ESA/STAT/AC.78/10
18 June
2001
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UNITED NATIONS
DEPARTMENT OF ECONOMIC AND SOCIAL AFFAIRS
STATISTICS DIVISION
Meeting of the Expert Group on
International Economic
and Social Classifications
Proposal for an
alternative structure
of ISIC, Revision 3 for the informal sector
Ralf Hussmanns
International Labour Office
1. Introduction
The informal sector
encompasses a wide range of different activities. In order to recognise the
heterogeneity of the informal sector, analyse the differences between various
segments of the informal sector regarding their income-generating potential,
constraints and other characteristics, and devise appropriate actions for each
segment, policy-makers and analysts need data revealing the structure and
composition of the informal sector. While kind of economic activity (or
industry) is not a criterion to define the informal sector, it is an important
variable to describe the characteristics of informal sector activities. It is
thus used as one of the standard variables for the tabulation of informal
sector data. It is also often used as a variable for the stratification of
informal sector survey samples.
Since the adoption of a
resolution on statistics of the informal sector by the 15th International
Conference of Labour Statisticians (ICLS) in 1993, the ILO Bureau of Statistics
has executed, or provided technical advice to, a considerable number of
technical cooperation projects which were aimed at assisting countries in
various parts of the world (Latin America, Caribbean, Former Soviet Union,
Middle East, Africa, Asia) in the design, conduct and evaluation of informal
sector surveys.
During these projects, a
number of shortcomings were identified regarding the use of ISIC, Rev. 3 for
the classification of informal sector activities by kind of economic activity
(industry). These problems can be grouped in three categories:
(1) excessively large
number of groups at the highest level of aggregation (tabulation categories);
(2) heterogeneity of activities at the level of tabulation categories and
divisions;
(3) insufficient detail at the lowest level of classification (classes).
The problems were described in more detail in a note prepared by the ILO for a
meeting of the UN Technical Subgroup (TSG) of the Expert Group on International
Classifications, which was held in
2. Alternative aggregation
At the highest level of
aggregation, ISIC consists of 17 tabulation categories. The number of
tabulation categories appears to be too large for the classification of
informal sector activities by kind of economic activity, especially for tables
where kind of economic activity is used as an explanatory variable and
cross-classified with other variables. In such tables, the number of sample
units per table cell frequently remains under the minimum number required for
estimates to be made with a reasonable degree of precision. The problem is
compounded by the fact that the distribution of informal sector activities over
the ISIC tabulation categories is very uneven. Informal sector activities tend
to be concentrated heavily in the following tabulation categories: A (if
agriculture is included in the scope of the informal sector), D, F, G, H, I and
O.
For the purposes of
informal sector statistics, it is suggested that an alternative highest level
of aggregation be introduced, with a smaller number of categories obtained by
and large through the aggregation of the existing tabulation categories. To
this end, use of the nine aggregate categories of ISIC Rev. 3 used by the SNA
and the UN questionnaire on national accounts is not a satisfactory solution,
as category 5 (wholesale and retail trade, repair of motor vehicles and
household goods, hotels and restaurants) groups together activities that
represent the vast majority of informal sector units in many countries, while
category 7 (financial intermediation, real estate and other business services)
and category 9 (public administration, defence, compulsory social security and
other public services) refer to activities that are quite irrelevant to an
industrial classification of informal sector activities.
A specific problem arises in respect of tabulation category G which groups
together (i) the repair of motor vehicles, motorcycles and personal and
household groups and (ii) wholesale and retail trade. The problem results from
division 50, which groups together (i) the sale of motor vehicles, motorcycles
and related parts and accessories and the retail sale of automotive fuel with
(ii) the maintenance and repair of motor vehicles and motorcycles; and from
division 52, which groups together (i) retail trade (except of motor vehicles
and motorcycles) and (ii) the repair of personal and household goods.
In the case of the informal
sector, repair services and trade are both groups of activities that are
numerically so important that they should not be grouped together at any level
when presenting statistics for the informal sector by industry. Moreover, these
two groups of activities are undertaken in the informal sector of developing
countries by different units, which differ significantly in terms of the
characteristics of the persons engaged in them, including sex. While the
majority of women in the informal sector is engaged in trade activities, repair
services are almost exclusively rendered by men. The situation is different
from that in developed countries where cars, personal and household goods are
often repaired by the same units which sell them.
The solution adopted in the
present proposal is to create a division 54 entitled "Repair of motor
vehicles, motorcycles and personal and household goods". It is proposed to
divide the division into three groups:
|
541 |
5410 |
Maintenance
and repair of motor vehicles (corresponding to group 502/class 5020 of the
standard ISIC, Rev. 3); |
|
542 |
5420 |
Maintenance
and repair of motorcycles (corresponding to that part of group 504/class 5040
of the standard ISIC, Rev. 3 which refers to maintenance and repair); |
|
543 |
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Repair of
personal and household goods (corresponding to group 526/class 5260 of the
standard ISIC, Rev. 3). |
It is further suggested to
break group 543 down into several classes (see section 3 below).
Division 50 would then be
renamed as "Sale of motor vehicles and motorcycles; retail sale of
automotive fuel" and consist of the following groups/classes:
|
501 |
5010 |
Sale of
motor vehicles; |
|
502 |
5020 |
void; |
|
503 |
5030 |
Sale of
motor vehicle parts and accessories; |
|
504 |
5040 |
void; |
|
505 |
5050 |
Retail
sale of automotive fuel; |
|
506 |
5060 |
Sale of
motorcycles and related parts and accessories (corresponding to that part of
group 504/class 5040 of the standard ISIC, Rev. 3 which refers to sale). |
Given the large number of
street vendors, market vendors, hawkers, etc. in many countries, there should be
as much detail in the classification for retail trade not in stores as there is
for retail trade in stores. To this end, it is proposed to create a division 53
which is entitled "Retail trade, except of motor vehicles and motorcycles,
not in stores" and which replaces group 525 of the standard ISIC, Rev. 3.
It is further suggested to divide division 53 into the following three groups:
|
531 |
5310 |
Retail
sale via mail order houses (corresponding to class 5251 of the standard ISIC,
Rev. 3); |
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532 |
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Retail
sale via stalls and markets (corresponding to class 5252 of the standard
ISIC, Rev. 3); |
|
539 |
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Other
non-store retail sale (corresponding to class 5259 of the standard ISIC, Rev.
3). |
Division 52 would then be
renamed as "Retail trade, except of motor vehicles and motorcycles, in
stores" and consist of the standard ISIC, Rev. 3 groups 521, 522, 523 and
524.
At the most aggregate
level, the alternative structure of ISIC, Rev. 3 proposed for the informal
sector consists of the following nine categories:
|
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Tabulation
categories |
Divisions |
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I.
Agriculture, hunting, forestry and fishing |
A, B |
01, 02,
05 |
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II.
Mining and quarrying, manufacturing, |
C, D, E |
10-37,
40, 41 |
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III. Construction |
F |
45 |
|
IV.
Wholesale and retail trade |
G |
50
(rev.), 51, |
|
V. Repair
of motor vehicles, motorcycles |
G |
54 (new) |
|
VI.
Hotels and restaurants |
H |
55 |
|
VII. Transport,
storage and communication |
I |
60-64 |
|
VIII.
Education, health and other social and |
M, N, O,
P |
80, 85,
90-93, 95 |
|
IX. Other
services |
J, K, L,
Q |
65-67,
70-75, 99 |
3. More detail at the class level
A number of classes in
ISIC, Rev. 3 are too broad and, hence, too heterogeneous for a classification
of informal sector activities. They lump together activities which are
numerically quite important for the informal sector. Moreover, the activities
grouped together often differ quite substantially in terms of capital
requirements and the characteristics of the persons engaged in them (e.g.
men/women, adults/children). To better reflect such diversity, and at the same
time maintain consistency and comparability with other statistics using ISIC,
Rev. 3 as industrial classification, the solution proposed is to add new
classes to the classification whenever possible. This possibility existed when
the last digit of an existing ISIC class was "0" (meaning that there
was in fact no distinction at the class level). In such cases, the
corresponding group was sub-divided in two or more classes ending with
"1" to "9". New classes could also be added in cases where
it was possible to bring an existing ISIC class up to the group level and to
sub-divide the group, that was created in this way, into classes. In cases,
where it was not possible to create new classes in either of these two ways,
the existing ISIC classes were broken down in sub-classes in adding a fifth digit
to the classification. The approach chosen ensures that the alternative
structure developed for the informal sector can be converted to the standard
ISIC, Rev. 3 groupings without cutting across their boundaries.
The problem of broadness
and heterogeneity arises in respect of the following classes, in particular:
2029 (Manufacture of other
products of wood; manufacture of articles of cork, straw and plaiting
materials): The solution proposed is to divide this class into two sub-classes:
20291 Manufacture of other
products of wood;
20292 Manufacture of articles of cork, straw and plaiting materials.
2899 (Manufacture of other
fabricated metal products n.e.c.): It is proposed to change the class title to
"Manufacture of metal cooking utensils; manufacture of other fabricated
metal products n.e.c.". (The change in title does not affect the content
of the class.) It is further proposed to divide the class into two sub-classes:
28991 Manufacture of metal
cooking utensils (i.e. hollow-ware, dinnerware, flat ware, fry-pans, sauce-pans
and other metal cooking utensils);
28999 Manufacture of other fabricated metal products n.e.c.
453/4530 (Building installation): It is proposed to divide Group 453 into three
classes:
453 Building installation;
4531 Plumbing;
4532 Electrical installation;
4539 Other building installation.
454/4540 (Building completion): It is suggested to divide Group 454 into six
classes:
454 Building completion;
4541 Glazing;
4542 Plastering;
4543 Painting, decorating and wall papering;
4544 Floor and wall tiling;
4545 Parqueting and carpentry finishing;
4549 Other building completion.
5232 (Retail sale of textiles, clothing, footwear and leather goods): It is
proposed to divide this class into two sub-classes:
52321 Retail sale of textiles
and clothing;
52322 Retail sale of footwear and leather goods.
5252 (Retail sale via stalls and markets): As mentioned in Section 2, it is
proposed to replace class 5252 by a newly created group 532 (Retail sale via stalls
and markets). It is suggested to divide group 532 into the following classes
and sub-classes:
5321 Non-specialised retail
sale via stalls and markets;
53211 Non-specialised retail sale via stalls and markets with food, beverages
or tobacco predominating;
53219 Other non-specialised retail sale via stalls and markets;
5322 Specialised retail
sale of food beverages and tobacco via stalls and markets;
5323 Other specialised retail trade of new goods via stalls and markets;
53231 Retail sale of pharmaceutical and medical goods, cosmetic and toilet
articles;
53232 Retail sale of textiles and clothing;
53233 Retail sale of footwear and leather goods;
53234 Retail sale of household appliances, articles and equipment;
53235 Retail sale of hardware, paints and glass;
53236 Retail sale of printed or recorded media products;
53239 Other specialised retail sale via stalls and markets;
5324 Retail sale of
second-hand goods via stalls and markets.
5259 (Other non-store retail sale): As mentioned in Section 2, it is suggested
that class 5259 be replaced by a newly created group 539 (Other non-store
retail sale). It is proposed to divide group 539 into the following classes:
5391 Retail sale of food,
beverages and tobacco;
5392 Retail sale of flowers;
5393 Retail sale of newspapers and magazines;
5394 Retail sale of postcards and souvenirs;
5395 Retail sale of lottery tickets;
5396 Retail sale of plastic and paper bags;
5397 Retail sale of household, cosmetic and toilet articles;
5398 Retail sale of textiles and clothing;
5399 Non-store retail sale of other goods.
526/5260 (Repair of personal and household goods): As mentioned in Section 2,
it is proposed to replace group 526 by a newly created group 543. The group
title remains unchanged. Group 543 should be broken down in several classes
according to the type of goods repaired. The following breakdown is suggested:
5431 Repair of bicycles and
other non-mechanised transport equipment;
5432 Repair and alteration of clothing;
5433 Repair of footwear and leather goods;
5434 Repair of household appliances, articles and equipment;
5435 Repair of watches and jewellery;
5436 Repair of optical frames, dentures and artificial limbs;
5439 Repair of other personal and household goods.
552/5520 (Restaurants, bars and canteens): It is proposed to divide Group 552
into three classes:
552 Restaurants, bars and
canteens
5521 In-door restaurants,
canteens, cafés, bars, etc.;
5522 Kiosks, refreshment stands and other out-door eating and drinking places
(excluding terraces and beer gardens connected with in-door restaurants,
canteens, cafés, bars, etc.);
5523 Catering activities; sale of prepared meals and drinks to take away by
customers.
6022 (Other non-scheduled passenger land transport): It is suggested to divide
this class into two sub-classes:
60221 Mechanised
non-scheduled passenger land transport;
60222 Non-mechanised non-scheduled passenger land transport.
6023 (Freight transport by road): It is suggested to divide this class into two
sub-classes:
60231 Mechanised freight
transport by road;
60232 Non-mechanised freight transport by road.
612/6120 (Inland water transport): It is proposed to divide Group 612 into two
classes:
612 Inland water transport;
6121 Mechanised inland
water transport;
6122 Non-mechanised inland water transport.
9309 (Other service activities n.e.c.): This class is rather meaningless for
the informal sector unless it is sub-divided. To introduce further detail, it
is proposed to re-structure Division 93 in moving classes 9301, 9302, 9303 and
9309 up to the group level and dividing the Group 939 thus created into seven
classes. The result is the following structure:
93 Other service
activities;
931/9310 Washing and (dry-)
cleaning of textile and fur products;
932/9320 Hairdressing and
other beauty treatment;
933/9330 Funeral and
related activities;
939 Other service
activities n.e.c.
9391 Shoe shining;
9392 Luggage porting;
9393 Car washing and windshield cleaning;
9394 Car watching;
9395 Escort services, prostitution and erotic massage;
9396 Astrological advice, spiritual activities and fortune telling;
9399 Other services.
The detailed alternative
structure of ISIC, Rev. 3 for the informal sector, which incorporates all the
above-mentioned proposals, is presented as an annex to this paper. All
modifications to the standard classification are highlighted in bold.
29.11.00