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The Informal Sector
A question of definition:
What is the informal sector?
Whats in a name? What is the difference?
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Defining the Informal Sector |
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 hat exactly is the informal sector? How can we define it? Most definitions focus on what it is not - in terms of being non-regulated, non tax paying etc.
The key to a better understanding of the informal sector, and development of effective policies, is a useable definition. This section explores and outlines some of the definitions adopted for the informal sector. |
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The 'informal sector', which essentially covers the unorganized
spectrum of economic activities in commerce, agriculture,
construction, manufacturing, transportation and services, now
absorbs as much as 60% of the labour force in urban areas of
developing countries.
- ILO
Current thinking at ILO:
Decent Work and the Informal Economy
 The portion of a country's economy that lies outside of any formal regulatory environment. Informal sector activities are rarely reflected in official statistics on economic activity (for example, gross domestic product)." - Source
Economic activities that are not regulated by labour or taxation laws or monitored for inclusion in gross domestic product estimates eg water sellers, street vendors, buskers, shoe-shiners." - Source
Work that is outside the formal sector, not officially registered and sometimes illegal." - Source
In contrast with the formal sector, the informal sector encompasses economic activities that are not recorded by the state, ie activities to which the state has no means of access. Further reading on the informal sector." - Source
In economics the informal economy is the system of exchange used outside state-controlled or money-based economic activities." - Source
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Employment Share:
The informal sector accounts for 61 percent of global employment, or about 2 billion workers worldwide
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Regional Variation:
Informal employment represents 85 percent in Africa, 68 percent in Asia-Pacific, and 40 percent in the Americas.
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Measurement Challenge:
National definitions vary - for example, Japan classifies informal work through "non-regular employment" (part-time, temporary, or dispatched), which now accounts for 38 percent of its workforce (Statistics Bureau of Japan).
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