Alternative definitions of informal sector employment in South Africa

Stellenbosch Working Paper Series No. WP21/2008
 
Publication date: 2008
 
Author(s):
[protected email address] (Department of Economics, University of Stellenbosch)
[protected email address] (Department of Economics, University of Stellenbosch)
 
Abstract:

Before the introduction of the Quarterly Labour Force Survey (QLFS) in 2008, Statistics South Africa (Stats SA) has been using the same methodology to derive the informal sector employment throughout the years, focusing on the enterprise registration status to classify workers (which include both self-employed and employees) as either formal or informal sector workers. Although there are difficulties with attempting to provide any consistent trend data (Yu, 2007 & Essop & Yu, 2008), it is generally accepted that informal sector employment grew relatively more rapidly in the late 1990s, and then stabilized at about 2 million in the early 2000s before it increased (albeit more slowly) again since 2005. Nonetheless, recent papers by Devey, Skinner & Valodia (2006) as well as Heintz & Posel (2008) argue that the current classifications used by Stats SA hide a significant degree of informality in the formal economy, as some formal jobs are characterized by conditions that are typical of informal work. Therefore, they propose alternative definitions of informal sector employment, focusing on worker characteristics instead of enterprise characteristics. This paper aims to address the reliability or otherwise of these recent approaches, as well as to suggest better ways to define informal sector employment.

 
JEL Classification:

J00

Keywords:

South Africa, Household survey, Labour market trends, Informal sector

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BER Weekly

13 September 2021
It was a data-heavy week in SA, with the 2021Q2 real GDP data indicating that the economy had better-than-expected recovery momentum in the first half of the year. While growth remained solid in the second quarter, both the survey and actual data released last week revealed the significant impact that the range of shocks at the start of the third quarter...

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