Establishment Based Informal Sector Statistics: An Endeavor of Measurement from Economic Census 2018 of N epal

Abstract

The informal sector represents an important part of the economy and labor market in many countries, especially developing countries. Measurement of the informal sector is an important aspect for assessing the true size of an economy. Existing legislations typically lack an official concept and comprehensive definition of informal sectors. In Nepal, formalization of the informal economy is anticipated in the national plan to ensure and extend social security, creating opportunities for decent work. Although the Nepalese economy includes informal sectors in the production or labor market, those sectors are not yet fully covered by economic statistics. Official informal sector statistics are limited to nonagriculture sectors based on guidelines developed by International Conference on Labour Statisticians (ICLS). Results from some regular statistical operations, like population censuses and living standard surveys, also provide some information on informal sector activities. Given the importance of this topic, there is now a need for comprehensive informal sector statistics to support the national accounts, and also the formulation of public policy. The purpose of this chapter is to explain the status of informal sector statistics within economic statistics in Nepal. It details how informal activities are captured by the Economic Census and affect the results for micro-, small-, and medium-scale establishments; as well as street businesses and account keeping status. Central Bureau of Statistics (CBS) has been collecting and publishing informal sector statistics via their labor force surveys since 1998. CBS conducted an establishment based Economic Census in 2018 for the first time, with the aim of measuring the composition of various industrial sectors. Those census results illustrated that unregistered establishments accounted for nearly half of reported economic activity, highlighting the importance of the informal sector, and the need to establish a statistical business register in Nepal. Informal sector statistics can inform decision-making decisions vis-à-vis the development of a more formalized economy in developing countries like Nepal. Informal sector statistics should be a regular key official statistics in order to properly measure the national economy.