force
survey
December 2004
Bahraini non-institutional
population (432’400)
292’700
139’700
Non-institutional population 15+
Non-institutional population <15
115’200
Worked last week
Employed
Not worked last week
With a job or enterprise
but not at work last week
177’500
1’800
117’000
18’100
Do not want to
work or disable
157’600
Other reason for not working
27’000
Seeking work last four weeks
Not seeking work
last four weeks
Available for work
within two weeks
Not available for work
within two weeks
130’600
Inactive
149’700
26’000
Unemployed
26’000
1’000
18
Methods of job-search of unemployed Bahrainis
Survey jobseekers
- Ministry of Labour
- CSB
- Employment services
- Newspaper ads
- Internet
- Friends & relatives
- Starting own business
- Other
1
10’600;
2
26’000 search effort =1.7
12’9001 11’778 MoL2003
3’3002
2’862 CBS
3’500
10’500
1’000
8’700
300
4’200 Total=44’400
3
4
2’800 among core jobseekers.
Indicators of the Labour Market 2003-2004, (in Arabic) by Isma Al-Khalifa, Sana Maci, Anwar
Al-Khunaisi, Ministry of Labour, Kingdom of Bahrain, May 2005.
3
4
Civil Service Bureau, Kingdom of Bahrain, Annual Report 2004, p. 13.
19
Reservation wage of unemployed Bahrainis
Reservation wage:
Each worker has a
specific wage rate
that induces him or
her to perform paid
market work. A
worker seeking
work employment
will accept jobs
paying above his
or her reservation
wage, and reject
those paying less.
20
Beyond unemployment
Unemployment and its halo
Underemployment
Over-employment
Soft-employment
Other issues:
– Child labour
– Full-time employment of women with low age children
– Old age without pension
Underemployment and inadequate
employment situations1
Characteristic of “employment”
Based primarily on “current capacities and
work situations of worker”
(not potential capacities and desires for
work)
Judged against “alternative employment
situation in which worker is willing and
available to engage”
1
ILO, Resolution concerning the measurement of underemployment and inadequate employment
situations, Sixteenth International Conference of Labour Statisticians, Geneva, October 1998.
22
Time-related underemployment
Definition:
Willing to work additional hours
Available to work additional hours
Worked less than a threshold relating to
working time
Two particular groups:
Persons who usually work part-time schedules and want to work
additional hours
Persons who during the reference period worked less than their
normal hours of work
23
Inadequate employment situations
Skill-related inadequate employment
wanting or seeking to change their current work situation in order to use
their current occupational skills more fully, and were available to do so
Income-related inadequate employment
wanting or seeking to change their current work situation in order to
increase income limited as result of low levels of organisation of work or
productivity, insufficient tools or equipment and training or deficient
infrastructure, and were available to do so
Inadequate employment related to excessive
hours
wanting or seeking to work less hours either in the same job or in another
job, with a corresponding reduction of income
24
Other forms of inadequate
employment situations
Wanting to change current work situation or to make
changes to work activities and/or environment
For following reasons:
–
–
–
–
–
–
–
Excessive hours of work
Precarious job
Inadequate tools, equipment or training for assigned tasks
Inadequate social services
Travel to work difficulties
Variable, arbitrary or inconvenient work schedules
Recurring work stoppages because of delivery failures of raw
material or energy
– Prolonged non-payment of wages
– Long overdue payments from customers
25
Underemployment and inadequate employment situations
Employed Bahrainis (117’000)
Seeking another job
Not seeking another job
82’600
Reason
34’400
Low income
Income-related inadequate employment
24’500
Inadequate use of qualification
Skill-related inadequate employment
1’300
Short hours of work
Time-related underemployment
100
Long hours of work
Over-employment
1’300
Other reason
7’200
26
27
28
Status in employment1
Classification:
Employees
Employers
Own-account workers
Members of producers’ cooperatives
Contributing family workers
Workers not classifiable by status
1
ILO, International Classification of Status in Employment, Fifteenth
International Conference of Labour Statisticians, Geneva, 1993.
29
Employees
Definition:
Working in “paid employment job”
– Holding explicit (written or oral) or implicit
employment contract
– Remuneration not directly dependent upon the
revenue of the unit for which they work
Remuneration:
–
–
–
–
–
Wages and salaries
Commission from sales
Piece-rates
Bonuses
In-kind payments such as food, housing or training
30
Employers
Definition:
Working on own-account or with one or a few
partners
In “self employment job”: Remuneration is
directly dependent on the profits (or potential for
profits) derived from the goods and services
produced or for own consumption
Engaging one or more “employees,” on a
continuous basis, determined by national
circumstances
31
Own-account workers
Definition:
Working on own-account or with one or a
few partners
In “self employment job
Not engaging any “employees,” on a
continuous basis, during the reference
period
32
Members of producers
cooperatives
Definition:
Working in a cooperative producing goods
and services
In “self employment job”
Engaging or not any “employee” on a
continuous basis
33
Contributing family workers
Definition:
Working in a market-oriented
establishment operated by a household
member, who cannot be regarded as
partner
In “self employment job”
Engaging or not any “employee” on a
continuous basis
34
35
Proportion of employees in total
employment:
International comparison
100%
80%
49.5%
50.8%
57.9%
72.9%
20%
76.2%
86.5%
88.1%
92.4%
40%
95.3%
60%
20
in
04
ga
po
re
20
M
al
03
ay
si
a
20
03
Ita
ly
20
03
E
gy
pt
20
03
Tu
rk
ey
20
E
04
th
io
pi
a
20
04
S
an
y
20
04
A
U
S
G
er
m
B
ah
ra
in
20
04
0%
Source: http://laborsta.ilo.org
36
System of Wages Statistics
Wages as price of labour:
Wage rate1
Wages as income to worker:
Earnings1
Wages as cost to employer:
Labour cost2
Income from employment3
1 Twelve International Conference of Labour Statisticians, Geneva, October 1973. 2 Eleventh
International Conference of Labour Statisticians, Geneva, October 1966. 3 Sixteenth International
Conference of Labour Statisticians, Geneva, October 1998.
37
Wage rate
Definition: Rate of pay per period of time or per unit of
production for an employee on a given job.
Includes:
 Basic wages
 Cost-of-living allowances
 Other guaranteed and regularly paid allowances
Excludes: Overtime payments, Bonuses and
gratuities, Family allowances, Other social security
payments by employers, Payments in kind,
supplementary to normal wage rates
38
Earnings
Definition: Remuneration in cash or in kind paid to employees,
as a rule at regular intervals, for time worked or work done
together with remuneration for time not worked such as
annual vacation and other paid leave or holidays.
Direct wages and salaries
Remuneration for time not worked
Bonuses and gratuities
Payments in kind
Excludes: Employers’ contributions to social security
and pension schemes, severance and termination pay.
39
Labour cost
Definition: Labour cost is the cost incurred by the employer
in the employment of labour.
Earnings
+
Employers’ social security expenditure
Cost of vocational training
Cost of welfare services
Taxes regarded as labour cost
Other (transport, clothing, recruitment)
40
Three types of labour cost
Basic labour cost:
Hourly labour cost:
Unit labour cost:
Labour cost per
worker
Labour cost per hour
Labour cost per unit
of output
Labour cost index: The labour cost index measures the change in labour
cost during a given period adjusted for employment shifts among
occupations and branches of economic activity in that period.
41
Employment-related income
Definition: Payments, in cash, in kind or in services, which
are received by individuals, for themselves or in respect of
their family members, as a result of their current or former
involvement in paid or self-employment jobs.
Income related to paid employment
Earnings
Profit-related pay
Employment-related social security benefits received directly from
employer, or from social security or compulsory insurance schemes or the
State
Income related to self-employment
Gross profit (or share of profit)
Remuneration received by owner-manager of corporations and quasicorporations
Employment-related social security benefits received
Excludes: Income derived from property income, annuities, gifts, etc. and
allowances paid by social security schemes or the State without regard to
employment status
42
Jordan 1997
Economic
activity
Isic
Earnings
Rev 3
Labour
cost *
Dinars/Month
Dinars/Year
Ratio
Textile
17
151.8
1980
1.09
Office
machinery
TV, radio, etc
30
196.7
3009
1.27
32
193.5
2050
1.65
* Compensation of employees
43
Labour cost = wage rate * (1 + r) + a
r = variable component
a = fixed component
44
Hours of work1
Normal hours of work
Actual hours worked
Usual hours of work
Hours paid for
1
Tenth International Conference of Labour Statisticians, Geneva, October
1962.
45
Normal hours of work
Definition:
Hours of work fixed by or in pursuance of
– laws and regulations
– collective agreements
– arbitral awards
(If not fixed as above) Hours of work in excess of
which
– remuneration is at overtime rate, or
– forms an exception to the rules or customs of the
establishment relating to the class of workers
concerned
46
Actual hours worked
Definition:
Hours worked during normal hours of work
Overtime work
Time spent at the place of work on
– preparation of work
– waiting or standing by
– short rest periods including tea or coffee
breaks
47
Hours paid for
Definition:
Hours actually worked
Hours paid for but not worked
– Paid annual leave
– Paid public holidays
– Paid sick leave
– Paid meal breaks
– Time spent travelling between home and
workplace
48
Usual hours of work
Definition:
Hours worked in an activity during a typical
week
Calculation:
Modal value of hours actually worked per
week over a long period
49
Hours worked:
International comparison
60
Actual hours worked
Hours paid for
50
40
30
20
38.9
42.9
43.4
49.3
34.1
31.9
10
0
Italy
2003
Bahrain
2004
USA
2004
Source: http://laborsta.ilo.org.
Turkey
2004
USA
2004
Canada
2004
50
51
52
Institutional units
Household
Legal or social entity
Household unincorporated
market enterprise
Government unit
Household enterprise
producing for own final use
Corporation
Other types of household
Company
Partnership
Definition of an institutional unit:
An economic entity that is capable, in
its own right, of owning assets,
incurring liabilities and engaging in
economic activities and in
transactions with other entities.
Cooperative
Proprietorship
Other legal forms
Non-profit institution
http://unstats.un.org/unsd/sna1993/toctop.asp
53
Institutional units by sector
Sectors
Institutional
units
Corporations1
Nonfinancial
corporatio
ns sector
x
Financial
General NPI
corporations govern serving
sector
ment
hslds
sector
sector
x
Government
units
Non-profit
institutions
Households
Household
sector
x
x
x
x
x
x
1 Including all quasi-corporations, whether owned by households, government units or non-resident
institutional units.
54
Public – Private sector boundaries1
Total economy
Public sector
Non-market
sector
“controlled + mainly financed”
Ability to determine the entity’s general corporate
policy, by appointing directors, if necessary
Market sector
General
government
Private sector
“economically significant
prices” Prices that have a significant influence
Public
corporations
on the amounts the producers are
willing to supply and on the amounts
the purchasers wish to buy
Public non-financial
corporations
Public financial
corporations
United Nations, “Government/Public Sector/Private Sector Delineation Issues,” Task Force on Harmonisation of Public
Sector Accounting, Fourth meeting of the Advisory Expert Group on National Accounts, 30 January – 8 February 2006,
55
Frankfurt, SNA/M1.06/17.
1
Public sector employment in
Bahrain, 2004
Sub-sector
Total
employed
Government services and public
83’800
Bahraini
employed
49’300
administration
Public non-financial
corporations
Public financial corporations
Other (education and health?)
Total
(32%/49% of total employment)
13’100
9’100
700
600
97’600
59’000
Source: Ministry of Labour, Bahrain Centre for Studies and Research, Labour Force Survey, December 2004.
56
Domestic workers
Free visas
Ghost workers
57
Informal
Informal sector 1
- Economic units with informal features
Informal employment 2
- Jobs with informal features
1
ILO, Resolution on the measurement of employment in the informal sector,
Fifteenth International Conference of Labour Statisticians, Geneva, January
1993.
2
ILO, Guidelines on statistics of informal employment, Seventeenth
International Conference of Labour Statisticians, Geneva, November 2003.
58
Informal sector enterprises
Subset of household enterprises
(SNA unincorporated enterprises owned by
households)
Informal own-account enterprises
– Either all own-account enterprises
– Or, only those that are not registered under specific forms of national
legislation
Enterprises of informal employers
– Small in terms of employment
– Not registered (in the same sense as for informal own-account
enterprises)
– Non-registration of its employees
59
Household
sector
Employers
Enterprises
of informal
employers
Own-account
workers
Informal
own-account
enterprises
Informal
sector
Employees
Recipients of
property and
transfer incomes
Recipients of
property income
Recipients of
pensions
Recipients of
other transfer
incomes
60
Informal employment
Combination of following criteria:
 Written or oral contract
 Paid annual leave
 Paid sick leave
 Employer’s contribution to social security
schemes
61
Employment in the Informal Economy
(Brazil, percentages, 1999)
Informal
employment
Formal
employment
Informal sector
A
(33.1%)
B
(4.7%)
Other sectors
C
(27.4%)
D
(34.8%)
Employment in the informal sector:
A+B
Informal employment:
A+C
Informal employment outside the informal sector: C
Employment in the informal economy:
A+B+C
(37.8%)
(60.5%)
(27.4%)
(65.2%)
62
63
64
GDP and the Labour Market
1
Population
2
2/1
3
Population
15+
Labour force
3/2
Proportion of population
aged15 years and over
Labour force participation rate
4
Employed
4/3
1-Unemployment rate
5
Hours worked
5/4
Average hours worked
6
GDP
6/5
Labour productivity
6/1
GDP per capita
65
Labour productivity
Amount of output per unit of labour
Value-added based measure:
Quantity index of value added
Quantity index of labour input
Output based measure:
Quantity index of gross output
Quantity index of labour input
67
Labour market trends in
Bahrain and the World
Labour productivity
per hour
100%
7.0
BD per hour
90%
6.0
80%
70%
World 2004
World 2001
Bahrain 2004
World 2004
World 2001
Bahrain 2004
Bahrain 2001
World 2004
20%
World 2001
30%
Bahrain 2004
40%
Bahrain 2001
50%
Bahrain 2001
60%
5.0
4.0
3.0
2.0
10%
0%
Non-oil
Non-oil market
Bahrain market sector
Bahrain 2004
sector 2004
2001
2001
World
2001
World
2004
1.0
Percentage pop 15+
LFPR
Employment rate
Labour productivity (BD per hour)
68
Bibliography
http://www.ilo.org/public/english/bureau/stat/standards/index.htm
http://laborsta.ilo.org
http://unstats.un.org/unsd/sna1993/toctop.asp
http://web.worldbank.org
ILO, Resolution concerning statistics of hours of work, Tenth International
Conference of Labour Statisticians, Geneva, October 1962.
ILO, Resolution concerning statistics of labour cost, Eleventh International
Conference of Labour Statisticians, Geneva, October 1966.
ILO, Resolution concerning an integrated system of wages statistics, Twelve
International Conference of Labour Statisticians, Geneva, October 1973.
ILO, Resolution concerning statistics of the economically active population,
employment, unemployment and underemployment, Thirteenth International
Conference of Labour Statisticians, Geneva, October 1982.
ILO, International Classification of Status in Employment, Fifteenth International
Conference of Labour Statisticians, Geneva, 1993.
ILO, Resolution concerning of statistics of employment in the informal sector,
Fifteenth International Conference of Labour Statisticians, Geneva, January 1993.
ILO, Resolution concerning the measurement of employment-related income, Sixteenth
International Conference of Labour Statisticians, Geneva, October 1998.
ILO, Resolution concerning the measurement of underemployment and inadequate employment
situations, Sixteenth International Conference of Labour Statisticians, Geneva, October 1998.
69
Bibliography (cont’d)
ILO, Guidelines on statistics of informal employment, Seventeenth International
Conference of Labour Statisticians, Geneva, November 2003.
ILO, Hussmanns, R., Mehran, F., and Verma, V., Surveys of Economically Active
Population, Employment, Unemployment and Underemployment: An ILO Manual on
Concepts and Methods, ILO, Geneva 1990. (Translated in Arabic, Persian,
Portuguese, Russian, and Spanish.)
Kingdom of Bahrain, Ministry of Labour, and Bahrain Centre for Studies & Research,
Labour Force Survey, December 2004, SPSS data file.
Kingdom of Bahrain, Central Informatics Organisation, Census of Population,
Housing, Buildings, and Establishments – 2001, Part two The Demographic, Social,
Economic Characteristics of the Population, Housing, Buildings and Establishments,
December 2004.
Kingdom of Bahrain, Civil Service Bureau, Annual Report 2004, p. 13.
Kingdom of Bahrain, Ministry of Labour, Indicators of the Labour Market 2003-2004,
(in Arabic) by Isma Al-Khalifa, Sana Maci, Anwar Al-Khunaisi, Ministry of Labour,
May 2005.
United Nations, “Government/Public Sector/Private Sector Delineation Issues,” Task
Force on Harmonisation of Public Sector Accounting, Fourth meeting of the Advisory
Expert Group on National Accounts, 30 January – 8 February 2006, Frankfurt,
SNA/M1.06/17.
70
Index
Economically active population
Currently active population
Usually active population
Labour force
Labour force participation rate
Economic activity
Production boundary
Work
Employment
Employment-population ratio
Seeking work
Availability for work
Unemployment
Unemployment rate
Seasonal worker
Discouraged worker
Underemployment
Time-related underemployment
Inadequate employment
Skill-related inadequate
employment
Income-related inadequate
employment
Over employment
Job
Occupation
Branch of economic activity
Absence from work
Formal job attachment
Paid employment job
Self-employment job
Status in employment
Employee
Employer
Own-account worker
Unpaid family worker (Contributing
family worker)
Member of producer’s cooperative
71
Index (cont’d)
Wages
Wage rate
Earnings
Labour cost
Labour cost index
Unit labour cost
Hourly labour cost
Employment-related income
Hours of work
Normal hours of work
Actual hours worked
Usual hours of work
Hours paid for
GDP
Goods
Services
Value added
Labour productivity
Establishment
Institutional unit
Enterprise
Corporation
Quasi-corporation
Government unit
Non-profit institution
Public sector
Private sector
Market sector
Non-market sector
Household sector
Informal sector
Informal employment
Informal economy
Hidden economy
Unrecorded activities
72
Questionnaire
1. Among the topics discussed in the
lecture, which do you think are
more relevant for the analysis of
the labour market in Bahrain?
a. _________________________
b. _________________________
c. _________________________
2. Are there any other topics not
discussed in the lecture that you
think should be included in
relation to the analysis of the
labour market in Bahrain?
a. _________________________
b. _________________________
c. _________________________
3. Which topics have been the most
clearly described?
a.
________________________
b.
________________________
c.
________________________
4. Which topics, in your view, require
further clarification?
a. _________________________
b. _________________________
c. _________________________
5. Were the numerical examples
appropriate for comparing
Bahrain in relation to other
countries?
a.
Yes, explain ______________
b.
No, explain ______________
73