Development – Informal Employment, Poverty and Social Protection
Women and men in the informal economy: A statistical picture
ILO Report – Third Edition
30 April 2018 :: 164 pages
Main findings [excerpt p. 67]
This publication aims to provide a statistical overview on informality by applying a harmonized
definition of informal employment and employment in the informal sector to micro data for more than 100 countries representing more than 90 per cent of the world’s employed population. The estimates are based on a common set of standardized criteria to determine informal employment and employment in the informal sector as the main job. The estimates are comparable across developed and developing countries and regions, but the ILO’s country estimates may differ from national ones when they exist. This edition also provides global and regional estimates for 2016 based on percentages calculated from the latest available data.
The statistics show that informal employment plays a significant role in the global labour market. Two billion workers, representing 61.2 per cent of the world’s employed population, are in informal employment. Half of the world’s employed population work informally in non-agricultural activities. The level of socio-economic development is positively related to formality.
Emerging and developing countries have substantially higher rates of informality than developed countries. The informal sector comprises the largest component of informal employment in all regions. When the share of informal employment is disaggregated by sex, men (63.0 per cent) have higher rates of informal employment than women (58.1 per cent) around the world, but there are actually more countries (55.5 per cent) where the share of women in informal employment exceeds the share of men. Women are more exposed to informal employment in sub-Saharan Africa, the Latin American countries and most low- and lower-middle income countries. They are more often found in the most vulnerable situations.
Young people and older persons are found to be more affected by informality than persons aged between 25 and 64. The level of education is another key factor affecting the level of informality. Globally, increases in the level of education are related to decreases in the level of informality. People living in rural areas are almost twice as likely to be in informal employment (80.0 per cent) as those living in urban areas (43.7 per cent). The agricultural sector by nature is the sector with the highest level of informality (93.6 per cent) around the world. The industry (57.2 per cent) and service (47.2 per cent) sectors have relatively less informality…
Informal employment and key social and economic indicators
Informal employment is related to the level of economic development. Informality rate among
developed countries is usually well below 40 per cent with an average of 18.3 per cent, while informality rates among developing and emerging countries have a higher variation with an average of 69.6 per cent. Countries with high informality also have low HDIs. There is a negative correlation between the share of informal employment in total employment and the proportion of waged workers and a positive correlation with the proportion of own-account workers. Women are more likely to be in informal employment than men in countries with the lowest level of GDP per capita. In sub-Saharan Africa, Latin America and most low- and lower-middle income countries, a larger proportion of women’s employment than men’s is informal employment.
There is a clear positive relation between informal employment and poverty, but the data also show that some informal workers are not poor and some formal workers are poor.
In all regions of the world and for all statuses in employment, people with higher level of education are less likely to be in informal employment. Half of all those engaged in informal employment globally have either no or primary level of education and just above 7 per cent of informal workers worldwide reach tertiary level. The positive effect of the increase in the level of education on access to formal employment is obvious among employees and employers, but far less among own-account workers, whose exposure to informal employment remains high (over 60 per cent) whatever their level of education. The share of informal employment among employees is always lower than for other statuses even when the level of education is considered. Nearly 91 per cent of women with either no education or primary education are in informal employment as compared to 87.2 per cent of men with similar level of education. Among the less educated workers, women have higher levels of informality than men in both developing, emerging and developed countries, but this pattern is reversed among women and men at secondary or higher levels of education.
Globally, 15.7 per cent of employees in permanent full-time employment hold informal jobs, i.e.
having no employment related social and labour protections. The proportion of employees in informal employment increases significantly among part-time employees (44.0 per cent), and among employees in temporary employment (59.6 per cent) and is highest for employees in “temporary part-time jobs” (64.4 per cent), especially among men (68.1 per cent). Women part time employees are less likely than men to be informal. Just above one-third of women employees working less than 35 hours a week are in informal employment, as compared to 54.2 per cent among men.
Worldwide, the share of informal employment varies significantly from 56.5 per cent among workers in full-time employment to 75.1 per cent for workers in part-time employment and 78.5 per cent for marginal employment (less than 20 working hours a week). The incidence of informal employment is more limited when employees are considered alone: 48.3 per cent of employees in marginal employment hold informal jobs, compared to 41.8 per cent for employees working 35 hours or more. The percentage of workers with very short working hours is higher among workers in informal employment compared to those in formal employment. Globally, 10.1 per cent of workers in informal employment work less than 20 hours a week compared to 4.2 per cent of workers in formal employment. The difference is greater for women and for own-account workers.
More than 14 per cent of all women in informal employment work less than 20 hours a week compared to 3.1 per cent among women in formal employment. The percentage of the own-account employed working very short hours is significantly higher among those operating in the informal sector (14.4 per cent) when compared to the formal (6.3 per cent). The proportion of workers in time-related underemployment is higher among workers in informal employment in most countries.
Workers in informal employment are even more likely to work excessive hours (more than
48 hours a week or even more than 60 hours a week), especially employees. This phenomenon
in Asia and the Pacific is extreme, but working longer hours when holding informal jobs seems to be the reality for half of all employees in the developing and emerging world. This reality is significantly different from the situation of employees in developed countries, as less than 16 per cent work long hours, without any difference between formal or informal employment. Own-account workers show a different picture, as own-account workers owning formal economic units tend to work longer hours than their counterparts operating informally.
More than 60 per cent of the world’s employed population are in the informal economy
30 April 2018
A new ILO report shows that 2 billion people work informally, most of them in emerging and developing countries. The majority lack social protection, rights at work and decent working conditions.
GENEVA (ILO News) – Two billion people – more than 61 per cent of the world’s employed population – make their living in the informal economy, the ILO said in a report, stressing that a transition to the formal economy is a condition to realize decent work for all.
Women and men in the informal economy: A statistical picture (Third edition) provides comparable estimates on the size of the informal economy and a statistical profile of informality using criteria from more than 100 countries.
When excluding agriculture, half of the employed population are in informal employment, according to the report.
In Africa, 85.8 per cent of employment is informal. The proportion is 68.2 per cent in Asia and the Pacific, 68.6 per cent in the Arab States, 40.0 per cent in the Americas and 25.1 per cent in Europe and Central Asia.
The report shows that 93 per cent of the world’s informal employment is in emerging and developing countries.
… Two of the report’s authors, Florence Bonnet and Vicky Leung, point out that while not all informal workers are poor, poverty is both a cause and a consequence of informality. “The report shows that the poor face higher rates of informal employment and that poverty rates are higher among workers in informal employment,” said Leung.
Bonnet, for her part, stressed: “There is an urgent need to tackle informality. For hundreds of millions of workers, informality means a lack of social protection, rights at work and decent working conditions, and for enterprises it means low productivity and lack of access to finance. Data on those issues are crucial for designing appropriate and integrated policies that are tailored to the diversity of situations and needs.”
… “The high incidence of informality in all its forms has multiple adverse consequences for workers, enterprises and societies and is, in particular, a major challenge for the realization of decent work for all and sustainable and inclusive development. Having managed to measure this important dimension, now included in the SDG indicators framework, this can be seen as an excellent step towards acting on it, particularly thanks to more available comparable data from countries,” said Rafael Diez de Medina, Director of ILO’s Department of Statistics.