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Informal sector employment and informal employment in South Africa

Informal sector employment and informal employment in South Africa. Yandiswa Mpetsheni Executive Manager: Labour Statistics Statistics South Africa 28 September 2009. Objective of the presentation Sources of informal sector employment in South Africa October Household Survey

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Informal sector employment and informal employment in South Africa

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  1. Informal sector employment and informal employment in South Africa Yandiswa Mpetsheni Executive Manager: Labour Statistics Statistics South Africa 28 September 2009

  2. Objective of the presentation Sources of informal sector employment in South Africa October Household Survey Labour Force Survey Quarterly Labour Force Survey Survey of the employers and self-employed Informal employment Presentation Outline

  3. To discuss how informal sector employment and informal employment are measured in South Africa Objective of the presentation

  4. Sources of data and periodicity • October Household Survey (OHS) 1994 – 1999 (annual) • Labour Force Survey (LFS) 2000 – 2007 (March, September) • Quarterly Labour Force Survey (QLFS) from Jan 2008 to date – Quarterly frequency • Survey of Employers & Self-employed (three year frequency)

  5. Scope and coverage • Surveys household based • Coverage: 30 000 dwelling units • Reporting levels: National and provincial

  6. October Household Survey (OHS)

  7. Formal/Informal sector definition was based on registration of the business entity. Question used to compute informal sector employment was as follows: Do you consider your work/business to be formal or informal October Household Survey

  8. October Household Survey • 1994 – 1996 : formal/informal distinction only for employers and self employed persons. • 1997 – 1999 : same questions asked of everyone employed OHS definition of the informal sector was based on the registration of the business entity

  9. Challenges with OHS definition • Registration concept not clear for some respondents • Definition difficult for employees who did not know if the businesses they were employed in were registered • Self- perception question was used to measure the formal/informal sector employment and thereby there was no objective criteria.

  10. Labour Force Survey (LFS)

  11. Formal/Informal self-perception plus the following questions: Size: Asked of all employed From 2000: UIF, Location VAT registration Labour Force Survey LFS used the self-perception question on the informality of the business to measure the informal sector

  12. Self- perception question was used to measure the formal/informal sector employment. Employees did not always know if business they were working in was registered or not. The registration concept was not clear as it included any registration (eg medical associations, VAT, etc) Challenges with LFS definition

  13. Quarterly Labour Force Survey (QLFS)

  14. Informal sector comprises: Employers, own-account workers and persons working unpaid in their household business ( where the business is not registered for VAT or income tax) Employees (not registered by their employers for income tax and working in establishments of less than 5 employees) QLFS

  15. The informal sector in the QLFS Employed Employers; Own-account; Working unpaid in hhold business Employees Income tax deducted by employer Registered for VAT or Income tax No No Size of establishment less than 5 employees Yes Informal sector

  16. What informed the choice of objective measure • Need to be clear of what registration comprised (VAT registration and income tax registration) • Consistent with the establishment register • Need to use an objective criteria rather than self perception in defining the informal sector.

  17. Survey of employers and the self-employed (SESE)

  18. Survey of Employers and the Self-Employed • Two-stages: • LFS questionnaire (2001, 2005) - All employed persons • QLFS questionnaire (2009 and every 3 years thereafter) • 3. SESE questionnaire: • Persons operating a business(es) with or without a partner • AND the business not registered for VAT (annual turnover of R1 mil or more) • Report on individuals and the characteristics of their businesses

  19. Questions in SESE • Location of the business premises • Set of accounts • Access to finance • Employees (paid/unpaid, earnings) • Expenditure • Profit/turnover

  20. Informal employment

  21. Informal employment • First published in 2008 • Done on quarterly basis through the QLFS

  22. Definition • Informal employment comprises • all persons employed in the informal sector, • all persons helping unpaid in a household business, • all persons employed in private households and • employees in the formal sector who are not entitled to any of the following benefits: medical aid from the employer, contribution to pension by employer and a written contract.

  23. Employed: Market production activities Informal sector Employers, own-account, employees Helping unpaid in their household business Employed in private households FormalSector Employees : - Entitled to medical aid or - Contribution to pension - written contract No Informal employment* • * Excludes employers and own-account workers who are in the formal sector that do not have either medical aid or pension plans. Informal Employment

  24. Questions asked • Pension or retirement fund • Paid leave • Contribution to UIF • Medical aid access • Written contract

  25. Informal employment results

  26. Formal and Informal Sector employment

  27. Questions?

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