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Palestinian Central Bureau of StatisticsPalestinian Central Bureau of Statistics

PCBS Experience inPCBS Experience in MeasuringMeasuring

Informal SectorInformal Sector

13-15/04/200813-15/04/2008

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Table Of ContentsTable Of Contents

1.1. IntroductionIntroduction

2.2. Definition of informal sectorDefinition of informal sector

3.3. Characteristics of informal sectorCharacteristics of informal sector

4.4. Objectives of informal sector surveysObjectives of informal sector surveys

5.5. Palestinian Practice In Informal SectorPalestinian Practice In Informal Sector

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Table Of Contents/ContTable Of Contents/Cont

1.1. Current status in calculating informal Current status in calculating informal activities.activities.

2.2. Informal sector survey 2003.Informal sector survey 2003.• Survey Phases.Survey Phases.

• Methodology.Methodology.

• Questionnaire.Questionnaire.

• Population and sampling.Population and sampling.

• Main results.Main results.

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Introduction

background:background:

Informal sector employment and its contribution to GDP became an Informal sector employment and its contribution to GDP became an important issue of discussion of policy makers and researchers in important issue of discussion of policy makers and researchers in Palestine. Palestine.

No comprehensive picture of the total size and composition of the No comprehensive picture of the total size and composition of the informal sector in Palestine. informal sector in Palestine.

PCBS, has prepared statistics on the informal sector within its master PCBS, has prepared statistics on the informal sector within its master plan.plan.

PCBS has given transport and construction priority: Existing buildings PCBS has given transport and construction priority: Existing buildings and Transport (informal sector), the work in this surveys started at 1996 and Transport (informal sector), the work in this surveys started at 1996 as reference year. as reference year. 

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Contribution of the Contribution of the Existing Buildings Existing Buildings (informal sector) to (informal sector) to

the construction the construction activity by yearactivity by year

56.7

71.2

0

10

20

30

40

50

60

70

80

2002 2003

The percentage The percentage contribution of contribution of

informal Transport informal Transport and Existing Buildings and Existing Buildings

to the GDP in the to the GDP in the Palestinian territoriesPalestinian territories

3.6

1.7

00.5

11.5

22.5

33.5

4

Existing Buildin(informal sector)

Transport (Informalsector)

Cont- IntroductionCont- Introduction

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Definition of the Informal SectorDefinition of the Informal Sector

The informal sector is defined according to the following rules:The informal sector is defined according to the following rules:

The informal establishment refers to:The informal establishment refers to:

» an establishment employs less than or equal 5 employees, an establishment employs less than or equal 5 employees, and they are mostly proprietors, and they are mostly proprietors,

» unpaid family members, unpaid family members,

» with low value of capital, with low value of capital,

» lack of complete accounting records, lack of working lack of complete accounting records, lack of working contracts …etc.contracts …etc.

» Professionals such as Doctors, Engineers, Auditors and all Professionals such as Doctors, Engineers, Auditors and all other related professions are excluded from the survey other related professions are excluded from the survey frame.frame.

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Definition of Informal HouseholdDefinition of Informal Household

The Informal household project: The Informal household project: refers to refers to

the project established by the household or an individual to have a the project established by the household or an individual to have a source of incomesource of income, or a job as a result of difficulties in having the , or a job as a result of difficulties in having the working opportunity in the formal economy, where the project is working opportunity in the formal economy, where the project is heavily depending on the social relations and other personal heavily depending on the social relations and other personal relationsrelations..

The agriculture activities are excluded form the definition and the The agriculture activities are excluded form the definition and the survey since there is no frame and also to avoid any duplication in survey since there is no frame and also to avoid any duplication in measuring the economic indicatorsmeasuring the economic indicators..

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Characteristics of Informal SectorCharacteristics of Informal Sector

Its productive units work outside the administrative system.Its productive units work outside the administrative system.

Its ability to find new jobs with small capital costs.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 a high rate of failure as a result of the low rate of the worker

output and then a low income. output and then a low income.   

weak sector as it is in most countries, the workers on weak sector as it is in most countries, the workers on informal sector have less funding, general services, and informal sector have less funding, general services, and government and bank facilities when they are compared with government and bank facilities when they are compared with the private sector.the private sector.

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Objectives of the Informal sector SurveysObjectives of the Informal sector Surveys

Objectives of Informal Sector survey:Objectives of Informal Sector survey:

1.1.   Number of individuals and establishments in the Informal Number of individuals and establishments in the Informal Sector by economic activitySector by economic activity

2.2. Number of persons engaged in different categories and their Number of persons engaged in different categories and their remuneration in the Informal Sector establishments and remuneration in the Informal Sector establishments and household projects.household projects.

3.3. The value of production of both the primary and secondary The value of production of both the primary and secondary activities.activities.

4.4. The value added and its components, and the contribution of The value added and its components, and the contribution of the activities covered by the survey to the Gross Domestic the activities covered by the survey to the Gross Domestic Product (GDP).Product (GDP).

5.5. Data on production inputs, products and marketing.Data on production inputs, products and marketing.6.6. Data on the operators, characteristicsData on the operators, characteristics7.7. Data on the establishments and its organizationData on the establishments and its organization

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Palestinian Practice In InformalPalestinian Practice In InformalSectorSector

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First:the current status in calculating First:the current status in calculating informal activitiesinformal activities

ObjectivesObjectives

QuestionnaireQuestionnaire

SampleSample

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Existing Buildings & Informal Transport Existing Buildings & Informal Transport ObjectivesObjectives

Existing Buildings Survey:Existing Buildings Survey: Provides national accounts with Provides national accounts with

data on the cost of construction of data on the cost of construction of existing buildings in the Palestinian existing buildings in the Palestinian Territory by several characteristics, Territory by several characteristics, capital maintenance or capital maintenance or improvements and current repairs.improvements and current repairs.

Measuring the output of the Measuring the output of the informal sector engaged in building informal sector engaged in building construction, additions and capital construction, additions and capital and current maintenance.and current maintenance.

Providing data on costs of current Providing data on costs of current maintenance necessary for maintenance necessary for estimating the intermediate estimating the intermediate consumption of real estate activitiesconsumption of real estate activities. .

Informal Transport:Informal Transport: Number of transport vehicles Number of transport vehicles

and number of persons engaged and number of persons engaged in activity.in activity.

Value of output and intermediate Value of output and intermediate consumption.consumption.

Value added components.Value added components. Fixed assets and capital Fixed assets and capital

formation.formation. Other selected variables.Other selected variables.

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Existing Buildings & Informal Transport Existing Buildings & Informal Transport QuestionnaireQuestionnaire

QuestionnaireQuestionnaire: : The questionnaire used in both The questionnaire used in both surveys was designed as simple as the data expect to be surveys was designed as simple as the data expect to be kept by respondents - see the plural of enclosures, kept by respondents - see the plural of enclosures, Existing buildings and transport (informal sector).Existing buildings and transport (informal sector).

Questionnaires takes into account major economic Questionnaires takes into account major economic variables pertaining to the examined phenomenon and variables pertaining to the examined phenomenon and they meets the needs of the Palestinian National they meets the needs of the Palestinian National Account.Account.

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Existing Buildings & Informal Transport Existing Buildings & Informal Transport SampleSample

Existing Buildings Survey:Existing Buildings Survey:A two stage stratified cluster A two stage stratified cluster

random sample was used random sample was used in Existing building in Existing building survey:.survey:.

In the first stage a stratified sample of PSUs (enumeration area) was selected out of all 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:Informal Transport survey:

The design of the sample is a The design of the sample is a random cluster stratified random cluster stratified sample:sample:

First stage: simple stratified First stage: simple stratified sample of stations out of all sample of stations out of all stations in the frame.stations in the frame.

Second stage: quota sample Second stage: quota sample proportional to the size of the proportional to the size of the stationstation..

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Second: Informal Sector Survey 2003Second: Informal Sector Survey 2003

Household and establishments Survey Household and establishments Survey (Informal sector(Informal sector

** Survey Phases** Survey Phases

** Methodology** Methodology

** ** Population and SamplePopulation and Sample

**** Results of the Informal Sector SurveyResults of the Informal Sector Survey

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The Survey PhasesThe Survey Phases

Surveying the Informal Sector is to be accomplished Surveying the Informal Sector is to be accomplished during one whole year on a quarterly basis. The Survey during one whole year on a quarterly basis. The Survey Program comprises the following two stages:Program comprises the following two stages:

a)  a)  Preparation Phase:Preparation Phase: This phase includes preparing the survey documents which comprise a This phase includes preparing the survey documents which comprise a

questionnaire, outputs tables, work plan and time-table, checking and questionnaire, outputs tables, work plan and time-table, checking and validation rules and codification, necessary programs to tackle data validation rules and codification, necessary programs to tackle data and specifying time for data collection.and specifying time for data collection.

b)b)  Implementation Phases:Implementation Phases: – Collecting data from the fieldwork while checking and verifying them.Collecting data from the fieldwork while checking and verifying them.– The preparation of data entails tabulation through checking, The preparation of data entails tabulation through checking,

verifying and codifying them in congruence with reliable standards set verifying and codifying them in congruence with reliable standards set for the purpose. for the purpose.

– The next stage includes data entry, extracting the results and finally The next stage includes data entry, extracting the results and finally disseminating the findings.disseminating the findings.

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Methodology

The Questionnaire:The Questionnaire:

Two questionnaires had been prepared in respect of surveying the Two questionnaires had been prepared in respect of surveying the Informal Sector: One for surveying establishments; and, the other for Informal Sector: One for surveying establishments; and, the other for surveying surveying householdshouseholds. The questionnaires cover many of the variables . The questionnaires cover many of the variables that social and other economic data on working individuals in this that social and other economic data on working individuals in this sector. The questionnaires include variables in the following main sector. The questionnaires include variables in the following main areas:areas:

1. Numbers of workers, their different categories and compensation.1. Numbers of workers, their different categories and compensation.

2. Value production resulting from main and secondary activities.2. Value production resulting from main and secondary activities.

    3. Production inputs.3. Production inputs.

4. Products distribution and marketing.4. Products distribution and marketing.

5. Data on operators and employers.5. Data on operators and employers.

6. Data on the establishment and organization of production units6. Data on the establishment and organization of production units

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Population and Sample of Establishments Population and Sample of Establishments Survey: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.

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Population and SamplePopulation 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:

1. 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.

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CoverageCoverage  The Survey of the Informal Sector (The establishments part) The Survey of the Informal Sector (The establishments part)

covers the following main economic activities depends on covers the following main economic activities depends on the United Nations International Industrial Classification the United Nations International Industrial Classification Standards ISIC-3 :Standards ISIC-3 :

1.1. The Industrial activities.The Industrial activities.

2.2. Contractors activities.Contractors activities.

3.3. Internal Trade activities.Internal Trade activities.

4.4. Services activities.Services activities.

5.5. Transport, Storage and Communications activitiesTransport, Storage and Communications activities

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Sample SizeSample Size::

The sample size for the West Bank and Gaza Strip amounts to: The sample size for the West Bank and Gaza Strip amounts to: 6,168 establishments out of a total population of 61,086 6,168 establishments out of a total population of 61,086 establishments. The sample had been divided equally, into four establishments. The sample had been divided equally, into four parts of 1,542 establishments, each part for one quarter of the parts of 1,542 establishments, each part for one quarter of the year.year.

Weights CalculationsWeights CalculationsThe initial weight (the reciprocal of selection probability) was The initial weight (the reciprocal of selection probability) was

computed and was adjusted after survey implementation to computed and was adjusted after survey implementation to compensate for non-response.compensate for non-response.

Establishment Survey Establishment Survey

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Population and Sample for Household Population and Sample for Household SurveySurvey

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

1.  Working Status: Business owner that employs others or is self-employed.1.  Working Status: Business owner that employs others or is self-employed.2.  Work location: Within the Palestinian Territory.2.  Work location: Within the Palestinian Territory.3.  The Sector: Outside the Establishments3.  The Sector: Outside the Establishments..

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Households SurveyHouseholds SurveySampling frame:Sampling frame:The sampling frame was derived from the population, housing and establishment censusThe 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 including1997. 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 primaryhousing 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.sampling units (PSU) at the first stage of the selection process of sample.

Sample Design:Sample Design:Two-stage stratified random sample has been designedTwo-stage stratified random sample has been designedThe First StageThe First Stage: A stratified sample has been selected containing 636-numeration area. These: 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 sampleareas have been distributed equally over the one-year quarters where in each quarter sample comprised 159 areas. The stratification of enumeration areas was by comprised 159 areas. The stratification of enumeration areas was by Governorate and TypeGovernorate and Type of locality that include urban, rural areas and camps.of locality that include urban, rural areas and camps.

The Second StageThe Second Stage: : 20 households have been specified in the numeration area right from the20 households have been specified in the numeration area right from the

beginning of counting. In specifying the households, a questionnaire for the household hasbeginning of counting. In specifying the households, a questionnaire for the household has

been designated and has been filled out by each householdbeen designated and has been filled out by each household . . Weights calculationsWeights calculationsThe initial weights of households were computed for two stages and were adjusted afterThe initial weights of households were computed for two stages and were adjusted after survey implementation to satisfy the households distribution during the round by governoratesurvey 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 and locality type. The weights of persons were adjusted to satisfy the population distribution

during theduring the

round for subgroups that are classified by region, sex and age groupsround for subgroups that are classified by region, sex and age groups . .

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Results of the Informal Sector Survey Results of the Informal Sector Survey (Establishments Part)(Establishments Part)

Number of EstablishmentsNumber of Establishments::The results indicate that The results indicate that

(54,885) establishments in (54,885) establishments in the Palestinian Territory the Palestinian Territory working in consequence working in consequence with the adopted with the adopted definition of the Informal definition of the Informal Sector in 2003. Sector in 2003.

Characteristics of Characteristics of Establishment Employers:Establishment Employers:

The following chart shows the The following chart shows the percent of the age of the percent of the age of the workers in the informal workers in the informal sector.sector.

18.8

62.1

18.4

0.60

10

20

30

40

50

60

70

industrialactivities

Internal trade Services Transport ,Storage and

Communications

10.5

28.8

25

35.7

0

5

10

15

20

25

30

35

40

Less than 30 30-39 40-49 50 and above

Percent contribution of the informal establishment in the economic activities

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  Number of Persons Number of Persons Engaged in the Engaged in the Household Projects Household Projects (outside establishments):(outside establishments):The results of the survey The results of the survey had shown that the had shown that the number of persons number of persons engaged in the engaged in the InformalInformal Sector through Sector through household activities and household activities and projects, excluded from projects, excluded from economic economic establishments, during establishments, during the year has reached the year has reached 87,261 persons; 90.6% of 87,261 persons; 90.6% of whom are males and whom are males and 9.4% are females. 9.4% are females.

91.6

8.4

0

20

40

60

80

100

Male Female

Percent of person engaged in the informal work as main job by sex

74.8

25.2

0

10

20

30

40

50

60

70

80

Male Female

Percent of person engaged in the informal work as second job by sex

Results of the Results of the InformalInformal Sector Survey Sector Survey (Households Part)(Households Part)

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Labour Force SurveyLabour Force SurveyBackgroundBackground : :

The Labor Force Surveys constitute one of the basic statistical surveys that The Labor Force Surveys constitute one of the basic statistical surveys that have been implemented by the PCBS since 1995.have been implemented by the PCBS since 1995.

Considered continuous Household survey Considered continuous Household survey

Objective:Objective:

Provide sufficient data essential for policy maker for developing employment Provide sufficient data essential for policy maker for developing employment levels in thelevels in the PalestinianPalestinian TerritoryTerritory

Aims to build a database that enables researchers, planners and decision 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 makers to identify changes in the labour market from a year to another and carry out comparisons among similar seasons in different consecutive years carry out comparisons among similar seasons in different consecutive years

Data provided on the Palestinian labor market constitute data bank. such data Data provided on the Palestinian labor market constitute data bank. such data serves the Palestinian labor market and monitoring changes therein from time serves the Palestinian labor market and monitoring changes therein from time to timeto time

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Methodology of LFSMethodology of LFS

- Palestinian LFS Conducted since 1995 at quarterly basis, each round targeted Palestinian LFS Conducted since 1995 at quarterly basis, each round targeted 7,550 household, representing about 23,000 individual aged 15 years above. 7,550 household, representing about 23,000 individual aged 15 years above.

- - Each round of the Labour Force Survey covers all theEach round of the Labour Force Survey covers all the 481 481 master sample areas master sample areas

Basically, the areas remain fixed over time, but households in 50% of the EAs Basically, the areas remain fixed over time, but households in 50% of the EAs are replaced each roundare replaced each round

- The same household remains in the sample over 2 consecutive roundsThe same household remains in the sample over 2 consecutive rounds

- A 50 % overlap is then achieved between both consecutive rounds and between A 50 % overlap is then achieved between both consecutive rounds and between consecutive years (making the sample efficient for monitoring trends)consecutive years (making the sample efficient for monitoring trends)

- The non-response rate was between 11%-13%.The non-response rate was between 11%-13%.

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Informal Employment and Informal SectorInformal Employment and Informal Sector Data Collection Data Collection Through 1-2 survey approachThrough 1-2 survey approach

••Data is collected in two phasesData is collected in two phases

••First phase—First phase—labour force survey (LFS) as based household surveylabour force survey (LFS) as based household survey

••Adding questions to LFS to collect data on informal employmentAdding questions to LFS to collect data on informal employment

••Adding questions to LFS to identify informal sector projects or HUEMs Adding questions to LFS to identify informal sector projects or HUEMs (household unincorporated enterprises of at least market production)(household unincorporated enterprises of at least market production)

••Collect data on employment, including informal employmentCollect data on employment, including informal employment

••Collect data on characteristics to be able to identify HUEMsCollect data on characteristics to be able to identify HUEMs

••Second phaseSecond phase——

••Use first phase data to construct sampling frame of HUEMsUse first phase data to construct sampling frame of HUEMs

• • Conduct HUEM survey to Collect data on HUEMs(sample of Huems or all Conduct HUEM survey to Collect data on HUEMs(sample of Huems or all HuemsHuems))

Justification:Justification:

The informal sector projects (HUEMS) are not covered in updated list The informal sector projects (HUEMS) are not covered in updated list frameframe

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ProsPros:+:+  1-1-      LFS provides data for employment in general (formal LFS provides data for employment in general (formal

employment and informal employment). ,and other data for employment and informal employment). ,and other data for population characteristicspopulation characteristics..

2- The attached household survey provides updated data for 2- The attached household survey provides updated data for informal sector which can’t be achieved by economic census informal sector which can’t be achieved by economic census or population censusor population census..

  3-3-      LFS is conducted quarterly and with rotational LFS is conducted quarterly and with rotational sample(partially repeated) which give the ability for sample(partially repeated) which give the ability for monitoring the informal sector seasonal changesmonitoring the informal sector seasonal changes..

4- The cost of conducting informal sector and informal 4- The cost of conducting informal sector and informal employment survey by attaching to an existing household employment survey by attaching to an existing household survey is relatively low.survey is relatively low.

Limitations and EvaluationsLimitations and Evaluations

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Cons Cons ::        1- Accurate measurement of the informal sector indicators by 1- Accurate measurement of the informal sector indicators by

economic activity and other economic characteristics may not economic activity and other economic characteristics may not be assured because be assured because Sample designSample design and and weighting procedureweighting procedure of LFS are based on the distribution of households and of LFS are based on the distribution of households and individuals which does individuals which does NotNot reflect the distribution of informal reflect the distribution of informal sector projects (HUEMs) and no additional information for sector projects (HUEMs) and no additional information for stratification of the sample design or weighting procedure are stratification of the sample design or weighting procedure are availableavailable..

2- The data of labor force survey are obtained by proxy 2- The data of labor force survey are obtained by proxy response, and generally from the wife or non-worker member response, and generally from the wife or non-worker member in the household. The informal sector survey requires non-in the household. The informal sector survey requires non-proxy response and the data have to be obtained from the proxy response and the data have to be obtained from the person who manages the informal sector project in order to person who manages the informal sector project in order to obtain accurate data of his work. This point will affect the obtain accurate data of his work. This point will affect the goals of the informal sector survey, and if we allow the goals of the informal sector survey, and if we allow the interviewer to come back to the household to meet the person interviewer to come back to the household to meet the person who manages the informal sector project, this willwho manages the informal sector project, this will affect the affect the labor force surveylabor force survey..

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If the expected observations of informal sector projects in If the expected observations of informal sector projects in phase1 is relatively small. Should we add additional phase1 is relatively small. Should we add additional sample(additional enumeration areas) to LFS?sample(additional enumeration areas) to LFS?

If we need additional sample to LFS in phase1 there will If we need additional sample to LFS in phase1 there will difficulty in weighting data of informal sector projects. Are difficulty in weighting data of informal sector projects. Are there suggestions or recommendations to overcome the there suggestions or recommendations to overcome the difficulty?difficulty?

LFS sample is rotational sample in which households are LFS sample is rotational sample in which households are repeated partially in two rounds(50% in two repeated partially in two rounds(50% in two successivesuccessive rounds). Are there suggestions or recommendations to rounds). Are there suggestions or recommendations to overcome the difficulty?overcome the difficulty?

  Questions for discussionQuestions for discussion

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Suggested Questions for discussionSuggested Questions for discussion If we need dissemination for two periods or more together there If we need dissemination for two periods or more together there

will difficulty in weighting data of informal sector projects. Are will difficulty in weighting data of informal sector projects. Are there suggestions or recommendations to overcome the difficulty?there suggestions or recommendations to overcome the difficulty?

Could we compare weighting results of informal sector with Could we compare weighting results of informal sector with another source of data such as informal sector data that are another source of data such as informal sector data that are obtained from last census 2007?obtained from last census 2007?

What is the time period separation between stage1 and stage2 What is the time period separation between stage1 and stage2 that can be recommended ? is it related to reference period of that can be recommended ? is it related to reference period of quarter?quarter?

Is it worthy to add questions concerning the worker if he would Is it worthy to add questions concerning the worker if he would change his informal work to a formal work.change his informal work to a formal work.

Is it worthy to add question concerning if the workers might Is it worthy to add question concerning if the workers might change his activity.change his activity.