Comments on draft SNA chapter: Chapter 25: Informal aspects of the economy

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1 Cmments n draft SNA chapter: Chapter 25: Infrmal aspects f the ecnmy Deadline fr s: 30 September 2008 Send s t: sna@un.rg Yur name: Yur cuntry/rganizatin: Cntact (e.g. address): Mr Sanjiv Mahajan UK / Office fr Natinal Statistics Head f Natinal Accunts Strategy and Develpment Natinal Accunts C-rdinatin Divisin Zne GE 108 Office fr Natinal Statistics 1 Myddeltn Street Islingtn Lndn EC1R 1UW Tel n. +(44) sanjiv.mahajan@ns.gv.uk Submissin date: 30 September 2008 This template allws yu t recrd yur s n draft SNA chapter 25 Infrmal aspects f the ecnmy and, at the same time, makes it easy fr us t use yur s in cnsidering revisins t the draft chapter. Yu may cmplete any r all parts f the template. There is n file cmparing existing text with draft text fr this chapter because there is n equivalent chapter in the 1993 SNA. Save this template and send it as an attachment t the fllwing address: sna@un.rg Part I: s In the space belw, please prvide any general s. This may cver e.g. the structure f the chapter, issues missing and (lack f) cnsistency with ther chapters f the 2008 SNA. s: 1

2 This is a shrt and well-written chapter albeit sme changes are needed t imprve the flw and readability. Given the emphasis in this chapter n the infrmal sectr, it makes mre sense t re-title the chapter, either SNA and links t the Infrmal Sectr r The Infrmal Sectr. In terms f structure, there shuld be a brief sectin (i.e. befre Sectin B) n the cverage and prductin bundary as laid ut by the SNA. This is imprtant given the rle and starting pint f the SNA and the use and cverage f estimates like GDP and GNI. Mre detail and the treatment f a number f areas (briefly) is needed t prvide a fuller and mre balanced picture: Either via a diagrammatic apprach r tabular (shwing inclusins and exclusins), the links between the infrmal sectr and the main bdy f the SNA accunts need t be made clearer. In line with the previus pint, mre is needed n hw t extract data fr the infrmal sectr frm the main sequence f the SNA accunts, and the cncepts underlying the infrmal sectr as ppsed t the evlutin and discussins cvering this area. Difficulties in measuring the varius areas such as hidden ecnmy. Fr the different types f activity (e.g. illegal, hidden, etc.) need t prvide examples f the type f units undertaking them and the links t any under-recrding f the units n Business Registers, thus survey results thrugh t fficial estimates like GDP. Is there a need t cver hw the infrmal prductin activities are measured in vlume terms? Need t be cnsistent with the use f terminlgy thrughut the chapter, fr example infrmal sectr r infrmal ecnmy given n difference has been prvided. Style and cnsistency pints fr this chapter and/r acrss SNA chapters This sectin is evlving and expanding thrugh the prcess f the feedback prvided n the SNA chapters. This shuld be cnsidered as a check list reflecting varius issues identified thrugh the chapters t date but the issue(s) may nt ccur in each and every chapter. These are a number f specific pints which yu may wish t cnsider fr cnsistency in the editing f the revised SNA as a whle publicatin. Examples include: There are varius ccurrences f American spelling and English spelling f wrds. I d nt knw which apprach yu are applying but cnsistency within each chapter, and acrss the chapters, is necessary. I wuld recmmend the English spelling (nt surprisingly!). Fr example, in this 2

3 chapter, bth versins have been used, fr example, rganizatins shuld be rganisatins. There is an imprtant style pint which increases the usefulness fr the reader. Many f the crss-paragraph references, fr example, if there are exclusins in a list f examples, t knw where the exclusins are included elsewhere in the SNA in the same text reference is extremely helpful. Althugh it is time and resurce intensive t crss-check all such references, this needs t be balanced against the value and usefulness fr the reader as well as ensuring cnsistency acrss the SNA. The separatin f either a list f examples r list f bullet pints need t be cnsistent acrss, e.g. ; fllwed by fr the penultimate pint with and r use full stps fr each pint. Whichever the apprach, it needs t be the same acrss the SNA. Als the beginning f a bullet pint shuld start with a capital letter r a lwercase letter, again cnsistency is needed. In the text, reference t tables shuld be Table x.x and nt as table x.x. Use f Latin phrases r the English equivalent written in full? Again, cnsistency is the underlying theme, I am happy with either apprach. 3

4 Part II: Cmments n specific draft paragraphs and sectins All s n specific draft paragraphs are welcme. They can be abut e.g. scpe, cntent and clarity. Prpsing a cncrete alternative text r table is als pssible. Fr the paragraphs in separate sectins, separate frms are used fr prviding and cllecting s (see belw). A. Intrductin (paragraphs ) A table shwing the use f different terms like illegal ecnmy, infrmal ecnmy, hidden ecnmy, nn-bserved ecnmy, undergrund ecnmy, etc. wuld be useful tgether with a sentence r tw prviding sme backgrund descriptin. Paragraphs 25.9 t d nt fit well in the intrductin and shuld be cnsidered as a separate sectin Needs a clearer intrductin as it assumes prir knwledge f the cncepts and terms. What is cvered in SNA prductin bundary and excluded and then a link t the infrmal activity cncept may frm a better intrductin st sentence, replace especially in many develping cuntries and cuntries in transitin. with in mst cuntries Need t als include issues like different taxatin rates and plicies, incme type threshlds, and brder cntrls Need t prvide mre emphasis that the definitive surce fr the cncept and definitins fr the infrmal sectr is set by the ILO, and nt the SNA. Bullet pint (1), remve the - befre and after where they exist st sentence, replace Increasingly it has been realised that prductin with It is recgnised that prductin The first part f this paragraph is cnfusing. It needs t be clearer that the infrmal ecnmy is a subset f the nn-bserved ecnmy. Prfessinal services is a wide categry in terms f labur market classificatin, mre specific examples wuld be useful. * Insert rws in this Wrd table fr each paragraph n which yu wish t. B. Characteristics f units in the infrmal ecnmy (paragraphs ) It is nt clear hw this sectin (i.e. Sectin B) fits in with the Sectin A part cvering The ILO cncept f the infrmal sectr as these are nt the characteristics used by the ILO. Maybe swap them arund and state the way the ILO handle these characteristics in their definitins Need t als describe the cverage and exhaustiveness f the Business Register, and in turn, fr example, the exhaustiveness reservatin EU Member States have t fulfil as part f Statistical Regulatin. 4

5 25.17 Need t cver a number f ther issues such as: Grssing Sampling errr Nn-sampling errr Under-cverage f the ppulatin and universe n the Business Register Need t explain that size is an indicatr but nt a gd indicatr, fr example there are many units which have lw turnver and/r emplyees but fit within the characteristics f units in the infrmal ecnmy Need t explain that illegal activity is a subset f the nn-bserved ecnmy. Sme cuntries d make explicit adjustments f varius illegal activities within their GDP and natinal accunts estimates. Yu may wish t use the UK practice as an example. The UK incrprates specific estimates frm fficial surces fr smuggling (cvering alchl and tbacc) and VAT fraud (cvering missing trader intra-cmmunity VAT fraud n items like mbile phnes, cmputer chips, etc., i.e. high-value lw vlume items) within the UK accunts. It is als wrth recgnising when balancing the supply f prducts and demand fr prducts thrugh the Supply and Use Tables framewrk, the data cnfrntatin will implicitly incrprate sme f the activity missing frm sme f the data surces What is mdern as ppsed t traditinal? Need t be clearer what are the criteria being applied. Als, if sme f the activities are legal and recgnised as within the SNA prductin bundary, it is nt clear why the exclusin reference. Bullet pint (a), last sentence, remve extra space after cncepts. Bullet pint (c), remve - after small. * Insert rws in this Wrd table fr each paragraph n which yu wish t. C. The nn-bserved ecnmy (paragraphs ) th sentence, replace 1990 s with 1990s Again, the link between the nn-bserved ecnmy and the infrmal ecnmy needs t be shwn mre clearly Need t reflect that the tendency f cverage frm varius data surces is that the unbalanced estimate f GDP using the prductin apprach tends t higher than thse frm the incme and expenditure appraches. Even allwing fr this, the prductin apprach is itself nt exhaustive and specific adjustments are still needed. * Insert rws in this Wrd table fr each paragraph n which yu wish t. 5

6 D. The infrmal sectr as defined by the ILO (paragraphs ) st sentence, replace entities with units r institutinal units nd sentence, remve is s. Need t distinguish frm Bed and Breakfast dwellings frm thse that are wner-ccupied dwellings Bullet pint a., the term wn-accunt enterprises is nt a term recgnised in Chapter 4, Institutinal Units and Sectrs, and needs t be explained Replace 1 st sentence with The SNA sub-sectrs split prducers depending upn their dminant activity and cntrl int market prducers, prducers fr wn final use and nn-market prducers A table r a diagrammatic illustratin wuld be very helpful t illustrate the different inclusins and exclusins between the SNA and ILO fr issues like the frmal sectr, infrmal sectr, husehlds, etc. It shuld be clarified that frmal segment f enterprise in SNA is cnfined t nly institutinal sectrs ther than the husehld sectr. * Insert rws in this Wrd table fr each paragraph n which yu wish t. E. Infrmal emplyment (paragraphs ) Need t explain the differences between infrmal emplyment and infrmal sectr, and why sme differences can be seen in Table 24.1 but with n explanatin. Why des the infrmal emplyment definitin g beynd the infrmal sectr, fr example cntributing family wrkers wrking fr a frmal sectr enterprise? Apart frm the first tw sentences, the remaining text cverage f the three categries wuld be better shwn as separate bullet pints fr clarity Replace types f emplyees are cnsidered. with types f wrkers are cnsidered. * Insert rws in this Wrd table fr each paragraph n which yu wish t. 6

7 F. Wrk f the Delhi Grup (paragraphs ) This sectin, althugh very imprtant, shuld really be treated as an annex t the chapter and nt included here. This wuld be in line with the apprach elsewhere in the SNA Bullet pint d., replace five and mre with five r mre. * Insert rws in this Wrd table fr each paragraph n which yu wish t. G. Deriving data n the infrmal ecnmy frm the SNA accunts (paragraphs ) Bullet pint c., replace enterprises with enterprise This distinctin withut clear criteria seems rather weak and subjective. Fr example, when des an activity switch frm mdern t traditinal? rd sentence, need t shw the Manual reference in italics. * Insert rws in this Wrd table fr each paragraph n which yu wish t. H. Appraches t measuring activities undertaken in the infrmal ecnmy (paragraphs ) st sentence, remve establishment as business survey reprting units cver a mix f enterprises, establishments and lcal units. This pint needs t be shwn as a difference frm husehld establishment surveys. The pint f the questins shuld be addressed t all peple in the husehld t see if they are wrking infrmally? The paragraph suggests nly all emplyed peple. Need t cver issues like quality, accuracy, respnse rates f husehld surveys, limited samples which are ften nt representative, and grssing prblems handling utliers Husehld surveys have a prblem f respnse bias when classifying businesses. Even smething that wuld appear simple like industry suffers, s that the prblem f knwledge f the peratins is prbably even mre rife with respnse bias. * Insert rws in this Wrd table fr each paragraph n which yu wish t. 7

8 I. Studies and handbks n the infrmal sectr (paragraph 25.70) Part III. Other specific s Yu are welcme t make ther specific s. T assist yu in ding s, the fllwing pints are prvided as a guide t the types f pints n which yu might wish t. Nte, thugh, that yu are nt restricted t ing n nly these pints. 1. Is the descriptin f the nn-bserved ecnmy (NOE) and exhaustiveness sufficient given the existence f manuals devted t the subject? Yes 2. Is the cncept f the infrmal sectr as defined by the ILO clear? N, mre is needed fr clarity either via diagrams r tables shwing inclusins and exclusins. 3. Is the definitin f infrmal emplyment clear and sufficient? N, see pint Are the suggestins in sectin G t identify the units f interest sufficiently clear? Yes 5. D yu have any s n the data cllectins descriptins in sectin H? Yes, sectin s abve. 6. Are there any ther references yu thing shuld be added t the last sectin? N Specific s: Specific s Yu are als welcme t directly n the PDF file f the draft chapter. Please d s by using Adbe Acrbat Versin 6 r 7. If yu dn t have Adbe Acrbat Versin 6 r 7 and wuld like t make detailed s, please send a message t sna@un.rg requesting a versin f the draft chapter that permits yu t. T ptimize yur ing tls, please dwnlad Adbe Reader 7.0 fr free frm 8