Workshop Report. Title: Workshop on Interregional Cooperation on the Measurement of Informal Sector and Informal Employment, 3-4 December 2009

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1 Workshop Report Title: Workshop on Interregional Cooperation on the Measurement of Informal Sector and Informal Employment, 3-4 December 2009 Venue: United Nations Conference Centre - Bangkok, Thailand Organizer(s): ESCAP, ESCWA, ECLAC Participating Countries: Mongolia, Palestine, Philippines, Saint Lucia, Sri Lanka Participating Agencies: ADB, ECA, ECE, ECLAC, ESCAP, ESCWA, DIAL-IRD, WIEGO and independent Evaluator Number of Participants: Concept and Background In the context of the United Nations Development Account (DA) Project Interregional Cooperation on the Measurement of Informal Sector and Informal Employment (henceforth, the project), the Statistics Division of ESCAP, in collaboration with ECLAC and ESCWA, organized a concluding workshop for the project. The workshop brought together project partner countries and members of the project Steering Committee to review and evaluate the substantive and strategic processes and the findings and results of the project, in order to consolidate lessons learned and, to identify areas and modalities for further work at the sub-regional, regional and interregional levels. The workshop featured presentations by regional implementing agencies and the project country teams. Resource persons and an independent project evaluator 1 facilitated the exchange of experiences, knowledge sharing and panel/plenary discussions. The Workshop Agenda and List of Participants are included in this Workshop Report as Annexes 1 and 2, respectively. This report summarizes the key discussion points and recommendations from the workshop. Item 1. What were the expected results? Review of objectives and expected results 1. The workshop reviewed the problem analysis and objectives around which the project was designed and the expected results and noted the following: Key technical accomplishments of the project are: (1) the development of a more viable and cost-effective data collection strategy; (2) development of survey instruments; (3) methods for classifying informal employment and (4) use of household enterprise survey data for estimating the contribution of the informal sector to GDP. The project implementers should explore ways of ensuring that national project partners are able to integrate the survey methods on informal employment and national 1 As indicated in the Workshop Agenda, the workshop design included sessions to obtain inputs for the evaluative review of the project. 1

2 accounts estimation for the informal sector into their statistical survey programmes in a sustainable manner. Regional commissions should disseminate information on the 1-2 Survey methodology piloted by the project. Policies relating to informal employment and the informal sector are often not informed by empirical data, and that an initiative such as this project could create demand for such data and could create relevant data to meet the demand. In addition, the improvement of the measurement of the informal sector and informal employment is in itself a policy-related issue. Item 2. Key improvements/changes in this area of work at the national level: perspectives from national project partners National project partners were of the opinion that the project: Enhanced the technical capacity of their staff on the measurement of the informal sector and informal employment through experimentation of the 1-2 survey approach, as well as in the estimation of employment and value-added to GDP, and in some cases the integration of survey estimates into national accounts. Raised awareness on the importance of informal sector and informal employment data at the country level especially through the national dissemination workshops. Developed a methodology which could facilitate more regular collection of data on the informal sector and informal employment as compared to the ad hoc surveys conducted in countries so far. Provided clear guidelines on the identification of household unincorporated enterprises with at least some market production (HUEMs) and the informal sector that leads to a more comprehensive coverage of elements of the household sector. Item 3. Project Prospects for sustainability in methodologies developed and tested by the Mongolia and Sri Lanka indicated that there were no major impediments for the implementation of Phase 1 of the 1-2 survey regularly as this could be either integrated into or attached as a module to their regular labour force surveys. However, the continued conduct of the Phase 2 or HUEM survey would require additional budgetary commitments from government. Establishing consistent interface between estimation of value-added from traditional sources and through the Phase 2 of the 1-2 Survey is a key requirement for the sustainable application of the 1-2 survey. This would involve adopting a practical survey cycle such as full 1-2 surveys every 3 or 5 years and regular phase 1 surveys in the interim years. Such a cycle, determined according to national requirements for feasibility, would provide full data for direct estimation of informal sector GDP every five years and the use of phase 1 data to apply the labour input approach for indirect estimates during the years in-between. 2

3 Item 4. Added-value of inter-regional cooperation and partnership strategy The workshop recognized that interregional cooperation and partnership strategy led to positive outcomes: Interregional cooperation made possible the optimal use of project funds through joint activities by implementing regional commissions such as training (capacity building workshops mostly organized by ESCAP, access to same resource pool), and knowledge development and management (development of the project website, development of technical papers and guidelines etc.). Interregional cooperation provided opportunities for cross-fertilization of ideas across regions and facilitated the understanding of regional differences and commonalities in the experimentation and refinement of the 1-2 survey as a cost-effective method of data collection on informal employment and the informal sector. The Steering Committee brought statistics development partners and experts together and effectively harnessed the combined knowledge and experiences to the benefit of the project at various stages of implementation across the three implementing regions. Item 5. Technical Issues and Related Recommendations The workshop raised and discussed conceptual and methodological issues on the 1-2 survey methodology with a view to culling lessons learned and formulating recommendations and required actions. Concepts and Terminology: The project introduced the use of household unincorporated enterprises with at least some market production (HUEMs) as the starting point for data collection on the subset of informal sector enterprises. The workshop expressed the opinion that this approach could be expanded in designing a survey on household unincorporated enterprises including household quasi-corporations that would then provide data for household sector accounts. Based on an example from the classification of workers for Sri Lanka, the workshop suggested that ILO review the 17th ICLS recommendations on informal employment and consider the class of contributing family workers producing for own final consumption as informally employed in household production units. Scope and Coverage of the 1-2 survey: Given the experiences from the project as well as countries in which ADB and DIAL- IRD are providing technical assistance, the workshop concluded that the 1-2 survey provides a cost effective survey to estimate informal employment; value-added of informal sector enterprises to GDP; economic characteristics of informal sector enterprises; and characteristics related to policy issues such as employment policy analysis. For completeness of coverage, inclusion of HUEMs engaged in agricultural activities in Phase 2 surveys is recommended. The project had limited experience on how this can best be done but the ADB project experience may provide guidance in this area. 3

4 Activities of professionals such as doctors, accountants, teachers, architects etc. should be included in Phase 2 if it can be established that these are activities of HUEMs (in accordance with the definition). Questionnaire and Survey Design: A core set of questions for estimating informal employment based on the ICLS 17 recommendations should be recommended. This core set could be formulated on the basis of further data analysis and cross-country comparisons of the results from the Phase 1 surveys. Data items in the Phase 1 questionnaire can be either integrated into the regular LFS or designed as a separate questionnaire. Countries may have logistical or processing-related reasons for choosing one over the other. However, integrating phase 1 data items into the regular LFS would ensure the regular collection of data on informal sector and informal employment. The time lag between Phases 1 and 2 should be as short as possible as this minimizes non-response for the phase 2 survey as well as possible matching errors when linking phase 1 and phase 2 data. Sampling issues: The workshop noted that two sampling options were implemented by national project partners: (1) interview all HUEMs identified through Phase 1 in Phase 2 and (2) sub-sample HUEMs for Phase 2 interviewing. Option 2, in theory, could be implemented by subsampling from the list frame of HUEMs constructed in Phase 1 or, as done in the Philippines and in ADB project countries, by sub-sampling from sample areas (PSUs) of the LFS. In the latter case, the sampling of PSUs used auxiliary information on the distribution of HUEMs by economic sectors. The workshop heard differing views on the need for coverage adjustment factors to be applied to sampling weights for phase 2 surveys, based on auxiliary information such as the distribution of HUEMs. The workshop noted that this issue has been extensively discussed in the literature, including discussions on versions of the modified mixed household/enterprise for collecting informal sector data, including such a survey implemented in India. Data processing: The workshop noted the difficulties national project partners had in data cleaning and the application of imputation procedures particularly for the HUEM survey and suggested the preparation of a documentation of the 1-2 survey data processing issues and guidelines on editing and imputations. Estimation of gross valued added from HUEM surveys: In the Phase 2 questionnaire, data used in the estimation of gross value added should be at basic prices. The question should be framed to ask the respondent the value of sales excluding VAT. The workshop noted the need for more technical guidance on the methodology for estimating the contribution of informal sector to GDP. 4

5 Item 6. Taking forward the Global Agenda on the Measurement of the Informal Sector and Informal Employment and Related Recommendations The workshop identified actions that could be taken in the short- and medium-term: Actions by regional commissions and statistical bodies (UNSD, ILO): Take necessary actions on the recommendations put forward in item 5 above Institutionalization of informal employment statistics including: integrating into regional programmes on economic statistics; conducting a study of country specific labour laws to refine the definition of informal employment. Advocacy: Raise discussions on this work at the level of the UN Statistical Commission; inclusion of the informal sector and informal employment measurement in the agenda of the second session of the Committee on Statistics for ESCAP; documentation of the project experience and lessons as part of the Delhi Group Manual. Expansion of training in this area of work: development of standard training materials based on project experience; redesign and offer courses through statistical training institutes including the Statistical Institute for Asia and the Pacific Explore mechanisms for implementing south-south cooperation in this area of work within each region Linkages with other global initiatives: explore relevance of informal sector and informal employment statistics with the Global Impact and Vulnerability Alert System (GIVAS) Actions by national project partners: Proactive dissemination of data from the 1-2 surveys Take necessary steps to include questions on informal employment in the regular labour force survey Prepare policy-relevant analysis from the 1-2 survey data in order to make the case for the value of such data collection: including social protection, working conditions, employment policy analysis The workshop also expressed support for the plan of the Economic Commission for Africa to launch an inter-regional project on the informal sector in Africa in