Problems of data comparability for the measurement of the informal sector arise in particular from the following factors: differences in data sources; differences in geographical coverage; differences between the sectors covered; differences in the criteria for defining the informal sector, e.B. the size of the enterprise or establishment compared to the non-registration of the company or employee; different limit values for the size of the enterprise; Inclusion or exclusion of paid domestic workers; and the integration or exclusion of persons who have an ancillary activity in the informal sector but whose main activity is outside the informal sector. If one looks at the composition of the Indian economy, as mentioned above, the formal or organized sector and the informal or disorganized sector constitute the Indian economy. Formal sectors represent all jobs with specific working hours and regular wages, and the worker`s employment is secure. Workers are employed by the government, the state or private companies. It is an accredited and taxable body. It includes large-scale operations such as banks and other companies. Conversely, informal or disorganized sectors are those where workers or workers do not have regular working hours and wages and are exempt from taxes. It deals mainly with the primary production of goods and services with the main aim of creating jobs and incomes on a small scale. An example of an informal economy is a street vendor who sells his agricultural products on the street to produce and earn his daily bread. Rag collectors, money lenders, brokers are considered part of an informal economy.
It is also known as the underground economy. (1) has an organised employment system with clear written rules for recruitment, agreement and responsibilities. (2) a standardized relationship between the employer and the worker is maintained by a formal contract. (3) The employee is expected to work fixed hours and receive fixed salaries in addition to incentives and benefits. He works in a decent working environment and is entitled to benefits such as holidays, savings, loans, etc. He has an organized association or union in which his official complaints are dealt with. In addition, it is insured by social protection benefits such as life insurance, health insurance, pension, tip, etc. The majority of India`s population is concentrated in informal sectors. The main reason could be that most of the Indian part of society are economically backward people. You can`t afford to pay taxes. They can hardly earn the basic bread of the day.
Therefore, they prefer to work that is easily accessible to them, like. B agriculture, sell well in a street where they do not have to levy taxes. Informal sector activities are allowed and are required by the government to collect taxes. These organizations are usually large companies and private organizations. Other types of household surveys with an appropriate module on informal employment could also be used as data sources for the informal economy. Thank you for your comment Laufa. Although India is making efforts to exploit informal markets through a widespread expansion of jobs in formal markets, we still have a long way to go. The formal sector accounts for only 9-10% of our economy.
As far as the Pacific island nation is concerned, I think the solutions will be similar in nature to the one proposed in the article. However, the exogenous variable of natural disasters and climate change can pose a serious political challenge to the integration of formal and informal markets. Like the concept of the informal sector, the concept of informal employment was designed to allow countries to take into account their own situations and needs, which hinders comparability between countries. Given the lack of international comparability resulting from the flexibility of approaches, the ILO has developed a harmonized series on the informal sector and informal employment. This was achieved by applying a consistent navigation path when processing household microdata files to define the unit of production and the type of work, thus significantly reducing the variability of the definitions used between countries. However, this does not mean that all criteria can be applied in the same way, as the questionnaire contains different sets of questions for each country. As a result, problems of comparability remain in the harmonised series. As might be expected, there may be significant differences between the figures reported at national level and those of the harmonised series, although they are based on the same household surveys. Wikipedia defines the formal sector as activities that are taxed and monitored by the government, and the activities involved are included in gross domestic product (GDP). Unlike the formal economy, there is the informal sector, which is neither taxed nor included in a country`s GDP and gross national product (GNP). In short, the formal and informal sectors make up India`s economic sector. The main difference is the tax exemption in the informal sector, which dominates India`s main population.
Formal sectors are legalized and workers enjoy social protection, economic security and certain incentives, while those in the informal sectors have no such privileges. The concept of the informal sector has been deliberately kept flexible in order to respond to different country situations and country-specific needs. In practice, this has led to the collection of national statistics on employment in the informal sector, with countries reporting on the variation they prefer in the criteria set out in the international resolution. Some countries apply the unregistered companies test, but registration requirements may vary from country to country. Others apply only the job size criterion (which may also vary from country to country), and other countries apply a combination of the two. Due to national differences in definitions and coverage, the international comparability of nationally reported data for the informal sector is limited. A large part of the Indian population lives in the informal sectors. .