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Expert Group Meeting on

Statistics for SDGs: Accounting for Informal Sector in National Accounts

11-14 January 2016, Addis Ababa, Ethiopia

CONCEPT NOTE AND CALL FOR PAPERS

African Centre for Statistics (ACS)

United Nations Economic Commission for Africa (ECA)

1. Background

The informal sector plays a significant role in Africa as a major source of employment, income, goods and services, and thus is a significant contributor to Gross Domestic Product (GDP). Furthermore, informal sector statistics are essential for policy formulation and analysis regarding poverty reduction, labor force and employment, and socioeconomic development. The stake of understanding the place occupied and the role played by the informal sector in a country’s economy is high for designing policies reflecting the upcoming Sustainable Development Goals(SDGs) and leaving no one behind, especially in African countries where a large proportion of people work in the informal sector. Nevertheless, the proper measurement of the size and contribution of the informal sector and informal employment to GDP has become a challenge fordata collection and compilation in official statistics.

The measurement of the informal sector is also an important element of the upcoming Sustainable Development Goals (SDGs), in particular Goal 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.The proposed SDG 8 is supported by a set of aspirational global targets that reflect the labor market challenges of countries at different levels of development. Several priorities of the decent work agenda are included as targets under Goal 8[1], while others are mentioned as targets under other proposed goals. All these are key trends and gaps in the labor market requiring attention within the new framework. In addition the Proposed Priority Indicator List (as of July 2015) directly involves statistics of the informal sector.

Evidence-based policy making requires data. Therefore, if African countries want to formalize informal activities and enterprises, it is important to conduct informal surveys first, and to differentiate own-account production from informal production for commercial purposes. In addition, similarly to the Millennium Development Goals (MDGs), several of the proposed indicators, use GDP as a denominator. To correctly measure the GDP denominator, it is essential that the size of the informal sector be adequately incorporated in national accounts. According to recent estimates, the informal sector in a broad sense (including agriculture) accounted for 63.3% of GDP in Africa in the 2000s, and 31.3% of the GDP in its restrictive sense (without agriculture). These indicators are on an upward trend since the 1980s. Furthermore, depending on the definition in the different countries, the informal sector employs from 10% (Tanzania) up to 92% (Chad) of the total active and employed population across the African continent.

As part of the African Project for the Implementation of the 2008 SNA, ECA isthe lead in developing methodological documents and technical guides for countries in order to build capacity as well as to harmonize methods and facilitate international comparisons. As many African countries encounter limitations in measuring the informal sector, ECA has decided to compile anOperational Guidebook on Accounting for Informal Sector in National Accounts, to serve as reference material for African countries to improve their methodologies for measuringthe informal sector.The guidebook will contain case studies and best practices from African countries; to the end of gathering, discussing, and learning from existing practices in the African countries.As a reference document, the guidebook will help national statistical offices in Africa to regularly estimate the informal sector and informal employment, and to improve national accounts by accounting for informal activities. This will also contribute to a better understanding of the informal sector in general, which is a basis for adequate economic and social policy measures in view of the post-2015 development agenda.

In this context, the African Centre for Statistics of ECA is organizing an Expert Group Meeting (EGM)on Statistics for SDGs: Accounting for Informal Sector in National Accounts at ECA Conference Centre in Addis Ababa, Ethiopia on 11-14 January 2016.

1. Objectives

The objectives of the EGM areto:(i) present the draft of the guidebook; (ii) share and exchange experiences and bestpractices of methodologies and procedures forcollecting and compiling informal sector data; and (iii) share and exchange experiences and best practices on how to integrate theinformal sector into national accounts.

1. Participants

The EGM will convene approximately25 national accounts experts from NationalStatistical Offices of African countries, along with statisticians and experts representing ECA and other international, regional, and sub-regional organizations.The participants will be selected through a call for paper process.

1. Call for papers

Based on the list of proposed topics and outlines at the end of this note, you are kindly invited to submit a one page abstract in English by 10 August 2015. The abstracts should include the following elements:

(i)Introduction: Why is the problem area important? Why do you choose this topic?

(ii)Background: Which country’sexperiences and practices and in which year are being referencedfor preparing your paper?

(iii)Methodology: What method or approach are you using to analyze the topic?

(iv)Result: What are the most important findings, conclusions, and recommendations of your paper?

(v)Discussion: What are the larger implications of your study?

Abstracts will be blind-reviewed by a review committee. The objective is to select the best papers in every proposed topic to be presented at the EGM. Papers accepted for presentation will comprise original work not previously published. Papers are expected to base on the actual country experiences in this area.

1. Time frame for submission of papers

Participants and experts submitting abstracts and papers for the meeting must adhere to the key deadline dates as stated in the table below:

Table: Annotated time frame

Annotation / Deadline date
Deadline for abstract submission / 10 August 2015
Notification of preliminary acceptance of the abstract / 15 August 2015
Deadline for paper submission / 31 August 2015
Notification of final acceptance / 5 September 2015
Submission of revised manuscripts / 15 September 2015
EGM dates / 11-14 January 2016

The final paper should be between 7 to 10 pages structured according to the list of topics/outlines at the end of this note.

Please submit abstracts and papers in English to Xiaoning Gong () and Katalin Bokor () before the deadline dates as indicated in the table above.

1. Organization of the meeting

The Expert Group Meeting will be organized by theAfrican Centre for Statistics (ACS) of the United Nations Economic Commission for Africa (ECA) from Monday to Thursday, 11-14 January 2016 in Addis Ababa, Ethiopia.The meeting will be organized around three main activities: (i) presentation of the outline of the guidebook; (ii) presentation of the submitted papers by participants; and (iii) discussions and exchanges on best practices and technical issues.The meeting will be conducted in English.

1. Expected outputs

The outputs of the EGM are expected to include:

• A meeting report: a summary of key findings, conclusions, and recommendationsemergingfrom the meeting papers and outlines of the guidebook.
• Meeting proceedings: theOperational Guidebook on Accounting for Informal Sector in National Accounts will include and publish the most innovative papers of methodological and operational relevance.Participants are expected to share their country’s experience and discuss best practices in collecting data about the informal sector, and incorporating data in national accounts.

1. Sponsorship

While submitting their abstracts, authors will be requested to indicate whether they require support to cover expenses (travel, accommodation and daily subsistence allowance) associated with their participation at the meeting. Only one author per paper accepted for presentation will be eligible for sponsorship. Support is reserved for presenters and researchers from Africa.Approximately 25 participants will be sponsored to present their selected papers at the EGM.

1. Contact

Issues related to the organization and administrative arrangements of the EGM, please contact:

Ms. Katalin Bokor
Associate Economic Affairs Officer
African Centre for Statistics
United Nations Economic Commission for Africa
E-mail:
Tel.: +251-11-544 5201 / Ms. NetsanetAbebe
Staff Assistant
African Centre for Statistics
United Nations Economic Commission for Africa
E-mail:
Tel.: +251-11-544 5359

Annex: List of topics for country best practices on accounting for informal sector in national accounts

Topic / Outline
1Defining informal sector and informal employment / 1)Definitions adopted for informal sector and informal employment in the country
2)Operational definitions for informal sector adopted for surveys, censuses (please specify the data items in the surveys that identify informal sector) and national accounts in the country
3)Operational definitions for informal employment adopted for surveys, censuses (please specify the data items in the surveys that identify informal employment) and national accounts in the country
4)Reasons for adopting these specific definitions for informal sector and informal employment in the country
5)Give examples of surveys in which these definitions have been adopted
6)Give examples of data on informal sector (number of enterprises by size of enterprise, value of output, value added, employment, etc.) and informal employment (within both formal and informal sectors) and also as shown in national accounts
2Measuring informal economy through household surveys (such as the labor force survey, household budget survey) or censuses (such as the population census) / 1)Name and background of the survey/census through which informal sector and/or informal employment are measured
2)Definition of informal sector and informal employment adopted in the survey/census (please specify the data items in the surveys that identify informal sector and informal employment)
3)Survey design (please describe the sampling frame, sample selection, sample size, items included in the survey)
4)Tabulation of data (please describe the data processing status, availability of summary results and/or micro-data that facilitate using these data in national accounts)
5)Summary results (please include few tables showing data on informal sector (number of enterprises by size of enterprise, value of output, value added, employment, etc.) and informal employment (within both formal and informal sectors)
6)How the data was integrated into national accounts (please describe the methodology adopted for including these data in compiling estimates for informal sector and informal employment in national accounts)
7)Experiences/Remarks about the survey/results and their integration in national accounts and future initiatives/way forward
3Measuring informal economy through establishment surveys and establishment censuses / 1)Name and background of the survey/census through which informal sector and informal employment are measured
2)Definition of informal sector and informal employment adopted in the survey/census (please specify the data items in the surveys that identify informal sector and informal employment)
3)Survey design (please describe the sampling frame, sample selection, sample size, items included in the survey)
4)Tabulation of data (please describe the data processing status, availability of summary results and/or micro-data that facilitate using these data in national accounts)
5)Summary results (please include few tables showing data on informal sector (number of enterprises by size of enterprise, value of output, value added, employment, etc.) and informal employment (within both formal and informal sectors)
6)How the data was integrated into national accounts (please describe the methodology adopted for including these data in compiling estimates for informal sector and informal employment in national accounts)
7)Experiences/Remarks about the survey/results and their integration in national accounts and future initiatives/way forward
4Measuring informal economy through mixed household-enterprise surveys / 1)Names and background of the surveys included in the mixed surveys through which informal sector and informal employment are measured (please describe the number of surveys included and how the respondents were identified)
2)Definition of informal sector and informal employment adopted in the survey/census (please specify the data items in the surveys that identify informal sector and informal employment)
3)Survey design (please describe the sampling frame, sample selection, sample size, items included in the survey)
4)Tabulation of data (please describe the data processing status, availability of summary results and/or micro-data that facilitate using these data in national accounts)
5)Summary results (please include few tables showing data on informal sector (number of enterprises by size of enterprise, value of output, value added, employment, etc.) and informal employment (within both formal and informal sectors)
6)How the data was integrated into national accounts (please describe the methodology adopted for including these data in compiling estimates for informal sector and informal employment in national accounts)
7)Experiences/Remarks about the survey/results and their integration in national accounts and future initiatives/way forward
5Accounting for informal sector in national accounts through direct surveys / 1)Definition of informal sector used
2)Sources of data, availability of tabulated data (briefly describe how the available data was translated for national accounts for purpose)
3)Method of estimation of value added for informal sector, and if estimated on informal employment also (both in formal and informal sectors)
4)Estimates of value of output, value added, compensation of employees, etc. informal sector and employment in informal sector
5)Type of accounts compiled for informal sector in the national accounts (SNA recommends that production and generation of income accounts are to be compiled)
6)Remarks about accounting for informal sector (appropriateness or adequacy of source data and methods adopted), exhaustiveness achieved for informal sector (please describe whether entire informal sector has been accounted or there are missing activities); and future initiatives/way forward
6Accounting for informal sector in national accounts through indirect methods: Approaches followed, other than labor input methods / 1)Type of indirect methods adopted for accounting informal sector in national accounts
2)Data sources and methods adopted
3)Estimates of informal sector: production and employment
4)Type of accounts compiled for informal sector in the national accounts (SNA recommends that production and generation of income accounts are to be compiled)
5)Remarks about accounting for informal sector (appropriateness or adequacy of source data and methods adopted), exhaustiveness achieved for informal sector (please describe whether entire informal sector has been accounted or there are missing activities); and future initiatives/way forward
7Accounting for informal sector in national accounts through indirect methods: using labor input methods / 1)Brief introduction of the approach adopted to account for informal sector
2)Data sources used for compiling labor input matrix (this matrix presents data on employment in a cross classification of sectors and activities. Within the household sector, informal sector is shown as a sub-sector)
3)Compilation of labor input matrix: methods adopted and assumptions made (please also mention whether data on size classification of units within informal sector is available?) (please also give tables showing the data)
4)Estimation of value added or output per worker: data sources and methods adopted and assumptions made (please also give tables showing the data)
5)Estimates of value added for informal sector disaggregated by activities and employment in informal sector and informal employment in both formal and informal sectors
6)Type of accounts compiled for informal sector in the national accounts (SNA recommends that production and generation of income accounts are to be compiled)
7)Remarks about accounting for informal sector (appropriateness or adequacy of source data and methods adopted); exhaustiveness achieved for informal sector (whether entire informal sector has been accounted or there are missing activities); and future initiatives/way forward
8Preparation of labor input matrices / 1)Data sources used for compiling labor input matrix (this matrix presents data on employment in a cross classification of sectors and activities. Within the household sector, informal sector is shown as a sub-sector)
2)Compilation of labor input matrix: methods adopted and assumptions made (please also mention whether size classification of units within informal sector is available?)
3)Whether the labor input matrix also includes informal employment (within each institutional sector employment data is shown separately under formal employment and informal employment)
4)Tables showing the labor input matrices
5)Remarks about labor input matrices (appropriateness or adequacy of source data and methods adopted) exhaustiveness achieved for employment data in the economy (whether entire informal economy has been accounted or there are missing activities); future initiatives/way forward
9Estimation of value added or output per worker / 1)Data sources used for compiling labor input matrix (this matrix presents data on employment in a cross classification of sectors and activities. Within the household sector, informal sector is shown as a sub-sector)
2)Compilation of labor input matrix: methods adopted and assumptions made (please also mention whether size classification of units within informal sector is available?)
3)Whether the labor input matrix also includes informal employment (within each institutional sector employment data is shown separately under formal employment and informal employment)
4)Tables showing the labor input matrices
5)Estimation of value added or output per worker: data sources and methods adopted and assumptions made (please also give tables showing the data)
6)Estimates of value added for informal sector disaggregated by activities
7)Remarks about accounting for informal sector (appropriateness or adequacy of source data and methods adopted); exhaustiveness achieved for informal sector (whether entire informal sector has been accounted or there are missing activities); and future initiatives/way forward
10Treatment of informal employment in formal sectors, in national accounts / 1)Informal workers in formal sector are not actually the employees of formal sector
2)The formal sector normally shows in their accounts, the payments made to informal workers as expenses for purchase of their services. Such expenses are treated as intermediate consumption in national accounts.
3)This accounting practice reduces the value added, since there is no corresponding output for services provided by informal employment and also since payments made to them are not shown as wages, as these informal employees are not treated as employees by the formal sector in their accounts.
4)In this background, please describe (a) whether you see this as a problem area in your country’s national accounts because more and more jobs in formal sector are now performed by contract workers) and (b) what is your compilation practice to overcome this under-estimation of value added (please give a brief account of your practices under the following items):

• How is informal employment in formal sector treated in your national accounts:
• Are you imputing the payments made by the formal sector units to informal employees as wages instead of intermediate consumption as shown in their accounts?
• Are you imputing corresponding output (equivalent to the payments made to informal employees by the formal sector) in the relevant ISIC activity of service providers, so that the intermediate consumption shown by the formal sector units matches with the output in the relevant ISIC activity).
• Data sources and methods followed for either of the above two treatments of accounting for informal employment in formal sector
• Estimates of output and value added of informal employment in formal sectors
• Challenges faced and conclusions and way forward

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