Report of the Fifth Meeting of the Expert Group on Informal Sector Statistics (Delhi Group)

1. Organisation of the meeting

   The fifth meeting of the Expert Group on Informal Sector Statistics (Delhi Group) was organised and hosted by the Ministry of Statistics and Programme Implementation, Government of India in New Delhi during the period 19-21 September 2001.

   • 1.1Participants

     Representatives from five countries viz. India, Indonesia, Korea, Mexico and Nepal, the international organisations ILO and ESCAP and other organisations viz. Women in Informal Employment – Globalising and Organising (WIEGO), Gujarat Institute of Development Research (GIDR), National Council for Applied Economic Research (NCAER), Socio Economic Research Centre (SERC), Self Employed Women’s Association (SEWA) and National Commission on Labour participated in the meting.In all 37 participants attended the meeting. List of participants is at Annex-I.

   • 1.2 Inauguration

     Mr.K.V.Irniraya, Secretary, Ministry of Statistics and Programme Implementation, Government of India and Chairman of the Delhi Group welcomed the participants and opened the meeting.He was happy to note that the development of informal sector statistics was high on agenda in many countries as was evident from the participation of a number of experts in the meeting despite the tragic events in America and its adverse impact the world over.He gave a brief historical background about formation of Delhi Group and the work done by it in the past.Outlining the agenda before the Group, he expressed the hope that the issues would be carefully analysed and deliberated upon before arriving at suitable recommendations for future programme of work in the field.

   • 1.3 Agenda

     The agenda of the meeting was adopted as follows:

     1. Inaugural session
     2. Technical sessions

        The issues deliberated upon in the technical sessions were:

         

        1. Application of the informal sector definition: treatment of persons at the borderline between own-account workers and employees;
        2. Development of criteria for the identification of persons in informal (or precarious, non-standard etc.) employment inside and outside the informal sector; 
        3. Sampling frames and designs for mixed household and enterprise surveys;
        4. Evaluation of informal sector survey data and measures for quality improvement,
        5. Country Experiences and others, and
        6. Future work programme
     3. Adoption of the recommendations of the meeting
     4. Closing of the meeting

   Closing of the meeting

   The meeting designated Mr. Jacques Charmes (WIEGO) as Chairperson for Session I, Dr. N.S. Sastry as Chairperson for Session II, Mr. Ralf Hussmanns, Chairperson for Session III and presentation of recommendations , Mr. Loh Meng Kow, Chairperson for Session IV and Mr. M.G. Sardana, Chairperson for Session V. The following participants were designated as Rapporteurs: Dr. G.M. Boopathy for Session I, Dr. Rattan Chand for Session II, Mr. P.S. Bose for Session III, Mr. G.C. Manna for Session IV and Mr. T.V. Raman for Session V.For overall coordination, Dr. G. Raveendran was designated as Chief Rapporteur, Mr. P.H. Khopkar for technical aspects and Mr. A.K. Sharma for Administrative aspects.

   • 1.4 Documentation

     Sixteen papers, as listed in Annex-III, were presented during the meeting.

2. Technical sessions
   • 2.1 Summary Report on Session One

     Topic 1:Application of the informal sector definition: treatment of persons at the borderline between own-account workers and enterprises. 

     Papers presented

     1. Treatment of out-workers in International Classification of Status in Employment - Loh Meng Kow, ESCAP
     2. Application of informal sector definition : home based workers – Suman Bery, NCAER
     3. Application of the informal sector definition: Treatment of persons at the borderline between own-account workers and employees – Jyong Lee, Bank of Korea
     4. Application of the informal sector definition: Treatment of persons at the borderline between own-account workers and employees – India

     The paper by Loh Meng Kow, ESCAP discusses the issue on including ‘dependent workers’ as a separate category at the first digit level in the International Classification of Status in Employment (ICSE-93).It discusses the characteristics of the economic activities of this group of workers that are quite different from other entrepreneurs in the informal sector.The paper indicates that ESCAP Committee on Statistics at its twelfth session considered this issue but did not endorse the inclusion.The Expert Group was requested to deliberate the issue, and to make a recommendation.”

     The second paper by NCAER was based on a study “Outsourcing of manufacturing households: subcontracted Home-based work in India,” covering three sectors viz. agarbathi – incense sticks, bidi rolling – tobacco rolled in tendu leaf and zardosi – gold thread embroidery on finished garments. The study revealed that (i) outworkers carried out their activities as secondary activities (ii) shifting between status of worker: same worker could be own account/self employed at one point of time and sub-contracted at another and(iii) the existence of ‘centres’ – a place where workers come together to work under the supervision of a sub-contractor (not the work places of employers). Home based workers were found to shift between work at home and work in such centres depending on availability of work.

     The paper by Mr. Jyong Lee of Bank of Korea emphasised the need for clearly defining the self-employed worker and out worker and conducting specific surveys on self-employed workers

     India’s paper brought out the procedure followed in the categorisation of certain economic activities performed by individuals which were in the borderline of enterprises based on possession of productive assets and entrepreneurial activity, in the first ever national survey on informal sector carried out during 1999-2000.

     After considerable discussion, the Group observed that it may be difficult to identify the dependent home-workers and these workers can form part of all categories of employment. Depending upon their employment relationships and types of contracts, home workers can be found in any category of status in employment. Home-workers should therefore, be identified through the variable “place of work” in conjunction with existing other variables, rather than as a separate category of status in employment

     In order to define the criteria for the distinction between independent and dependent home-workers, as well as between own-account workers and employees in general, questions on the type of contractual arrangements may be included in surveys. Such questions are likely to provide better results than a self-assessment of status in employment by respondents.

   • 2.2 Summary Report on Session Two

     Topic 2: Development of criteria for the identification of persons in informal employment inside and outside the informal sector.Papers presented Informal Sector and Informal Employment; Elements of a conceptual framework – Ralf Hussmanns, ILOEmployment in the Informal Sector and Informal Employment: New Insights from Recent Surveys in India, Kenya and Tunisia – Jacques Charmes & Jeemol Unni, WIEGO The Mexican Experience: Why Employment in the Informal Sector and Vulnerable employment should not be deemed as one and the same – Rodrigo Negrete, INEGICasual Employment in Australia, Zia Abbasi, ABS, Australia (Read in absentia).Unorganised Sector – T.C. Girotra, National Commission on Labour, India.The paper by Ralf Hussmanns presented elements of a conceptual framework and definitions that would make it possible to complement statistical measures of Informal Sector or employment in the Informal Sector with Statistical measures of Informal Employment.The paper suggested that both these measures are useful for analytical purposes but the two concepts need to be defined in such a way that one can be clearly distinguished from the other.The paper by Jacques Charmes and Jeemol Unni attempted measurement of employment in the informal sector and of Informal employment in India, Kenya and Tunisia.The combined use of the residual method and direct survey method has been used in this study, which may be a step toward a better understanding of informal employment in its wide sense.The paper by Rodrigo Negrete presented the Mexican experience and emphasised that people working under informal labour relationship are part of a phenomenon that goes far beyond the mere employment linked to the informal sector.The paper by Zia Abbasi mainly presented the results of the ‘Survey of Employment arrangements and Superannuation’ conducted during April – June, 2000 and analysed the results in the context of casual employment in Australia The last paper by Mr. T.C. Girotra presented problems and characteristics of the workers that can be used to identify the Informal Sector workers from the point of view of Indian Labour Commission.He also stressed the need for reliable statistics on the subject.The issues relating to measurement of Informal Employment were discussed in detail by the Group.The Group observed that the proposed framework (by Ralf Hussmanns, ILO) for measurement of informal employment has been exposed for the first time before any international Group and it has not yet been tested in the context of any country.It was a generally felt that the concept of Informal Employment and its measurement was useful and necessary for use in Labour Force Surveys.The proposed framework was however, required to be tested at least in some countries before the same was recommended for adoption by all the countries.It was, therefore, recommended that the members of the Delhi Group, as well as other countries, must be encouraged to test on the basis of available data the conceptual framework developed by ILO for relating the measurement of employment in the informal sector to the measurement of informal employment within a labour force framework. Experiences should be reported to the next meeting of the Delhi Group to evolve an operational definition of informal employment and measurement methods for the same.

   • 2.3 Summary Report on Session Three

   Topic 3:  Sampling frames and designs for mixed household and enterprise surveys

   Papers presented

   Sampling frames and Designs for Mixed Household and enterprise Surveys ­India

   There was only one Paper in the Session prepared and presented by the Indian National Sample Survey Organisation.The paper entitled “Sampling Frames and Designs for Mixed Household and Enterprise Surveys” gave an overview of the Indian Informal Sector Survey carried out in NSS 55th Round (1999-2000).It discussed the approaches available for data collection on informal sector as recommended in the 15th ICLS (1993).It also highlighted in detail the Sampling Frames and Sampling Designs adopted for the Enterprise Surveys in the NSS.It was followed by highlighting of the salient features of the Sampling Design adopted in the NSS 55th Round.Finally, the paper suggested that steps like separate survey of bigger enterprises, adoption of panel surveys for obtaining better estimate of change over time and creation of public awareness for furnishing correct information, would improve the reliability of enterprise survey estimates in the coming years.

   The participants appreciated the paper as it provided a detailed and systematic description of the survey methodology

   • 2.3 Summary Report on Session Four

   Topic 4:Evaluation of informal sector survey data and measures for quality improvement.

   Paper presented

   Evaluation of Informal Sector Survey Results: The Indian Experience ­India

   The paper compared the informal sector survey results of NSS 55th Round (1999-2000) with the estimates available from alternate sources. As a part of external validation, estimated number of enterprises- both own-account enterprises (OAEs) and establishments, as well as estimated number of workers in OAEs and establishments based on NSS 55th Round were compared with the corresponding figures available from fourth Economic Census (EC 1998). For internal validation, alternate estimates of number of workers according to enterprise survey approach (schedule 2.0) and household survey approach (schedule 10) as per the NSS 55th Round were compared. There were differences in coverage of enterprises in the NSS 55th Round and EC-98- the coverage of the latter being much wider than the former, as the EC- 98 covered incorporated units also. But, still it is seen that estimated number of OAEs and estimated number of workers in OAEs based on NSS 55th Round were substantially higher than the corresponding figures based on EC-98. In the case of establishments, the EC estimates were higher due to coverage difference. The paper demonstrated that estimated number of workers based on schedule 10 was generally higher than the corresponding estimates based on schedule 2.0 for almost all activities.

   While discussing the paper after the presentation, many participants felt that there was a need to undertake detailed studies on the topic for more meaningful comparisons by utilising unit level data.While doing so, information on type of ownership of the enterprises in EC-98, activity type of workers of the sample households, etc. could be taken into account for comparing alternate estimates relating to the same categories.It was felt that such studies could be carried out by possibly drawing the required financial support from concerned international agencies.

   • 2.3 Summary Report on Session Five

     Topic 5: Country Experiences and othersPapers presented Estimating theextent of Informal Sector in the Nepalese Economy - Ms. Ganga Devi Dabadi, Central Bureau of Statistics (CBS), Nepal.Poverty in the Informal Sector  - Loh, Meng Kow, ESCAP.Informal Sector Statistics in Indonesia  - Rusman Heriawan  & Hananto Sigit, BPS – Statistics, Indonesia.InformalSector Statistics in Thailand - Rajana Netsaengtip &. Wilas Suwee, National Statistical Office, Thailand. (Read in absentia)The Indian Informal Sector Survey: Approach and results; 1999-2000 - the National Sample Survey Organisation, Government. of IndiaThe paper on Nepal started with the recognition that in the absence of comprehensive statistical information concerning economic activities of the entire population, it became very difficult to estimate the extent of value addition made and the employment opportunities generated in Nepal outside the formal sector.The paper then described the difficulties experienced by Nepal in adopting and implementingthe international practices while attempting to get a realistic and quantitative measure of the informal sector in that country. The paper includes a presentation as well as some interpretations and inferences drawn from the results flowing from (1) Nepal –Living Standard Survey (1996) and (2) Nepal- Labour Force Survey (NLFS).The paper further emphasised the need for the CBS, Nepal to conduct “informal sector surveys” capable ofproviding more detailed information on the informal sector than those available from the labour force surveys. While mentioning that the 2001 census of population in Nepal had included, inter-alia, a question as to whether the households covered were engaged in small scale economic activities other than agriculture, it concluded that ad-hoc employment surveys conducted in Nepal could not reveal the employment trends in that country, rendering them in the process to be of limited use in regard to policy formulation.The paper by Loh Meng Kow of ESCAP listed a number of characteristics for the identification of informal sector units as it would be difficult to define the sector. Quoting the experience of India in conducting comprehensive nation-wide survey on non-agricultural enterprises during 1999-2000, the paper points out that a household cum enterprise survey approach would be feasible for collecting data on informal sector enterprises. The paper further states that the size of workers employed for the production of economic activities (excluding the case of own-account workers involved in the new economy) may provide an indirect and yet good way to determine the income generating capacity of enterprises and for identifying trends in the incidence of poverty. The paper concludes by raising the critical issue of linking the surveys on informal sector to monitoring the incidence of poverty.The paper by Rusman Heriawan and Hanato Sigit brought out the experience of Indonesia in the development of Informal Sector Statistics.It is stated that the concept and definition of informal sector are still not clear in the country and thus the development and improvement of informal sector statistics are adversely affected. The paper further mentions that in the Indonesian context, there were several surveys relating to informal sector, using both the establishment approach and the household approach. A detailed account of some of these surveys is provided in the paper.It also highlights the fact that informal establishments are not easy to define and identify owing to differences in the types of such establishments existing in different sectors of the economy. The problems and complications involved in capturing the informal sector also vary from sector to sector.The paper further provides an indicative picture of important informal sector survey results pertaining to Indonesia. The paper concludes that the concept and definition of the informal sector having still not been uniformly agreed upon, the development of data collection activities in the informal sector has certainly been suffering. It also mentions that due to the very nature of informal sector, the measurement of activities in the informal sector is by no means an easy task. Further, the high degree of irregularities and differences marking the informal sector renders the task of making precise estimates for the various important characteristics of this sector rather difficult one.The highly important role being played by the Informal Sector in the Thai economy is indicated in the paper from Thailand.It mentions that the following surveys in Thailand taken together and connected appropriately, can provide a useful picture ofthestatus of informal sector in Thailand:The Labour Force Survey (LFS); The Homework Survey andThe Household Manufacturing Industry Survey.The paper provides a fairly detailed insight into various aspects of the aforementioned surveys conducted in Thailand. It also mentions, in particular, about the advantages of and limitations in using the data flowing from the above mentioned surveys. The paper concludes with an indication/suggestion with regard to the possible strategy which can be considered and adopted in future for being able to capture better, under the prevailing resource constraints, the nature and extent/dimensions of the informal sector in Thailand.The paper by India described the concepts being followed in conducting the surveys on un-organised sectors and the salient features of the first ever informal sector survey conducted in India by the National Sample Survey Organisation (NSSO) during the period July 1999-June, 2000. This, in fact, was an integrated survey of households and enterprises. All unincorporated proprietary and partnership enterprises in the non-agricultural sector were covered under the survey, as “informal sector enterprises.” Both the household approach through labour force survey and enterprise approach through informal sector survey were employed for the measurement of employment in the informal sector. The paper gives a vivid description of the survey methodology and findings. Some of the operational difficulties encountered in the conduct of the survey and the conclusions drawn from the experiences are also mentioned in the paper. All the aforementioned five papers were discussed in detail and it was noted that for India, it would be possible to establish a relationship between incidence of poverty and employment in the informal sector based on 55th Round NSSO survey. It was, however, recognised that poverty can exist at widely varying levels and need not necessarily be manifested amongst informal sector workers.Thus under the given situation, it would be too early to attempt any detailed enquiries connecting incidence of poverty with employment in the Informal Sector.

3. Future work programme:

   The future programmes of work of Delhi Group was discussed in detail and a consensus was reached on the following: (i)future work of the Delhi Group should concentrate on a project to establish a common pool of data for which financial support will be sought from donor agencies, (ii) Members of the Delhi Group should assist the secretariat of the Group in formulating a project proposal (iii) the Delhi Group will seek the institutional support of the UN Regional Commissions (iv) review will be made to assess how far the objectives set in the terms of reference of Delhi Group have been achieved and (v) the website of the Delhi Group should be used as an electronic discussion forum to enable more countries to participate in the deliberations of the Group.

4. Recommendations
   
   1. Depending upon their employment relationships and types of contracts, home workers can be found in any category of status in employment. Home-workers should therefore, be identified through the variable “place of work” in conjunction with existing other classifications, such as industrial and occupational classifications, rather than as a separate category of status in employment.
   2. In order to define the criteria for the distinction between independent and dependent home-workers, as well as between own-account workers and employees in general, questions on the type of contractual arrangements should be used in surveys. Such questions provide better results than a mere self-assessment by respondents of status in employment.
   3. The concept of informal employment is distinct from the concept of employment in the informal sector. Informal employment (to be defined in terms of characteristics of jobs) extends from the informal sector (defined in terms of characteristics of enterprises) to other sectors. The definition and measurement of employment in the informal sector need to be complimented with a definition and measurement of informal employment. Members of the Delhi Group, as well as other countries, are encouraged to test on the basis of available data the conceptual framework developed by the ILO for relating the measurement of employment in the informal sector to the measurement of informal employment within a labour force framework. Experiences should be reported in the next meeting of the Delhi Group to help evolve an operational definition of informal employment and measurement methods of the same. India and Mexico agreed to the request to provide the data support for testing the framework.
   4. For developing a programme of statistics in the informal sector, the parallel use of several methods (in particular, household surveys and mixed household and enterprise surveys) is re-iterated. The methods used should be documented in sufficient detail, so that data obtained from different sources can be compared and the differences, if any, explained.
   5. Data on the informal sector should be collected at sufficiently frequent intervals, so that time series can be obtained that make it possible to monitor trends and developments.
   6. Future work of the Delhi Group should concentrate on a project to establish a common pool of data bases on the informal sector (along similar lines as the Luxemburg Income Study), for which financial support will be sought from donor agencies. The aim of the project is to undertake the necessary work in order to obtain the best possible internationally comparable statistics of the informal sector. The project will therefore, include studies aimed to improve the quality of existing informal sector data, and the formulation of technical guidelines regarding the statistics to be included and how to develop them, including the formulation of questions for the identification in labour force surveys of informal sector workers on a regular basis. The external funding of the project may also lead to increased country representation in the Delhi Group.
   7. Members of the Delhi Group are invited to assist the secretariat of the Group in formulating a project proposal within the next three months and submitting it to donor agencies.
   8. The Chair of the Delhi Group will seek the institutional support of the UN Regional Commissions in order to address the Heads of National Statistical agencies in providing cooperation for accomplishing the aims of this project and to designate a contact person for the above mentioned purposes.
   9. Review may be made as to how far the objectives set in the terms of reference of Delhi Group have been achieved.
   10. The website of the Delhi Group should be used as an electronic discussion forum to enable more countries to participate in the deliberations of the Group.
   11. Procedures should be established for linking informal sector data obtained from existing sources (labour force surveys, mixed household surveys and enterprise surveys, economic census) with other sources (like household income & expenditure, consumer expenditure surveys, etc.)in support of the work of national accountants and for analysing the relationship of the informal sector with other topics like poverty.
5. Vote of Thanks
   

   The session was concluded with an vote of thanks by Dr. N. S. Sastry, DG & CEO, NSSO. The Chairman of the Group Shri K.V. Irniraya then, formally closed the meeting.