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THE INFORMAL SECTORin the 1993 SNA, Rev.1

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IVO HAVINGA, UN Statistics Division CAROL CARSON, Project Manager

Session on the Non-observed Economy Joint National Accounts Meeting

April 25-28, 2006 Geneva

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Plan of the presentation Informal sector in the SNA Update process

Context: Why is the informal sector an important issue for the update of the 1993 SNA?

Definition of the informal sector: differences between the ICLS (ILO) concepts of employment in the informal sector/informal employment and the SNA framework

Draft annotated outline of a chapter on the informal sector in the 1993 SNA, Rev.1

Looking ahead

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Thus far in the update process

Building on earlier discussions, the January-February AEG agreed that…

differences in terminology should be reconciled, differences in the definitions of market and non-

market should be considered, questions of comparability should be explored, the new SNA chapter should provide a good

introduction without attempting include all the material of a handbook.

The Statistical Commission, last month, welcomed the chapter on the informal sector

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Context: Policy relevance of measurement of the informal sector

Links to development objectives on… income generation, employment creation and poverty reductionand to the design and monitoring of targeted support

programs

Informal sector’s contribution to non-agricultural GDP 27 percent in northern Africa 41 percent in Sub-Saharan Africa 29 percent in Latin America 31 percent in Asia

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Context: Selected developments in methods and practice since 1993

Papers of Delhi Group on Informal Sector Statistics

UN handbook Household Accounting: Experience in Concepts and Compilation, Volume 1: Household Sector Accounts

Measuring the Non-observed Economy: A Handbook by OECD, IMF, ILO and CISSTAT

UNECE manual Non-observed Economy in National Accounts

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Context: Calls for guidelines

Issue in the work on the 1993 SNA; placed on the research agenda

Statistical Commission 2004 reiterated collaboration between UNSD and the Delhi Group on informal sector

Forthcoming publication Surveys of Informal Sector and Informal Employment

Collaborative effort of ILO and members of Delhi Group

Chapter on uses of informal sector data for national accounts purposes

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Definition of the informal sector

Differences between ICLS and SNA… in terminology in segmenting the economy in the use of enterprise-based criteria in the universe of household enterprises

would be key points for discussion in the new chapter. What are these differences?

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Terminology

The ICLS use of “sector” does not match the definition in the SNA.

The word “informal” has several meanings: May imply a formal-informal sector

distinction between household enterprises.

Can refer to exhaustiveness of data collection practices as well as a production unit with specific characteristics.

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Terminology (2)

The ICLS use of “households” is narrower than the meaning in the national accounts framework.

National accountants consider the “formal” segment of enterprises to be confined to institutional sectors other than the household sector.

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Segmenting the economy

ICLS uses non-registration to identify informal enterprises within household enterprises; in many countries this may coincide with lack of legal status and of accounts.

ICLS refers only to production units that engage labor as input; national accounts refer also to those that do not use labor inputs.

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Use of enterprise-based criteria

Criterion for market productionSNA: market producers are those

that sell “most or all” of their production on the market at economically significant

prices. ICLS: uses the phrase “some or all”.

Conceptual and practical advantage of “some or all” criterion.

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Use of enterprise-based criteria (2)

Possible grouping for macroeconomic statistics on the informal sector:

Household enterprises with employmentEnterprises with market production

Informal sector enterprisesOther household enterprises

Enterprises with only production for own final use

Household enterprises without employment

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Universes of household enterprises

With and without labor input (SNA) versus with labor inputs (ICLS) (noted above)

All economic activities (SNA) versus non-agricultural activities (ICLS)

…

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Points for discussion

What are views … about the differences listed—for example, which

are most important in practice?

about the ICLS “some or all” criterion used in identifying market producers? Does it have potential as an application for analysis and policy?

about international comparability—should further attempts be made to identify groupings, including the informal sector, that have greater cross-border and cross-region comparability?

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Draft outline of chapter

Introduction The informal sector: a broad statistical

perspective Definition of the informal sector Other concepts Measurement

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Points for discussion

Are there relevant topics that are missing from the outline?

Are there views about the balance to be struck—that the chapter should be an introduction, not a handbook? What could be omitted from the outline?

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Looking ahead

AEG sub-group

Collaboration with ILO and Delhi Group

Forums to test plans and drafts (e.g., UNECE April, Delhi Group, regional meetings)

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Thank You

Ivo Havinga at havinga@un.org Carol Carson at ccarson@imf.org