A Quick Statistical Review of Informal Employment Dynamics in Thailand

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

Our primary questions
 What 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 data
 Important Terminology:
 Informal economy
 Informal sector enterprises
 Employment in the informal sector
 Informal employment
 Data covering 2000 - 2012
 National Statistical Office of Thailand (NSO)
 Labour Force and Migration Surveys
 Ministry of Labour of Thailand (MOL)
 Other related agencies…

International definition – ILO/UN

“Informal” is……
 all economic activities by workers and
economic units that are not covered
or insufficiently covered by formal
arrangements

Informal sector enterprises
◦ Unincorporated 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

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,
unprotected
◦ not covered by existing regulations (social
protection, benefits

The Hussmanns (2004)
Matrix
 The 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).
Jobs by status in employment
Own-account
workers
Employers
Contributing
family
workers
Employees
Members of
producers’
cooperatives
Informal Formal Informal Formal Informal Informal Formal Informal Formal
Formal
Sector
Enterprises
n/a ✓ n/a ✓ 1 2 ✓ n/a ✓
Informal
Sector
Enterprises
3 n/a 4 n/a 5 6 7 8 n/a
Households 9 n/a n/a n/a n/a 10 ✓ n/a n/a

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
Labour force survey
(LFS)
Informal employment
survey (IES)
Socio Economic
survey (SES)
Employment Yes Yes Yes
Wage, Earningsa
Yes for Employee only
Yes - for Employee
only
Yes for all
Household’s data No No Yes
Note
No question about social
security
Adds question on social
security coverage
Includes question on
social security
coverage
Notes: a
There are six categories of employed person: 1) Employer; 2) Government Employee; 3)
Private Employee; 4) Own-Account Worker; 5) Unpaid Family Worker; 6) Members of Producers’
Cooperatives.
Source: Authors’ compilation based on LFS/IES, NSO (2010) and SES, NSO (2011)

Let’s take a look a the statistics:
A quick review on Growth and
Income distribution

Will higher Economic
development lead to a better
society?
3.46
2.92
4.82
8.63
6.39
5.77
3.23
3.67
2.12
6.26
8.17
5.18
6.12
2.71
4.51
1.99
6.25
9.34
5.19
7.76
5.28
3.81
2.44
5.92
8.74
5.66
6.49
3.66
WORLD Developed
Economies &
European Union
Central & South-
Eastern Europe
(non-EU) & CIS
East Asia South-East Asia &
the Pacific
South Asia Latin America &
the Caribbean
GDP annual average rate of growth (%)
1993-2000 2001-2005 2006-2011 1993-2011
Source: IMF: World Economic Outlook Database, April 2012.

Wage share
Country 1993-2000 2001-2005 2007-2011
Trendline 1993-
2000
1993-2011
China 53.63% 51.98% 48.03% 52.14%
India 30.12% 28.65% 28.75% 28.74%
Japan 53.32% 51.29% 50.00% 51.97%
Korea 46.55% 44.43% 45.67% 45.75%
Lao - 9.08% - 9.08%
Mongolia 21.27% 22.15% 25.36% 22.58%
Papua New Guinea 23.12% 18.83% - 20.64%
Philippines 31.11% 34.77% 38.85% 33.65%
Sri Lanka 47.48% 49.61% 52.91% 50.28%
Thailand 29.79% 30.20% 30.06% 29.92%
Singapore 44.80% 45.42% 44.34% 44.68%
Country
Trendline
1993-2000
Average
share: 1993-
2011
Wage &
salaried
workers
(employees)
Observedyear of
Wage & salaried
workers
(employees)
China 52.14% - n.a.
India 28.74% 15.80% India (2005)
Japan 51.97% 86.90% Japan (2009)
Korea 45.75% 70.00% Korea (2009)
Mongolia 22.58% 41.10% Mongolia (2009)
Papua New Guinea 20.64% - n.a.
Philippines 33.65% 52.40% Philippines (2008)
Singapore 44.68% 85.20% Singapore (2008)
Sri Lanka 50.28% 57.60% Sri Lanka (2009)
Thailand 29.71% 44.60% Thailand (2009)
"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.t
For Singapore, the data were taken from ILO Global
Wage Database 2012
For Wage & salaried workers (employees) to total
employment, the data were obtianed from ILO: Key
Indicators of the Labour Market, 7th Edition
Note: (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 growing…
Income distribution
0
10
20
30
40
50
60
70
80
90
100
0 20 40 60 80 100
Cumulativeshareofincomeearned
Cumulative share of households from lowest to
highest incomes
Equality line
Thailand: Lorenz
curve y2011
Thailand: Lorenz
curve y1994
0
10
20
30
40
50
60
70
80
90
100
0 20 40 60 80 100
highest incomes
Equality line
Indonesia: Lorenz
curve y2010
Indonesia: Lorenz
curve y2000
Thailand Indonesia
The 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 growing…
Income distribution
Philippines Lao PDR
0
10
20
30
40
50
60
70
80
90
100
0 20 40 60 80 100
highest incomes
Equality line
Philippines: Lorenz
curve y2011
Philippines: Lorenz
curve y2005
0
10
20
30
40
50
60
70
80
90
100
0 20 40 60 80 100
highest incomes
Equality line
Lao: Lorenz curve
y2010
Source: 1. Thailand Socio-economic survey 1994, 2000, 2011
2. Indonesia National labour force survey 2000, 2011
3. Lao PDR national labour force survey 2010
4. 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 employment
Informal employment as % of non-agricultural
employment
Country Total
Femal
e Male Year Source
China 32.6 35.7 30.1 2010
Source: China Urban Labor
Survey (six cities)
Thailand 42.3 43.5 41.2 2010
Source: Informal Employment
Survey
Sri Lanka 62.1 55.7 65.2 2009
Source: Sri Lanka Labour Force
Survey
Viet Nam 68.2 66.8 69.4 2009
Source: The Viet Nam 2009
Labour Force Survey
Philippines 70.1 70.2 69.9 2008Source: Informal Sector Survey
Indonesia 72.5 72.9 72.3 2009Source: Informal Sector Survey
Pakistan 78.4 75.7 78.7
2009/
10Source: Labour Force Survey
India 83.6 84.7 83.3
2009/
10
Source: National Sample Survey,
66th Round
Nepal 86.4 91.8 83.8 2008Source: 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:

Women’s income in the Asian
economy
Percentile Group of income from low to high (Left to right)
1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th
Thailand Gender Male 47.7% 46.7% 55.1% 49.1% 54.8% 56.5% 57.2% 57.4% 59.3% 57.8%
2011 Female 52.3% 53.3% 44.9% 50.9% 45.2% 43.5% 42.8% 42.6% 40.7% 42.2%
Veitnam Gender Male 47.9% 50.4% 57.0% 57.8% 60.9% 65.6% 59.0% 63.0% 65.0% 69.7%
2011 Female 52.1% 49.6% 43.0% 42.2% 39.1% 34.4% 41.0% 37.0% 35.0% 30.3%
Philippines Gender Male 25.6% 55.0% 62.0% 60.0% 57.4% 65.3% 66.6% 66.1% 68.8% 72.9%
2011 Female 74.4% 45.0% 38.0% 40.0% 42.6% 34.7% 33.4% 33.9% 31.2% 27.1%
Lao PDR Gender Male 63.2% 65.9% 55.4% 54.9% 59.3% 62.5% 66.8% 79.9% 74.6% 77.5%
2010 Female 36.8% 34.1% 44.6% 45.1% 40.7% 37.5% 33.2% 20.1% 25.4% 22.5%
Indonesia Gender Male 39.1% 52.2% 62.6% 66.8% 70.9% 70.2% 73.6% 69.4% 66.7% 74.3%
2010 Female 60.9% 47.8% 37.4% 33.2% 29.1% 29.8% 26.4% 30.6% 33.3% 25.7%

The Low paid by gender
Thailand 2011
Source: Thailand Socio-economic survey 2011
Low pay workers by gender
Low pay
Above 2/3 median Below 2/3 median
Count Column N % Count Column N %
Gender
Male 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 Nam 2011
Source: Viet Nam labour force survey 2011
Low pay
Gender
Male 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 gender
Philippines 2011
Source: Philippines labour force suvery 2011 (Q3)
Low pay
Count Column N % Count
Column N
%
Gender
Male 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%
Indonesia 2010
Source: Indonesia National labour force survey 2011
Low pay
Gender
Male 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 workers
Those who are unpaid -
Vulnerable employment
Country Year
Share of vulnerable
employment in total
employment (%)
Singapore 2011 9.6
Taiwan, China 2011 17.7
Malaysia 2010 21.7
Philippines 2011 41.2
Sri Lanka 2010 41.9
Thailand 2011 53.5
Indonesia 2011 57.2
Mongolia 2009 57.5
Viet Nam 2011 62.5
Pakistan 2008 63.1
Cambodia 2011 68.5
Vanuatu 2009 70.0
Bhutan 2011 70.9
India 2010 80.8
Nepal 2008 81.9
Bangladesh 2005 85.0
Lao PDR 2005 88.0
Source: ILO Key Indicators of the Labour Market,
7th Edition (Geneva, 2011).

Vulnerable employment by
gender
Thailand
Vunlerable employment Vunlerable employment
2000 2011
Urban Rural Urban Rural
Male 41.09 38.03 46.46 48.65
Female 58.91 61.97 53.54 51.35
Philippines
Vunlerable employment Vunlerable employment
2005 2011
Male 55.58 63.77 53.00 61.56
Female 44.42 36.23 47.00 38.44
Indonesia
Vunlerable employment Vulnerable employment
2000 2010
Male 60.19 57.73 55.20 44.35
Female 39.81 42.27 44.80 55.65
Lao
Vunlerable employment
2010
Urban Rural with road
Rural without
road
Male 49.01% 50.33% 50.38%
Female 50.99% 49.67% 49.62%
Source: 1. Thailand Socio-economic survey 1994, 2000, 2011
2. Indonesia National labour force survey 2000, 2011
3. Lao PDR national labour force survey 2010
4. 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.

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

The informal employment in
Thailand

What significance do they have
to the Thai economy
◦ These 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 2004-2009
Source: Authors’ compilation based on Bank of Thailand Database
(2013) and SES, NSO (2009)
Sector Informal Formal
Share of
employment
2009
Employment growth
2009-2004
Agriculture, Hunting and Forestry 92.90% 7.10% 38.04% 7.49%
Fishery 93.60% 6.40% 1.25% 7.09%
Mining and Quarrying 36.00% 64.00% 0.15% 1.54%
Manufacturing 43.50% 56.50% 15.78% -1.88%
Electricity, Gas and Water Supply 22.60% 77.40% 0.29% 1.81%
Construction 86.70% 13.30% 6.00% 10.17%
Wholesale and Retail, Repairing Motor Vehicles/
Motorcycles/ Personal Goods/Household Goods
76.90% 23.10% 15.97% 8.76%
Hotel and Restaurant 79.90% 20.10% 6.50% 13.92%
Transport, Storage and Communication 61.10% 38.90% 3.17% 3.60%
Financial Intermediate 23.10% 76.90% 0.85% 23.51%
Real Estate, Renting and Business Activities 43.40% 56.60% 1.80% 17.63%
Public Administration and Defence, Compulsory
Social Security
17.60% 82.40% 2.86% 30.52%
Education 12.70% 87.30% 2.97% 9.37%
Health and Social Work 14.10% 85.90% 1.58% 24.55%
Other Activities Related to Community/ Social/
Personal Service
82.00% 18.00% 2.09% 14.44%
Private Households with Employed Person 91.00% 9.00% 0.70% -2.23%
Extra-territorial Organization and Bodies 53.80% 46.20% 0.01% 17.62%

Rate of growth of GDP and Share of informal and
vulnerable employment to total employment in
Thailand 2005 - 11
Source: NESDB (2011) and LFS/IES, NSO (2011).
4.50%
4.92% 4.92%
2.45%
-2.36%
7.52%
0.08%53.09% 53.24% 53.32%
54.09% 54.28%
54.63%
55.38%
62.08% 61.46%
62.71%
63.71% 63.37% 62.40% 62.60%
46%
48%
50%
52%
54%
56%
58%
60%
62%
64%
66%
-4%
-2%
0%
2%
4%
6%
8%
10%
2005 2006 2007 2008 2009 2010 2011
Growth rate of GDP Share of vulnerable employment
Share of informal employment

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 status 2011
Employee
Government employee 8.64%
State enterprise employee 0.64%
Private company employee 33.27%
Self-employed worker
Employer 3.03%
Own-account worker 34.14%
Member of producers' cooperative 0.03%
Unpaid family worker
Contributing family worker 20.25%

Average monthly earnings by categories of formal
and informal employed 2011
Average monthly earnings
Employees
Informal Formal Total
Wage workers
Male 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-employed
Farm
Male 2,229.05 3,063.63
2,270.07
Female 1,714.72 2,409.14
1,744.72
Non-farm
Male 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 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 household’s income
per member.
0
.2.4.6.8
6 8 10 12 6 8 10 12
Informal Formal
Density
Workers' monthly earnings expressed in natural logarithm
Graphs by D_SS

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 household’s income per
member.

Safety in the workplace
 The “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, 2005–08
 The 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; and
 face greater exclusion from state, market and political
institutions that determine the ‘rules of the game’ in these

Possible future implications
 A greater emphasis on:
◦ revisiting Thailand’s 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.

For more information
Tiraphap Fakthong
Office:
Tha prajan Campus: Room 455
Faculty of Economics, Thammasat University
Rangsit Campus: Room 256 Duen Nunnag Building
Faculty of Economics, Thammasat University
Or
Email: tiraphap@econ.tu.ac.th

A Quick Statistical Review of Informal Employment Dynamics in Thailand

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