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The Informal Econmy in TurkeyBurhanettin NoğayEge University 2010-2011The Faculty of Economics and Administrative Sciences
Contents1.Introduction2. How to define the informal economy3.How to measure the informal economy3a. Damages of the informa...
1. Introduction
The Informal Economy :
1.Introduction• The official statisticians have referred to this segment – or a closely  comparable one – by various names...
2. How to define the informal economy
Formal Definition of                 “Informal Economy”All economic activities by workers andeconomic units that are – in ...
The informal economy can be also called as the blackeconomy, cash economy, hidden economy, illegal economy,informal sector...
if the intension is to emphasize the clandestineness of economic activities         The informal economy is sometimes also...
1.1 Definitions of the Informal SectorThe basic nature of the informal sector units can be summarized in the following way...
1.2 General characteristics of the informal economyThe informal economy is largely characterised by:– Low entry requiremen...
1.3 Definition by activities (economic units/enterprises)
The international concept also distinguishes between the twosubcategories of informal economy enterprises :– Family enterp...
1.4 Definition by employment categoriesInformal employment is all remunerative work, both self-employment and wageemployme...
1.5 Definition based on the location of informal economy actorsThe categories are:1. Home-based workers:a) Dependent home-...
3.How to measure the informal economy
2.How to measure the informal economy•Many methods used in the calculation of the informal economy. The methodof calculati...
3a. Damages of the informal economy
4.Especially exposed groups within the informal economy
4.Especially exposed groups within the informal economy• The informal economy comprises some of the most exposed as well a...
5.Size of the informal economy in Turkey
5.Size of the informal economy in Turkey•Looking at the size of the informal economy by countries would be important for u...
Economy StatisticsInformal economy (most recent)by country
Economy StatisticsInformal economy (most recent)by country
Economy StatisticsInformal economy (most recent)by country
6. Causes of the informal economy in Turkey
1. Level of development in the countries and there are no necessaryinvestments2.Public or private sector cannot create suf...
• Social ,psychological, political and moral dimensions      can determine informal economy.
7.An advice instead of results• Republic of Turkey Ministry of Finance employees 30 thousand people.Only 10 thousand of th...
Maybe the governments don’t want to solve this problem ?WHY ?        • The informal economy creates demand to formal econo...
Informality is not a fate,but everyone must do its part
“The biggest space in the world is  the space for improvement!”
Thank you!!!!
Informal economy
Informal economy
Informal economy
Informal economy
Informal economy
Informal economy
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Informal economy

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I presented this subject which is"informal economy" in the Vocational Foreign Language II(Timuçin HÜR) course.(2010-2011,Ege University,Economics)

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Informal economy

  1. 1. The Informal Econmy in TurkeyBurhanettin NoğayEge University 2010-2011The Faculty of Economics and Administrative Sciences
  2. 2. Contents1.Introduction2. How to define the informal economy3.How to measure the informal economy3a. Damages of the informal economy4.Especially exposed groups within the informal economy5.Size of the informal economy in Turkey6. Causes of the informal economy in Turkey7.An advice instead of results
  3. 3. 1. Introduction
  4. 4. The Informal Economy :
  5. 5. 1.Introduction• The official statisticians have referred to this segment – or a closely comparable one – by various names like “unregistered”, “unorganised” and “unrecorded” segment of the economy.• Informal economy has a special place and importance for developing countries such as Turkey.• Weighted share of taxes is a known fact that the public finances.• The ratio of tax revenues in total public revenues is 90% in developed countries but 70% in developing countries.• Social , psychological, political and moral dimensions can determine informal economy.
  6. 6. 2. How to define the informal economy
  7. 7. Formal Definition of “Informal Economy”All economic activities by workers andeconomic units that are – in law or inpractice – not covered or insufficientlycovered by formal arrangements.(“Conclusions concerning decent work and the informal sector”: at the 90thInternational Labour Conference 2002)
  8. 8. The informal economy can be also called as the blackeconomy, cash economy, hidden economy, illegal economy,informal sector, underground economy, or unobservableeconomy.
  9. 9. if the intension is to emphasize the clandestineness of economic activities The informal economy is sometimes also called as the shadow economy, hidden economy, disguised economy, underground economy, or twilight economyif the intension is to emphasize the illegality of activities as the black economy, gray economy, or illegal economy or illicit economyif the intension is to emphasize that activities are disguised from State as unofficial economy, non-formal economy, informal economy or unregistered economyif the intension is to emphasize that activities are left outside official GNP due to insignificancethereof. as marginal economy, second economy, or secondary economy
  10. 10. 1.1 Definitions of the Informal SectorThe basic nature of the informal sector units can be summarized in the following waywith the words of ILO (1993: 7, 8, 39): Informal sector units “... generally work at a lowlevel of organisation, have little or no division between labour and capital, and carryon their activities on a small scale.They are run by self-employed persons working alone, with the help of unpaid familymembers or, in some cases, a few hired workers or apprentices ...Informal sector units can adapt quickly to changing economic conditions because theycan lay off workers easily or hire additional workers; labour relations are based onpersonal and social relations rather than formal guarantees.”
  11. 11. 1.2 General characteristics of the informal economyThe informal economy is largely characterised by:– Low entry requirements in terms of capital and professionalqualifications.– A small scale of operations.– Skills often acquired outside of formal education.– Labour-intensive methods of production and adaptedtechnology.
  12. 12. 1.3 Definition by activities (economic units/enterprises)
  13. 13. The international concept also distinguishes between the twosubcategories of informal economy enterprises :– Family enterprises comprised of independent and own-account workers, family workers, apprentices and workers,and with no permanent employees.– Micro-enterprises comprised of units with less than 5 to 10employees (or jobs), and which are not registered asenterprises
  14. 14. 1.4 Definition by employment categoriesInformal employment is all remunerative work, both self-employment and wageemployment that is not recognised, regulated, or protected by existing legal orregulatory frameworks as well as non-remunerative work undertaken in an income-producing enterprise. The informal economy can be described through the followingemployment categories :– (a) Self-employed, i.e. own-account workers , heads of family businesses and unpaidfamily workers ;– (b) Wage workers, i.e. employees of informal enterprises, casual workers without afixed employer, home workers , paid domestic workers, temporary and part-timeworkers and unregistered workers.– (c) Employers, i.e. owners and owner operators of informal enterprises
  15. 15. 1.5 Definition based on the location of informal economy actorsThe categories are:1. Home-based workers:a) Dependent home-based workers which:– Work at home outside the establishment that buys theirproduct;– Agree by prior arrangements to supply goods or services to aparticular enterprise;– Get remunerated through what is paid for their products;– Do not employ workers on a regular basis.b) Independent home-based workers are those who work in theirhome and deliver their products or services to prospective buyers.Their characteristics are those of the self-employed and areclassified as part of the “account workers”.2. Street traders and street vendors.3. Itinerant, seasonal or temporary job workers on building sites or roadworks.4. Those in between the streets and home, e.g. waste collectors.
  16. 16. 3.How to measure the informal economy
  17. 17. 2.How to measure the informal economy•Many methods used in the calculation of the informal economy. The methodof calculation due to the differences from country to country leadsto very different conclusions.•Trying to measure the informal economy methods are usually direct, and indirect 1.Indirect measurement methods 2.Direct measurement methods
  18. 18. 3a. Damages of the informal economy
  19. 19. 4.Especially exposed groups within the informal economy
  20. 20. 4.Especially exposed groups within the informal economy• The informal economy comprises some of the most exposed as well as poor groupson the labour market. Although the informal economy actors are not all poor, themajority of the poor are found in the informal economy.• Non-working age population such as children• Unfortunately in Turkey 60 % of women employed in the informal
  21. 21. 5.Size of the informal economy in Turkey
  22. 22. 5.Size of the informal economy in Turkey•Looking at the size of the informal economy by countries would be important for us toidentify the point where we intend to reach to.•Friedrich Schneider (2002) has estimated size of the informal economy in 110developing, transition and OECD countries.• in developing countries is 41%•in transition countries 38%•in OECD countries 18%•With 32.1% Turkey is pretty above the OECD average (Graph 1).
  23. 23. Economy StatisticsInformal economy (most recent)by country
  24. 24. Economy StatisticsInformal economy (most recent)by country
  25. 25. Economy StatisticsInformal economy (most recent)by country
  26. 26. 6. Causes of the informal economy in Turkey
  27. 27. 1. Level of development in the countries and there are no necessaryinvestments2.Public or private sector cannot create sufficient employmentopportunities for registered3.The share of public sector in economic activities4. Injustice in income distribution and the width of low-income group5.Tax Policy6.Demography7.Inflation and Economic Crises8. Inability in some institution about tax audit
  28. 28. • Social ,psychological, political and moral dimensions can determine informal economy.
  29. 29. 7.An advice instead of results• Republic of Turkey Ministry of Finance employees 30 thousand people.Only 10 thousand of them graduated.• Only the number of branch manager (I don’t mention workers!!) inRepublic of Turkey Ministry of Environment and Forest is more than thenumber of employed in Ministry of Finance•Government should provide sufficient and qualified staffhttp://www.maliye.gov.tr/pergen/istatistik/2005/ogrenim.asphttp://www.cevreorman.gov.tr/teskilat/index.htm
  30. 30. Maybe the governments don’t want to solve this problem ?WHY ? • The informal economy creates demand to formal economy • The informal economy provides employmentWe hope it is not so
  31. 31. Informality is not a fate,but everyone must do its part
  32. 32. “The biggest space in the world is the space for improvement!”
  33. 33. Thank you!!!!

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