Measurement of Informal Sector and Employment: Case study of Palestine Saleh Alkafri

Discussant Derek Blades

ILO definitions• Informal enterprises (unincorporated,

unregistered, do not pay taxes)

• Informal employment ( working in informal enterprises, own account workers for own final use only)

• Informal jobs (no written contract, no social security)

ILO Indicators

• % informal enterprises

• % informal employment

• % informal GDP

• % of informal/unprotected employment

• Kinds of activity of informal enterprises

• Occupations of informal employees

Data problems

• Problems common to most countries– No dedicated surveys of informal sector– Amount of detail from surveys decreases as

enterprises get smaller• Conflict– Gaza excluded from population census– Gaza destruction– Disruption of economic life in the West Bank by

occupation

1 – 2 Survey• First survey is Labour Force Survey

• Identifies persons/households employed in informal jobs

• Second survey focuses on these persons/households

• Sampling and weighting issues

• LFS first modified to 1-2 format in Q4 2008

• Some preliminary results

Some results

• 37% of all enterprises are informal

• 45% of all private sector enterprises are informal

• Informal sector employed 22% of total employment

• Informal value added represents 8% of GDP

• 54% of employees are unprotected

Some results: employment

Informal employment

Formal employment

Total

Informal sector

141 200(41%)

Zero(0%)

141 200(22%)

Formal sector 205 500(59%)

295 300(100%)

500 800(78%)

Total 346 700(100%)

295 300(100%)

642 000(100%)

Why measure informal?ILO Approach

• Standard definitions for enterprises, employment, jobs

• Standard indicators of size of informal sector, informal employment

• International comparability

Broader approach

• Improve labour statistics• Exhaustive national

accounts• Looser definitions adapted

to each country• No measure of “informal

sector” as such. • Information for policy

purposes.

Information for policy

• Survival strategy or business opportunity• Kinds of activity• Main or secondary source of income• Labour productivity• Age, gender, education of informal workers• Access to bank credit• Barriers to growth

Taxes are a delicate matter

• Can we ask – “Do you pay taxes?”

• Can we ask – “Does your employer pay taxes?”

• Should we ask these questions?

• Reliability of answers?

• Danger of linking statistical office with the tax

authorities

Four questions

• What is meant by “projects”? • What are “inside” and “outside”

enterprises?• What lessons for the next 1-2 survey• What is informal employment in the

formal sector?

Some results: employment

Informal employment

Formal employment

Total

Informal sector

141 200(41%)

Zero(0%)

141 200(22%)

Formal sector 205 500(59%)

295 300(100%)

500 800(78%)

Total 346 700(100%)

295 300(100%)

642 000(100%)