a quick statistical review of informal employment dynamics in thailand

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A Quick Statistical Review of Informal Employment Dynamics in ThailandTiraphap FakthongFaculty of Economics, Thammasat University (Thailand)23rd September 2014, at Chulalongkorn University, Thailand

Our primary questionsWhat is the definition of the informal employment?

Who and where are they?

How many are they and what significance do they have to the Thai economy?

What about inequality?

Is informal employment good or bad?

What should we (the gov.) do next?

Terminology and dataImportant Terminology:Informal economy Informal sector enterprises Employment in the informal sectorInformal employment

Data covering 2000 - 2012National Statistical Office of Thailand (NSO)Labour Force and Migration SurveysMinistry of Labour of Thailand (MOL)Other related agencies

International definition ILO/UN

Informal isall economic activities by workers and economic units that are not covered or insufficiently covered by formal arrangements

Informal sector enterprisesUnincorporated enterprises: enterprises owned by individuals or households that are not constituted as separated legal entities independently of their owners, and for which no complete accounts are available that would permit a financial separation of the production activities of the enterprise from the other activities of its owner

Size is below a certain threshold

All or at least some of the goods or services produced are meant for sale or barter. Market orientation

Defined by national circumstances

Lack of registration

Employment in the informal sector

all persons who, during a given reference period, were employed in at least one of the informal sector enterprise, irrespective of their status in employment and whether it was their main or a secondary job

Informal employment Persons employed in the informal sector + persons employed in informal jobs. non-standard, atypical, irregular, precarious, unprotectednot covered by existing regulations (social protection, benefits

The Hussmanns (2004) MatrixThe 17th International Conference of Labour Statisticians (ICLS), in 2003, endorsed a definition of informal employment based upon a building block approach, as set out in the matrix above. It includes not only informal employment but other workers who may be working in formal enterprises but without a formal job or those working formally within the informal sector. It integrates the production-based approach with a job based approach (See Table above) based on Hussmans (2004). Total informal employment, under this conceptual framework, consists of cells 1-6 and 8-10 (cell 7 is counted under formal employment, though it belongs to the informal sector).

Thai official definition - NSO

In practice, often because of a lack of data on variables recommended for measuring informal employment as shown in the matrix, informality is defined by either work status, or size of enterprises, or access to social protection.

Thailand conducts regular labour force surveys (LFS) every quarter that provide comprehensive data and details of employment activity, status, industry and occupation.

However, wages in the labour force surveys, relate only to those who are actively working as government/ public enterprise and private employees.

Since 2005, the third quarter LFS has had an informal employment survey module (IES) attached to it.

In this module informal employment is defined by the workers who are not covered by social protection.

Formal employment, on the other hand, includes workers who are protected by existing labour legislation and includes the following - government employees, state enterprise employees, teachers based in private schools, employees of foreign governments and private employees who are under the coverage of labour laws.

This definition is not entirely in line with the recommendations of the 17th ICLS, but it provides an approximate picture of workers who are likely to be informal.

According to this definition, informal employment accounts for 62.3 per cent of the total employment in Thailand in 2010 and gradually increased to 62.5 and 62.7 per cent in 2011 and 2012, as per the National Statistics Office, based on the definition of access to social security.

Measuring informal employment using the official Thai survey data

Lets take a look a the statistics:

A quick review on Growth and Income distribution

Will higher Economic development lead to a better society?Source: IMF: World Economic Outlook Database, April 2012.

Wage share

"Source: UN Data complied from National Accounts Country Data [Table 4.1 Total Economy, Generation of Income Account]For Thailand, the data were obtained and calcualte directly from National account avialable on NESDB website: http://www.nesdb.go.tFor Singapore, the data were taken from ILO Global Wage Database 2012For Wage & salaried workers (employees) to total employment, the data were obtianed from ILO: Key Indicators of the Labour Market, 7th EditionNote: (Unadjusted) Wage share = Compensation of employees (LCU) / GDP at market price (LCU)

Exploitation in the developing countries labour market

Growing informal employment

In many countries, both developed and developing, the gap between rich and poor households has been growingIncome distributionThailandIndonesiaThe World Bank said poverty rate is declining. However inequality is still there

In many countries, both developed and developing, the gap between rich and poor households has been growingIncome distributionPhilippinesLao PDRSource: 1. Thailand Socio-economic survey 1994, 2000, 20112. Indonesia National labour force survey 2000, 20113. Lao PDR national labour force survey 20104. Philippines labour force suvery 2005 (Q3), 2011 (Q3)

Assets/resource allocation in the family?

The informal employment around the world

Statistical update on employment in the informal economy, ILO - Department of Statistics, June 2012



Informal employment and Gender

Informal employmentInformal employment as % of non-agricultural employmentCountryTotalFemaleMaleYearSourceChina32.635.730.12010Source: China Urban Labor Survey (six cities) Thailand42.343.541.22010Source: Informal Employment Survey Sri Lanka62.155.765.22009Source: Sri Lanka Labour Force Survey Viet Nam68.266.869.42009Source: The Viet Nam 2009 Labour Force Survey Philippines70.170.269.92008Source: Informal Sector Survey Indonesia72.572.972.32009Source: Informal Sector Survey Pakistan78.475.778.72009/10Source: Labour Force Survey India83.684.783.32009/10Source: National Sample Survey, 66th Round Nepal86.491.883.82008Source: Labour Force Survey Note: Indonesia includes only Banten and Yogyakarta; Sri Lanka excludes the Northern Province; China covers six urban areas.Source: ILO and WIEGO: Women in Informal Employment: Globalizing and Organizing (forthcoming), referencing official sources. Available at: http://laborsta.ilo.org/informal_economy_E.html; official national sources.

Womens income in the Asian economyPercentile Group of income from low to high (Left to right)1st2nd3rd4th5th6th7th8th9th10thThailandGenderMale47.7%46.7%55.1%49.1%54.8%56.5%57.2%57.4%59.3%57.8%2011Female52.3%53.3%44.9%50.9%45.2%43.5%42.8%42.6%40.7%42.2%VeitnamGenderMale47.9%50.4%57.0%57.8%60.9%65.6%59.0%63.0%65.0%69.7%2011Female52.1%49.6%43.0%42.2%39.1%34.4%41.0%37.0%35.0%30.3%PhilippinesGenderMale25.6%55.0%62.0%60.0%57.4%65.3%66.6%66.1%68.8%72.9%2011Female74.4%45.0%38.0%40.0%42.6%34.7%33.4%33.9%31.2%27.1%Lao PDRGenderMale63.2%65.9%55.4%54.9%59.3%62.5%66.8%79.9%74.6%77.5%2010Female36.8%34.1%44.6%45.1%40.7%37.5%33.2%20.1%25.4%22.5%IndonesiaGenderMale39.1%52.2%62.6%66.8%70.9%70.2%73.6%69.4%66.7%74.3%2010Female60.9%47.8%37.4%33.2%29.1%29.8%26.4%30.6%33.3%25.7%

The Low paid by genderThailand2011Source: Thailand Socio-economic survey 2011Low pay workers by genderLow payAbove 2/3 medianBelow 2/3 medianCountColumn N %CountColumn N %GenderMale 6,882,988 81.1% 1,604,708 18.9%Female 5,638,590 79.0% 1,498,348 21.0%Total 12,521,578 80.1% 3,103,056 19.9%

Viet Nam2011Source: Viet Nam labour force survey 2011Low pay workers by genderLow payAbove 2/3 medianBelow 2/3 medianCountColumn N %CountColumn N %GenderMale 33,654,909 60.5% 8,362,536 57.7%Female 21,991,701 39.5% 6,121,942 42.3%Total 55,646,610 79.3% 14,484,477 26.0%

The Low paid by genderPhilippines2011Source: Philippines labour force suvery 2011 (Q3)Low pay workers by genderLow payAbove 2/3 medianBelow 2/3 medianCountColumn N %CountColumn N %GenderMale 468,436,218 67.3% 86,817,010 55.5%Female 228,094,551 32.7% 69,729,336 44.5%Total 696,530,769 81.6% 156,546,346 22.5%

Indonesia2010Source: Indonesia National labour force survey 2011Low pay workers by genderLow payAbove 2/3 medianBelow 2/3 medianCountColumn N %CountColumn N %GenderMale 16,009,309 76.1% 5,014,666 23.9%Female 7,933,293 69.0% 3,564,249 31.0%Total 23,942,602 73.6% 8,578,915 35.8%

vulnerable employment is the sum of own-account workers and contributing family workersThose who are unpaid - Vulnerable employmentCountryYearShare of vulnerable employment in total employment (%)Singapore20119.6Taiwan, China201117.7Malaysia201021.7Philippines201141.2Sri Lanka201041.9Thailand201153.5Indonesia201157.2Mongolia200957.5Viet Nam201162.5Pakistan200863.1Cambodia201168.5Vanuatu200970.0Bhutan201170.9India201080.8Nepal200881.9Bangladesh200585.0Lao PDR200588.0

Source: ILO Key Indicators of the Labour Market, 7th Edition (Geneva, 2011).

Vulnerable employment by genderThailandVunlerable employmentVunlerable employment20002011UrbanRuralUrbanRuralMale41.0938.0346.4648.65Female58.9161.9753.5451.35

PhilippinesVunlerable employmentVunlerable employment20052011UrbanRuralUrbanRuralMale55.5863.7753.0061.56Female44.4236.2347.0038.44

IndonesiaVunlerable employmentVulnerable employment20002010UrbanRuralUrbanRuralMale60.1957.7355.2044.35Female39.8142.2744.8055.65

LaoVunlerable employment2010UrbanRural with roadRural without roadMale49.01%50.33%50.38%Female50.99%49.67%49.62%

Source: 1. Thailand Socio-economic survey 1994, 2000, 20112. Indonesia National labour force survey 2000, 20113. Lao PDR national labour force survey 20104. Philippines labour force suvery 2005 (Q3), 2011 (Q3)

Informal employment vs poverty

Informal employment and poverty

the proportion of women workers engaged in informal employment is generally greater than the proportion of men workers;

women are concentrated in the more precarious types of informal employment;

the average earnings from these types of informal employment are too low, in the absence of other sources of income, to raise households out of poverty.

Statistics from a variety of developing countries show that, fully 50 to 80 per cent of non-agricultural employment is informal.

Between 60 and 70 per cent of informal workers in developing countries are self-employed, including employers, own-account workers and unpaid contributing family workers in family enterprises (ILO 2002b).

The remaining 30 to 40 per cent are informal wage workers, including the employees of informal enterprises, casual day labourers, domestic workers and industrial out-workers.



The informal employment in Thailand

What significance do they have to the Thai economyThese activities have an increasing role in creating jobs, providing income, and producing goods and services.

Share of informal and formal employment in each sector in 2009, and sectoral employment growth during 2004-2009Source: Authors compilation based on Bank of Thailand Database (2013) and SES, NSO (2009)SectorInformalFormalShare of employment 2009Employment growth 2009-2004Agriculture, Hunting and Forestry92.90%7.10%38.04%7.49%Fishery93.60%6.40%1.25%7.09%Mining and Quarrying36.00%64.00%0.15%1.54%Manufacturing43.50%56.50%15.78%-1.88%Electricity, Gas and Water Supply22.60%77.40%0.29%1.81%Construction86.70%13.30%6.00%10.17%Wholesale and Retail, Repairing Motor Vehicles/ Motorcycles/ Personal Goods/Household Goods76.90%23.10%15.97%8.76%Hotel and Restaurant79.90%20.10%6.50%13.92%Transport, Storage and Communication61.10%38.90%3.17%3.60%Financial Intermediate23.10%76.90%0.85%23.51%Real Estate, Renting and Business Activities43.40%56.60%1.80%17.63%Public Administration and Defence, Compulsory Social Security17.60%82.40%2.86%30.52%Education12.70%87.30%2.97%9.37%Health and Social Work14.10%85.90%1.58%24.55%Other Activities Related to Community/ Social/ Personal Service82.00%18.00%2.09%14.44%Private Households with Employed Person91.00%9.00%0.70%-2.23%Extra-territorial Organization and Bodies53.80%46.20%0.01%17.62%

Rate of growth of GDP and Share of informal and vulnerable employment to total employment in Thailand 2005 - 11Source: NESDB (2011) and LFS/IES, NSO (2011).

Share of informal employment, by occupation, 2010

Some basic characteristics and inequality

Share of worker by work status 2011 Source: based on SES, NSO (2011).Work status2011EmployeeGovernment employee8.64%State enterprise employee0.64%Private company employee33.27%Self-employed workerEmployer3.03%Own-account worker34.14%Member of producers' cooperative0.03%Unpaid family workerContributing family worker20.25%

Average monthly earnings by categories of formal and informal employed 2011Source: based on SES, NSO (2011).Average monthly earningsEmployeesInformalFormalTotalWage workersMale 6,742.76 15,496.91 10,596.86 Female 5,900.32 13,358.98 9,479.14 Total 6,400.42 14,544.89 10,122.77 Self-employedFarmMale 2,229.05 3,063.63 2,270.07 Female 1,714.72 2,409.14 1,744.72 Non-farmMale 8,839.43 10,743.59 9,006.88 Female 6,793.19 7,068.48 6,822.01 Total 3,686.36 5,097.20 3,774.77 Total 4,437.49 10,237.11 5,839.30

Monthly wage (baht) of formal and informal sector employees, by industry, 2010

Earnings distributions of workers in the formal and informal employment in 2011Note: This figure includes 13,244,192 observations of members from every household. For the unpaid-family workers, the data imputation is done with the total households income per member. Source: based on SES, NSO (2011).

Share of informal employed individual by income quintile 2011 Note: This figure includes 13,244,192 observations of members from every household. For the unpaid-family workers, the data imputation is done with the total households income per member. Source: based on SES, NSO (2011).

Safety in the workplaceThe accident and injury rate are all accidents and injuries that take place in the workplace per 1,000 workers. Defined by the Ministry of Labour, accidents and injuries cover any harmful event that leads to death, disability, loss of some parts of the body or sick leave.

Share of employed persons who experienced an accident or injury, 200508The work-related accidents in the informal sector was substantially more than that in the formal sector in 2010, when the number of injured formal sector workers was about 1.2 million while that of injured informal sectors workers was 3.5 million. The proportion of formal sector workers injured at work was a little less than half (8.2 per cent) of those among the informal sector workers (14.6 per cent)

The consequences of working informally have less access to basic infrastructure and social services;face greater exposure to common contingencies (e.g., illness, property loss, disability and death);have less access to the means to address these contingencies (e.g., health, property, disability or life insurance);have, as a result, lower levels of health, education and longevity;have less access to financial, physical and other productive assets;have fewer rights and benefits of employment;have less secure property rights over land, housing or other productive assets; andface greater exclusion from state, market and political institutions that determine the rules of the game in these various spheres.

Possible future implicationsA greater emphasis on:revisiting Thailands labour market policies to ensure better employment to reduce decent work deficits in the informal economy.education and skills to enhance productivity, earnings, and equality.institutions for improving suitable jobs for informal employed female workers including safety and security job.further investigation on the situation of inequality in the informal employed workers in the Thai labour market to better understand their needs.

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Tiraphap Fakthong

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Rangsit Campus: Room 256 Duen Nunnag BuildingFaculty of Economics, Thammasat University

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