Statistics on the informal economy

In many countries, the informal economy represents a significant part of the labour market and plays a major role in production, employment creation and income generation. However, informality puts workers at a higher risk of vulnerability and precariousness. It has a strong adverse impact on the adequacy of earnings, occupational safety and health and working conditions in general.

Informality remains a key concern of the Decent Work Agenda and the 2030 Agenda for Sustainable Development (the informality rate is part of the indicators selected to measure progress towards the Sustainable Development Goals, as SDG indicator 8.3.1). Addressing informality is also critical for women’s economic empowerment and gender equality.

In 2023, the 21st International Conference of Labour Statisticians (ICLS) adopted a resolution updating and improving measurement standards on the informal economy, not only to reflect latest world of work developments and provide a better reflection of people’s situation but also to align them to recent standards on the measurement of all forms of work (not only employment) and work relationships adopted by the 19th and 20th ICLS.

Recognizing that there is informality in all countries (regardless of their level of income and development), in economic units of the informal sector as well as the formal sector, and in households, the new standards provide operational definitions of the formal sector, the informal sector, and the household own-use and community sector based on the formal status of the economic unit and the intended destination of the production. They also introduce the concept of “informal productive activities” designating all productive activities carried out by persons or economic units that are – in law or in practice – not covered by formal arrangements, recognizing that productive activities can be “partly” informal. In short, the informal economy includes all informal productive activities of persons and economic units.

A key feature of the 21st ICLS resolution is the introduction of an informal economy indicator framework which aims to support policy development and monitoring, research, and analysis. To simplify  the use of this indicator framework, the ILO has created an Indicator Selection Tool (available in beta version).