Palestinian Central Bureau of Statistics

Palestinian Central Bureau of Statistics PCBS Experience inMeasuring Informal Sector 13-15/04/2008

Table Of Contents • Introduction • Definition of informal sector • Characteristics of informal sector • Objectives of informal sector surveys • Palestinian Practice In Informal Sector

Table Of Contents/Cont • Current status in calculating informal activities. • Informal sector survey 2003. • Survey Phases. • Methodology. • Questionnaire. • Population and sampling. • Main results.

Introduction background: • Informal sector employment and its contribution to GDP became an important issue of discussion of policy makers and researchers in Palestine. • No comprehensive picture of the total size and composition of the informal sector in Palestine. • PCBS, has prepared statistics on the informal sector within its master plan. • PCBS has given transport and construction priority: Existing buildings and Transport (informal sector), the work in this surveys started at 1996 as reference year.

Cont- Introduction Contribution of the Existing Buildings (informal sector) to the construction activity by year The percentage contribution of informal Transport and Existing Buildings to the GDP in the Palestinian territories

Definition of the Informal Sector The informal sector is defined according to the following rules: • The informal establishment refers to: • an establishment employs less than or equal 5 employees, and they are mostly proprietors, • unpaid family members, • with low value of capital, • lack of complete accounting records, lack of working contracts …etc. • Professionals such as Doctors, Engineers, Auditors and all other related professions are excluded from the survey frame.

Definition of Informal Household • The Informal household project: refers to the project established by the household or an individual to have a source of income, or a job as a result of difficulties in having the working opportunity in the formal economy, where the project is heavily depending on the social relations and other personal relations. • The agriculture activities are excluded form the definition and the survey since there is no frame and also to avoid any duplication in measuring the economic indicators.

Characteristics of Informal Sector • Its productive units work outside the administrative system. • Its ability to find new jobs with small capital costs. • a high rate of failure as a result of the low rate of the worker output and then a low income. • weak sector as it is in most countries, the workers on informal sector have less funding, general services, and government and bank facilities when they are compared with the private sector.

Objectives of the Informal sector Surveys Objectives of Informal Sector survey: • Number of individuals and establishments in the Informal Sector by economic activity • Number of persons engaged in different categories and their remuneration in the Informal Sector establishments and household projects. • The value of production of both the primary and secondary activities. • The value added and its components, and the contribution of the activities covered by the survey to the Gross Domestic Product (GDP). • Data on production inputs, products and marketing. • Data on the operators, characteristics • Data on the establishments and its organization

Palestinian Practice In InformalSector

First:the current status in calculating informal activities Objectives Questionnaire Sample

Existing Buildings Survey: Provides national accounts with data on the cost of construction of existing buildings in the Palestinian Territory by several characteristics, capital maintenance or improvements and current repairs. Measuring the output of the informal sector engaged in building construction, additions and capital and current maintenance. Providing data on costs of current maintenance necessary for estimating the intermediate consumption of real estate activities. Informal Transport: Number of transport vehicles and number of persons engaged in activity. Value of output and intermediate consumption. Value added components. Fixed assets and capital formation. Other selected variables. Existing Buildings & Informal Transport Objectives

Existing Buildings & Informal Transport Questionnaire • Questionnaire: The questionnaire used in both surveys was designed as simple as the data expect to be kept by respondents - see the plural of enclosures, Existing buildings and transport (informal sector). • Questionnaires takes into account major economic variables pertaining to the examined phenomenon and they meets the needs of the Palestinian National Account.

Existing Buildings Survey: A two stage stratified cluster random sample was used in Existing building survey:. In the first stage a stratified sample of PSUs (enumeration area) was selected out ofall PSU’s which were subdivided by region and locality type for statistical purposes. In the second stage a stratified random sample of buildings was selected out of all buildings in the selected PSUs. Informal Transport survey: The design of the sample is a random cluster stratified sample: First stage: simple stratified sample of stations out of all stations in the frame. Second stage: quota sample proportional to the size of the station. Existing Buildings & Informal Transport Sample

Second: Informal Sector Survey 2003 • Household and establishments Survey (Informal sector ** Survey Phases ** Methodology ** Population and Sample **Results of the Informal Sector Survey

The Survey Phases Surveying the Informal Sector is to be accomplished during one whole year on a quarterly basis. The Survey Program comprises the following two stages: a) Preparation Phase: This phase includes preparing the survey documents which comprise a questionnaire, outputs tables, work plan and time-table, checking and validation rules and codification, necessary programs to tackle data and specifying time for data collection. b)Implementation Phases: • Collecting data from the fieldwork while checking and verifying them. • The preparation of data entails tabulation through checking, verifying and codifying them in congruence with reliable standards set for the purpose. • The next stage includes data entry, extracting the results and finally disseminating the findings.

Methodology The Questionnaire: Two questionnaires had been prepared in respect of surveying the Informal Sector: One for surveying establishments; and, the other for surveying households. The questionnaires cover many of the variables that social and other economic data on working individuals in this sector. The questionnaires include variables in the following main areas: 1. Numbers of workers, their different categories and compensation. 2. Value production resulting from main and secondary activities. 3. Production inputs. 4. Products distribution and marketing. 5. Data on operators and employers. 6. Data on the establishment and organization of production units

Population and Sample of Establishments Survey: The updated data of The 1997 final census of establishments had been used for sampling purposes. It includes identification, classification and economic data on operating establishments in different economic activities in the Palestinian Territory. The frame was used to identify those establishments in the informal sector by definition according to: 1. Employing less than 6 employees. 2. Ownership: Private national sector. 3. Legal entity: Single proprietorship, public company, and public limited liability company. 4. Statistical Sector: The sector of households according to the system of national accounts 1993 and the sector of non-financial institutions.

Population and Sample Sample Design:(Establishment Survey): A one-stage stratified random sample had been prepared. The establishment represents the primary unit of study. Two standards of strata have been used to design an effective sample representative of the survey population according to the following: • Division of population to three geographical strata: The first is the West Bank excluding that part of the Jerusalem governorate that was annexed by Israel after the1967 occupation, the second is the Gaza Strip; and, the third is that part of the Jerusalem governorate. 2. Strata had been established in line with the second-rate standard of economic activity (ISIC) whereby each activity represents one actual stratum.

Coverage The Survey of the Informal Sector (The establishments part) covers the following main economic activities depends on the United Nations International Industrial Classification Standards ISIC-3 : • The Industrial activities. • Contractors activities. • Internal Trade activities. • Services activities. • Transport, Storage and Communications activities

Establishment Survey Sample Size: The sample size for the West Bank and Gaza Strip amounts to: 6,168 establishments out of a total population of 61,086 establishments. The sample had been divided equally, into four parts of 1,542 establishments, each part for one quarter of the year. Weights Calculations The initial weight (the reciprocal of selection probability) was computed and was adjusted after survey implementation to compensate for non-response.

Population and Sample for Household Survey During the 1997 population, housing, and establishments’ census, carried out by the Palestinian Central Bureau of Statistics, economic data relating to workers have been collected. They show the working conditions and whether they are business owners, self-employed, paid workers, etc; work location (of different categories); the economic sector including the workers sector (outside the establishments). This entails business owners or project employers that cannot be considered as an establishment, in accordance with its definition. Those data have been used to identify individuals who are business owners or project employers in the Informal Sector. The specification standards for the purpose of this survey (according to available data in the survey questionnaire) are the following: 1. Working Status: Business owner that employs others or is self-employed. 2. Work location: Within the Palestinian Territory. 3. The Sector: Outside the Establishments.

Households Survey Sampling frame: The sampling frame was derived from the population, housing and establishment census 1997. The frame is a list of the numeration areas, which are certain areas including housing units (an average of 150 units). These areas have been used as primary sampling units (PSU) at the first stage of the selection process of sample. Sample Design: Two-stage stratified random sample has been designed The First Stage: A stratified sample has been selected containing 636-numeration area. These areas have been distributed equally over the one-year quarters where in each quarter sample comprised 159 areas. The stratification of enumeration areas was by Governorate and Type of locality that include urban, rural areas and camps. The Second Stage: 20 households have been specified in the numeration area right from the beginning of counting. In specifying the households, a questionnaire for the household has been designated and has been filled out by each household. Weights calculations The initial weights of households were computed for two stages and were adjusted after survey implementation to satisfy the households distribution during the round by governorate and locality type. The weights of persons were adjusted to satisfy the population distribution during the round for subgroups that are classified by region, sex and age groups.

Results of the Informal Sector Survey (Establishments Part) Percent contribution of the informal establishment in the economic activities Number of Establishments: The results indicate that (54,885) establishments in the Palestinian Territory working in consequence with the adopted definition of the Informal Sector in 2003. Characteristics of Establishment Employers: The following chart shows the percent of the age of the workers in the informal sector.

Results of the Informal Sector Survey (Households Part) Percent of person engaged in the informal work as main job by sex Number of Persons Engaged in the Household Projects (outside establishments): The results of the survey had shown that the number of persons engaged in the Informal Sector through household activities and projects, excluded from economic establishments, during the year has reached 87,261 persons; 90.6% of whom are males and 9.4% are females. Percent of person engaged in the informal work as second job by sex

Labour Force Survey Background : • The Labor Force Surveys constitute one of the basic statistical surveys that have been implemented by the PCBS since 1995. • Considered continuous Household survey Objective: • Provide sufficient data essential for policy maker for developing employment levels in thePalestinianTerritory • Aims to build a database that enables researchers, planners and decision makers to identify changes in the labour market from a year to another and carry out comparisons among similar seasons in different consecutive years • Data provided on the Palestinian labor market constitute data bank. such data serves the Palestinian labor market and monitoring changes therein from time to time

Methodology of LFS • Palestinian LFS Conducted since 1995 at quarterly basis, each round targeted 7,550 household, representing about 23,000 individual aged 15 years above. • Each round of the Labour Force Survey covers all the 481 master sample areas Basically, the areas remain fixed over time, but households in 50% of the EAs are replaced each round • The same household remains in the sample over 2 consecutive rounds • A 50 % overlap is then achieved between both consecutive rounds and between consecutive years (making the sample efficient for monitoring trends) • The non-response rate was between 11%-13%.

Informal Employment and Informal SectorData Collection Through 1-2 survey approach •Data is collected in two phases •First phase—labour force survey (LFS) as based household survey •Adding questions to LFS to collect data on informal employment •Adding questions to LFS to identify informal sector projects or HUEMs (household unincorporated enterprises of at least market production) •Collect data on employment, including informal employment •Collect data on characteristics to be able to identify HUEMs •Second phase— •Use first phase data to construct sampling frame of HUEMs • Conduct HUEM survey to Collect data on HUEMs(sample of Huems or all Huems) Justification: The informal sector projects (HUEMS) are not covered in updated list frame

Limitations and Evaluations Pros+: 1-LFS provides data for employment in general (formal employment and informal employment). ,and other data for population characteristics. 2- The attached household survey provides updated data for informal sector which can’t be achieved by economic census or population census. 3-LFS is conducted quarterly and with rotational sample(partially repeated) which give the ability for monitoring the informal sector seasonal changes. 4- The cost of conducting informal sector and informal employment survey by attaching to an existing household survey is relatively low.

Cons : 1- Accurate measurement of the informal sector indicators by economic activity and other economic characteristics may not be assured because Sample design and weighting procedure of LFS are based on the distribution of households and individuals which does Not reflect the distribution of informal sector projects (HUEMs) and no additional information for stratification of the sample design or weighting procedure are available. 2- The data of labor force survey are obtained by proxy response, and generally from the wife or non-worker member in the household. The informal sector survey requires non-proxy response and the data have to be obtained from the person who manages the informal sector project in order to obtain accurate data of his work. This point will affect the goals of the informal sector survey, and if we allow the interviewer to come back to the household to meet the person who manages the informal sector project, this willaffect the labor force survey.

Questions for discussion • If the expected observations of informal sector projects in phase1 is relatively small. Should we add additional sample(additional enumeration areas) to LFS? • If we need additional sample to LFS in phase1 there will difficulty in weighting data of informal sector projects. Are there suggestions or recommendations to overcome the difficulty? • LFS sample is rotational sample in which households are repeated partially in two rounds(50% in two successive rounds). Are there suggestions or recommendations to overcome the difficulty?

Suggested Questions for discussion • If we need dissemination for two periods or more together there will difficulty in weighting data of informal sector projects. Are there suggestions or recommendations to overcome the difficulty? • Could we compare weighting results of informal sector with another source of data such as informal sector data that are obtained from last census 2007? • What is the time period separation between stage1 and stage2 that can be recommended ? is it related to reference period of quarter? • Is it worthy to add questions concerning the worker if he would change his informal work to a formal work. • Is it worthy to add question concerning if the workers might change his activity.

Palestinian Central Bureau of Statistics