Annex-VIII
SAARCSTAT.05
Country Report
Informal Sector - Sri Lanka
Department of Census and Statistics
Ministry of Finance and Planning
Table of Contents
1. Introduction ................................................................................................................................. 3
1.1 Informal Sector Statistics in Sri Lanka ................................................................................ 3
1.2 National Definition for Informal Sector ................................................................................ 3
1.3 Informal Employment in Sri Lanka ...................................................................................... 5
1.4 Introducing 1-2 Survey in Sri Lanka ..................................................................................... 5
Survey on Household Unincorporated Enterprises -2008/09 ...................................................... 5
1.5 Updating the LFS Questionaire in order to Improve International Comparability of
Informal Sector Statistics ............................................................................................................ 5
2. Overview of Informal Sector Employment in Sri Lanka ........................................................... 5
2.1 Distribution of Labour Force of the country from 1990 ..................................................... 5
2.2 Distribution of informal and Formal Sector -2011................................................................ 6
2
Informal Sector - Sri Lanka
1. Introduction
Informal sector is a very important for a developing country, as it generates employment
opportunities for the population, while the formal sector of the country cannot absorb all the
labour force of the country. However, generally it is believed that informal sector employments
are highly vulnerable in nature due to lack of job and income security. Therefore, for a
developing country like Sri Lanka, this sector is very important as an employment generator but
due to high vulnerability and the closer relationship to working poverty, more attention should
pay on this sector in order to eradicate poverty and to achieve decent work conditions of the
country.
1.1 Informal Sector Statistics in Sri Lanka
The Department of Census and Statistics as the main government body for national data
compilation and dissemination, publishes statistics on informal sector employment of the country
from year 2006. The information related to informal sector employment has been collected with
the Annual Labour Force Survey since then.
1.2 National Definition for Informal Sector
A national definition to define informal sector was introduced in year 2006 with the
assistance of an expert from UNESCAP. For this, the data collected at the Sri Lanka Labour
Force Survey -2006 was utilized. At this process some key aspects on informal sector, which
were considered at the 15th ICLS (International confference on Labour Statisticians) resolution
and guidelines given in the SNA 1993 were mainly considered.
Key aspects of identifying informal sector in Sri Lanka
− Registration of the organization
− Accounts keeping practices of the organization
Using above key concepts following criteria are considered to identify formal and informal
− Total number
regular
employees of the organization
sector employments
ofofthe
country.
3
However, by reviewing the above national statistical definitions of the informal sector shows that
they do not always fully correspond to the international definition adopted by the 15th
International Conference of Labour Statisticians (15th ICLS) and the System of National
Accounts (SNA) 1993.
Deviations from 15th ICLS resolution
• Do not identify whether the institute is unincorporated enterprise.
• But the registration in the Employees Provident Fund or Inland Revenue
and having formal accounts can be considered as proxies for this.
4
•
Do not consider whether the institute has a market production.
• Subsistence farming and activities of households as employers are
included in the informal sector.
1.3 Informal Employment in Sri Lanka
• A national definition has not yet introduced and discussions on this are in progress.
1.4 Introducing 1-2 Survey in Sri Lanka
Survey on Household Unincorporated Enterprises -2008/09
With the collaboration of UNESCAP under the Development Account Project “
Interregional cooperation on the measurement of the informal sector and informal
employment” Sri Lanka conducted above survey during the period from 2008- Q4 till 2009Q3. Sri Lanka was one of the piloted country for the survey with two other countries
Philippines and Mongolia.
• Two separate questionnaires were designed for (1-2) survey namely Phase-1 and
Phase-2. The questionnaires were developed by considering generic questionnaires
which were provided by UNESCAP on this project.
• Household Unincorporated Enterprises with at least market some market production
were identified at Phase-1.
• The identified HUEMs were interviewed at Phase -2 to collect more details such as
Input, Output, Assets, Employment, Problems, Prospects, Loans taken…… etc.
1.5 Updating the LFS Questionaire in order to Improve International Comparability of
Informal Sector Statistics
• The Survey schedule for the year 2013 LFS has updated in order to improve international
comparability of informal sector statistics and informal employment statistics of the
country.
• The lessons learned at the 1-2 survey was used to improve the questionnaire. Questions to
get the information, which are important to correspond with ICLS definition, were
included in the LFS questionnaire.
2. Overview of Informal Sector Employment in Sri Lanka
2.1 Distribution of Labour Force of the country from 1990
Table 1.1 Distribution of Age 10 & above Household Population by Labour Force
Charaterisrics - (1990-2011)
Year
Characteristic
199
200 200
201 201
1990
2000
2008 2009
5
6
7
0
1
HH Population-Age 10 &
11.5 12. 13.1 14. 15. 15.0 15.3 15. 15.
above (millions)
7
74
7
83
05
8
9
65
84
5
Labour Force Population
(millions)
Not in Labour Force
Population (millions)
Unemployed Population
(millions)
Employed Population
(millions)
Formal Sector Employment
(%)
Informal Sector
Employment (%)
Labour Force Participation
Rate
7.5 7.4
9
9
7.2 7.5
5.57
6.74
3
6
0.4 0.4
0.95
0.52
9
5
7.1 7.0
5.05
6.31
0
4
38. 38.
n.a. n.a.. n.a..
4
1
61. 61.
. n.a. n.a.. n.a..
6
9
51.9 47. 50.3 51. 49.
0
90
0
20
80
15.9 12.
6.5 6.0
Unemployment Rate
7.60
0
30
0
0
Source: Department of Census and Statistics, Quarterly Labour
2011.
Note: Excluding Northern and Eastern provinces
6.00
6.1
1
6.6
3
0.7
5
5.3
6
6.83
7.56
7.57
7.51
7.82
0.39
0.43
7.17
7.14
39.8
38.1
60.2
61.9
50.2
0
49.2
0
5.20
5.70
Force Survey,
7.6 7.7
1
4
8.0 8.1
4
0
0.3 0.3
7
1
7.2 7.4
3
3
37. 37.
4
3
62. 62.
6
7
48. 48.
60
8
4.9 4.0
0
Annual Report -
The above Table 1.1 clearly shows distribution of population by various labour force
charateristics. Further more, this reveals that about 62 percent of total employment comprises
with informal sector employment.
2.2 Distribution of informal and Formal Sector -2011
Sri Lanka labour Force Survey- 2011 reveals that in Sri Lanka the contribution of informal sector
employment to the total employment is over 60 percent. Following Table 1.2 shows that about
86 percent of agriculture sector employment comprises with informal sector employments and
about fifty one percent of non-agriculture sector activities is informal sector employments. Also
more informal workers are reported from lower levels of education compared to higher levels of
education groups.
6
Table 1.2 Composition of Informal/Formal sector
employment by economic sector - 2011
Table 1.3Composition of Informal/Formal sector
employment by level of education - 2011
Economic Sector
Non
Agricult
Total
Agricult
ural
ural
No 81969
2708020 5488907
27
.
Total
100.0
100.0
% 100.0
Forma No 30577
364015 2693729
.
44
l
sector %
37.3
13.4
49.1
Inform No 51391 2344005 2795178
.
83
al
sector %
62.7
86.6
50.9
Informal /
Formal
sector
Level of
Education
Total
No.
81969
Total
27
Below
15377
Grade 5
01
39439
Grade 5 - 9
16
G.C.E.(O/L 12882
)
71
G.C.E.(A/L
14270
)
39
& above
Figure1: Distribution of Informal sector
%
100
.0
100
.0
100
.0
100
.0
Sector
Formal Informal
No. % No. %
30577
51391 62.
37.3
44
83 7
29402
12436 80.
19.1
7
74 9
10483
28955 73.
26.6
57
60 4
61461
67365 52.
47.7
9
1 3
100 11007
32629 22.
77.1
.0
41
8 9
As seen in the above Figure:1 about 50% of
informal sector workers are own account
workers .
employment by employment status -2011
7
Figure 2 :Distribution of Participation rate of informal sector in non-agriculture sector by
district - 2011
Survey results reveals that the existing variability of percentages of informal sector
contributions among the districts may be due to the special distribution of nonagricultural industries in the country.
8