MAIN FINDINGS

 

Size of the Informal Economy

 

Informal employment comprises one half to three-quarters of non-agriculture employment in developing countries: specifically, 48 per cent of non-agricultural employment in North Africa; 51 per cent in Latin America; 65 per cent in Asia; and 72 per cent in sub-Saharan Africa. If South Africa is excluded, the share of informal employment in non-agricultural employment rises to 78 per cent in sub-Saharan Africa. If data were available for additional countries in Southern Asia, the regional average for Asia would likely be much higher.

 

Some countries include informal employment in agriculture in their estimates of informal employment. In these countries the inclusion of informal employment in agriculture increases significantly the proportion of informal employment: from 83 per cent of non-agricultural employment to 93 percent of total employment in India; from 55 per cent to 62 per cent in Mexico; and from 28 per cent to 34 per cent in South Africa.

 

Three categories of non-standard or atypical work – self-employment, part-time work, and temporary work – comprise 30 per cent of overall employment in 15 European countries and 25 per cent of total employment in the United States. Although not all self-employed, part-time workers, and temporary workers are informally employed, the majority receive few (if any) employment-based benefits or protection. In the United States, for instance, less than 20 per cent of regular part-time workers have employer-sponsored health insurance or pensions.

 

Components of the Informal Economy

 

Informal employment is comprised of both self-employment in informal enterprises (i.e., small and/or unregistered) and wage employment in informal jobs (i.e., without secure contracts, worker benefits, or social protection). In all developing regions, self-employment comprises a greater share of informal employment (outside of agriculture) than wage employment: specifically, self-employment represents 70 per cent of informal employment in sub-Saharan Africa, 62 per cent in North Africa, 60 per cent in Latin America, and 59 per cent in Asia. Excluding South Africa, where black-owned businesses were prohibited during the apartheid era and have only recently begun to be recognised and reported, the share of self-employment in informal employment increases to 81 per cent in sub-Saharan Africa.

 

Self-employment represents nearly one-third of total non-agricultural employment worldwide. It is less important in developed countries (12 percent of total non-agricultural employment) than in developing countries where it comprises as much as 53 per cent of non-agricultural employment in sub-Saharan Africa, 44 per cent in Latin America, 32 per cent in Asia, and 31 per cent in North Africa.

Informal wage employment is also significant in the developing world: comprising 30 to 40 per cent of informal employment (outside of agriculture). Informal wage employment is comprised of employees of informal enterprises as well as various types of informal wage workers who work for formal enterprises, households, or who have no fixed employer. These include casual day labourers, domestic workers, industrial outworkers (notably homeworkers), undeclared workers, and part-time or temporary workers without secure contracts, worker benefits, or social protection.

 

Non-standard wage employment, much of which is informal, is significant in the developed world. In 1998, part-time work represented 14 per cent of total employment for the Organization for Economic Co-operation and Development (OECD) countries as a whole and more than 20 per cent of total employment in eight of these countries. In the countries of the European Union, temporary work comprises 11 per cent of total employment. Comparable data on other categories of non-standard wage work that are even more likely to be informal in nature – namely, contract work, industrial outwork, and casual day labour - are not available.

 

Home-based workers and street vendors are two of the largest sub-groups of the informal workforce: with home-based workers the more numerous but street vendors the more visible of the two. Taken together they represent an estimated 10-25 per cent of the non-agricultural workforce in developing countries and over 5 per cent of the total workforce in developed countries.

 

Women and Men in the Informal Economy

 

Informal employment is generally a larger source of employment for women than for men in the developing world. Other than in North Africa where 43 per cent of women workers are in informal employment, 60 per cent or more of women workers in the developing world are in informal employment (outside agriculture). In sub-Saharan Africa, 84 per cent of women non-agricultural workers are informally employed compared to 63 per cent for men non-agricultural workers; in Latin America 58 per cent for women in comparison to 48 per cent for men In Asia, the proportion of women and men non-agricultural workers in informal employment is roughly equivalent.

 

Although women’s labour force participation rates are lower than men’s, the limited data available point to the importance of women in home-based work and street vending in developing countries: 30-90 per cent of street vendors (except in societies that restrict women’s mobility); 35-80 per cent of all home-based workers (including both self-employed and homeworkers); and 80 per cent or more of homeworkers (industrial outworkers who work at home).

 

Although women’s labour force participation rates are lower than men’s, women represent the vast majority of part-time workers in many developed countries. In 1998, women comprised 60 per cent or more of part-time workers in all OECD countries reporting data. Women’s share of part-time work for specific countries was as high as 98 per cent in Sweden, 80 per cent in the United Kingdom, and 68 per cent in both Japan and the United States.