Transcript Index of the Use of Human Capacity: Measurement and

The Measurement of Informal
Sector and Employment:
Case Study of Palestine
Saleh ALKAFRI
Director General of Economic
Statistics,
Palestinian Central Bureau of
Statistics (PCBS),
Ramallah, Palestine.
[email protected]
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Contents:
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What is the informality?
Why measuring the informality is
important?
How can it be measured?
Recent case in Palestine Q4 2008
Data Analysis
Conclusions and Recommendations
2
Introduction
3
The concepts and definitions:
Informal Sector (IS)-15th ICLS
Economic perspective
The informality absorbs the national resources by declining
the capital revenues in cash as tax and productivity; and
in physical as human capital resources.
 Depending on that view, the following criteria can describe
the Informal sector (IS) and Informal employment (IE):
The main criteria of IS:
 Legal organization (unincorporated enterprise);
 Some of product destination go to the market;
 Do not have complete set of accounts;
 Do not pay TAX / do not have tax records

4
The concepts and definitions:
Informal Employment (IE)
The main criteria:
 Own-accounts workers who are producers for own final use
only
 Own-accounts workers who are producers for sale or
barter working in IS
 Employers working in IS
 All contributing family workers
 Employees working in IS (ruling out the possibility of
formal job contract in the IS)
 Employees with IJ working in IS enterprises and
unincorporated private enterprises engaged in non-market
production
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The concepts and definitions:
Informal jobs (IJ)-UNPROTECTED
-social protection
The main criteria to classify the IJ are:
 Annual/sick/maternity paid leave
 Contributed in the social protection if
available or Retirement system, or
compensation of the end of the services
 Contract available
The people classified as Formal
Employment if at least have Formal Job
Source: ILO, 2008. Unprotected Employment in the West Bank and Gaza Strip.
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Importance of Measuring Informal
Sector
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Statistically: improving labor stat. and
contributing towards exhaustive
measures of GDP
Economically: represent one of the main
negative factors of development of the
nations in the long run, i.e. reduction of
gov. revenues and reallocation of income.
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The main indicators:
The Indicators:
 The Percentage of Informal Production Units
(enterprises) of total ent.
 The Percentage of Employed Persons in Informal
Sector of total employment
 The Percentage of Informal Sector Share of GDP
 The Percentage of Informal/Unprotected
Employment
 The Characteristic of Informal Sector
 The Characteristic of Informal/ Unprotected
Employment
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Methodology
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Methodology
Collect and study available data
 Specifying the weakness of of the
current data to measure the
informality and its characteristics
 Designing suitable survey to obtain
the missing information for this
purpose
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Available resources and data
Population Census, Dec. 2007
Includes: unincorporated enterprise classified by inside/outside the
establishments [Own-accounts workers and employers + place of work]
= give us a framework for all unincorporated enterprises outside
establishments as main job for workers distributed by economic activities
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Establishments Census , 2007
Includes: provide us with framework for all (inside) establishments (gov.
NGO’s, private,..) distributed by legal status and economic activities,
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Annual Economic Surveys, 1994-2008 (non-agricultural sectors)..
Include: the main questions of informal sector [complete set of accounts and
pay tax or not]. Include also the main economic indicators i.e. value
added, production,.. COVER the inside establishments
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Quarterly Labour Force Survey, 1995-2009 ..
Include:after Q4 2008, cover questions to classified the employed persons to
informal employment and to find the informal unincorporated enterprise
as 1st phase of 1-2 survey. LFS sample is rotation sample.

Construction Survey and Transportation Survey to cover the outside
establishments
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Weakness and Obstacles
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There is no specialized surveys for measuring the informality
The available surveys/censuses can provide us with partial
information reflecting the state of different periods
There are dramatical changes in the informal sector state due to
the crises of Gaza.
The unstable labour market in Palestine cause difficulties in
depending on the census to calibrate the weights.
Less details specially for unincorporated enterprises outside
establishments or unincorporated enterprises engaged at least
partially in the market production (HUEMs)
Special case in Palestine, the population census 2007 did not
complete in Gaza Strip (1/3 of the Palestinian Ter.) which made
lack of data on HUEMs
Missing core variables in LFS
12
Utilizing the current LFS to
be part of 1-2 survey
To estimate the informal
sector/employment and to avoid the
obstacles, PCBS conducted 1-2
survey by using the available
standard LFS
 1-2 survey was conducted on 4th
quarter of 2008
 The survey includes 2 phases
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1-2 survey
cont
.
The objectives of the 1st phase are:
 Identify and construct a sampling
frame of HUEMs among the
enterprises in which employed
persons work;
 Estimating the IE/IJ – unprotected
employment
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1-2 survey
cont
.
The objectives of the 2nd phase are:
 Estimating the number of HH projects in
the IS
 Estimating the number of employment
and their compensations in IS
 Estimating the other economic indicators
for IS i.e. VA, output,… to use it for GDP
estimate
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1-2 survey
cont
.
PCBS employed the standard
quarterly LFS as the 1st phase
 With some additional questions,
phase 1 was completed
 The following structure shows the
additional questions to the standard
questionnaire of LFS:
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1st
IS classification
LFS questionnaire:
Questionnaire
Stabdard LFS questionnaire
Employed Person
Employer/own-account worker
Unincorporated enterprises owned by households
all/part of Production for the market
Non-availability of complete set of accounts
the enterprise registered
the enterprise not registered
Pay tax
does not pay tax
others
see the next slide
others
only for self exp.
Availabile
Classified by main and
secondary jobs
IS: Informal Sector
IE: Informal Employment
skip to the phase 2
[IE/IJ]
[IS]
IJ: Informal Job
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1st Questionnaire
IE/IJ classification
LFS questionnaire:
Other employment [Cont.]
Unpaid family members
IE/IJ
Wage employees
Gov./NGO/UNRWA/private
Employer/own-account worker
IE/IJ if IS
Place of work pay tax or not
enterprise size
work nature
perminant/temporary/seasonal...
Classified by
main/secondary jobs.
contract availability
paid leave/ retirement/ social security system
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Methodology: 1-2 survey
The questionnaire-2nd phase:
The questionnaire includes the following:
 No. of workers and their compensations
 The production value from the main and
secondary economic activity
 The inputs and production for marketing
 Data about employer
 Data about the establishment
organization
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Methodology: 1-2 survey
Estimation Procedure: The Sample
phase 1 depends on LFS sample design
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The LFS uses a stratified two-stage sampling design. It is carried
out on a master frame of 481 primary stage units (enumeration
units demarcated in the population census 1997). The rural,
urban areas and the refugee camps of each governorate are
defined as separate strata.
The sample of primary stage units constituting the master frame
is selected using a probability proportional to size systematic
scheme, independently from each stratum. The size variable
used for this purpose is the population of the enumeration area
according to the last population census.
Rotation Sample. The LFS is carried out in rounds of three
months. For each round, a sample of households drawn by
systematic sampling is used. Half of the sample of households is
rotated in each round.
the estimation procedure to be followed for the phase-1 of ISS
should be exactly the same as that used for the LFS.
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Classifying IE:
Self Emp./Employer
IE if their enterprise IS
Unpaid Family Members
IE
Wage Employees in Government, UNRWA,
NGO’s, International Organizations
IE if: (Part-time or Seasonal/ temporary job)
OR (Full-time and have limited time
contract/no contract) OR (Full-time and Have
contract and have paid leave)
Wage Employees in Private Sector as
Irregular
IE
Wage Employees in Private Sector as Regular
IE if: (place of work do not pay tax) OR (place
of work pay tax and he/she work
part/seasonal / temporary work) OR (place of
work pay tax and he/she work full-time and
have limited time contract/no contract) OR
(place of work pay tax and he/she work fulltime and Have contract and have paid leave)
IJ: IE in main or secondary jobs. IE = if at least the employed
person has Formal Job, he/she will be Formal Employment
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Methodology: 1-2 survey
Estimation Procedure for phase 2
Methodology of Weights Calibration
for the informal Sector Survey (Phase 2)
We divided the enterprises into 2 types
 Inside Enterprises Projects
 Outside Enterprises Projects
Part 1 : Inside Enterprises Projects
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1.
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The design Weights for this stage is the individual weight from
Phase 1 (LFS). We used the following sources to calibrate the
design weight which are :
Enterprises Census 2007, we extracted the enterprises which
have the following specifications:
Ownership Private National .
Legal Status individual or partnership.
Active Enterprises.
No Accounting Books.
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Methodology: 1-2 survey
Estimation Procedure for phase 2
Methodology of Weights Calibration
for the informal Sector Survey (Phase 2)
Economic Surveys results 2008 , we extracted the enterprises
which have the following specifications:
•
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Ownership Private National .
•
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Legal Status individual or partnership.
•
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Active Enterprises.
•
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No Accounting Books.
•
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Do not pay Tax
+
The results of the census show
that 78% of establishments do
not have accounting books.
The results of economic survey
show that 60% do not pay tax of
the establishments that do not
have accounting.
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Methodology: 1-2 survey
Estimation Procedure for phase 2
Methodology of Weights Calibration
for the informal Sector Survey (Phase 2)
Weighting Procedure:
1-
We obtained a table of frequencies of Enterprises which have
the above mentioned specifications from Est. Census 2007
and on strata Level.
2-
We estimated the proportion of Enterprises which don’t pay
Value Added Taxes (VAT) on the level of the same strata
which are mentioned above from Est. Survey
3-
We multiplied the results from step1 and step2 to get the
estimation the total count of the informal sector projects
inside the enterprises for each stratum..
4-
we constructed the same strata which are specified before on
the data file of Inside Enterprises Projects, and we estimated
the sum of weights for each stratum.
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Methodology: 1-2 survey
Estimation Procedure for phase 2
Methodology of Weights Calibration
for the informal Sector Survey (Phase 2)
Part 2 : Outside Enterprises Projects
The design Weights for this stage is the individual weight from
Phase 1. We used the following sources to calibrate the design
weight which are
 Labor Force Survey , we extracted all the projects which are
identified as informal sector projects.
 The inside enterprises data file in part1.
 The deference between LFS (all) and economic survey (inside
establishments) = the total of outside enterprises
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The results:
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PRELIMINARY-unpublished yet
37% of projects are informal of all
projects and establishment
45% of projects are informal of total
projects in private sector
Informal sector employed 22% of total
employment
Informal value added represents 8% of
GDP
54% of employment are unprotected
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The results:
PRELIMINARY-unpublished yet
Employment Distribution
IS
FS
Total
IE
FE
Total
141,200
Zero
141,200
40.7%, 100%
0%, 0%
22%, 100%
205,500
295,300
500,800
59.3%, 41.0%
100%, 59%
78%, 100%
346,700
295,300
100%, 54%
100%, 46%
642,000
--
Col.%, Row%
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The results:
PRELIMINARY-unpublished yet
GDP
Current GDP
Covered by
current GDP
5.024 M. US$
IS – outside establishments=260 m. $
Agriculture+Transport.+Construction
IS – inside establishments: all
activities = 105 m. US$
Uncovered
by current
GDP
IS – Outside establishments:
Manufacture+Trade+Service= 40 m.$
FS – Outside establishments:
Manufacture+Trade+Services ??
Estimated
by 1-2
survey –
2nd phase
Will find in the
future
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Data Quality-consistency
with other resources
•Several resources provide us with relative information
•The total projects in West Bank (inside+outside establishment)
from LFS is around the total from 2 sources (establishment survey
and population census)
•In Gaza Strip we faced problem of the lack of data for population
census (outside establishment) and the crises in Gaza made the
comparison so complex
•2nd phase has too small sample (1000 HUEMs)high variance
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Conclusions:
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The results of the available data (i.e., population and establishments
census and economic surveys) at the macro level very close with the 1-2
survey (one year between them)
1-2 survey (phase 2) provides us with complete information on informal
sector to serve the national accounts
Labour Force Survey with the additional questions can provide us with
the basic periodic information on informal sector and employments
The distinguishing between the projects inside and outside
establishments is important when the country conducts an
establishments survey, because it is enough to use LFS to estimate the
main indicators i.e. production of projects outside establishments, and
the establishments survey for inside establishments.
Informal employment reflects the degree of protection.
We have to think deeply about the unprotected people for its importance
in the social and economic stability.
Through 1-2 survey we can estimate the uncovered national accounts for
the projects outside the establishments
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Thanks
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