Abstract
The paper developed a methodology for classifying workers into formal and informal employment using the 2005 Bangladesh Labor Force Survey (LFS). Although the 2005 LFS was not designed to collect data for this purpose, it included questions that can be used to determine whether workers are engaged in formal or informal employment. However, the process of identifying the combination of questions that could distinguish between formal and informal workers was hampered by data inconsistencies that were probably brought about by limitations in data processing and validation. Because 3 years have already passed since data processing was done, the most workable approach was to determine which workers are under formal employment, and to assume that the remaining workers are engaged informally.Results show that 87.71% of the workers in Bangladesh are under informal employment. The highest concentration of informal workers is found in the rural areas (92%). Workers engaged in informal employment are mostly in agriculture; hunting and forestry; wholesale and retail trade; manufacturing; and transport, storage, and communications sectors. On the other hand, formal workers are primarily employed by the government. Women (91.3%) are most likely to be engaged in informal employment than men (86.6%); and women are generally unpaid family workers and in the private household sector. Workers under formal employment are paid better than those under informal arrangements. For each sector, wage differentials between formal and informal workers are significant. Informal workers are found to have significantly less benefits than those with formal employment, except for free meals and free lodging. In particular, self-employed and unpaid workers comprise a little over 20 million of informal workers, although less than 2 million of them enjoy benefits.
Highlights
Even though there has been significant poverty reduction in Asia, the 2008 International Labour Organization (ILO) Employment Trends indirectly estimated, using modeling techniques and available survey data from countries, some 487 million workers, 300 million of whom live in Asia, who do not earn enough to lift themselves and their families above the US$1/day poverty line (ILO 2008)
The United Nations Development Fund for Women (UNIFEM) and the global network Women in Informal Economy: Globalizing and Organizing (WIEGO) came up with measurement techniques for measuring the risk of poverty among employed persons in different employment statuses. These studies found that informal agricultural workers have the highest risk of poverty while informal employers are the least susceptible to poverty among nonagricultural workers. These results suggest that the link between informal employment and poverty is discernible only when informal workers are classified by employment status and industry/trade sectors
The analysis described above is performed on Bangladesh’s 2005 Labor Force Survey (LFS), the questionnaire itself and sample questionnaire were not designed to capture informal employment or informal sector data
Summary
Even though there has been significant poverty reduction in Asia, the 2008 International Labour Organization (ILO) Employment Trends indirectly estimated, using modeling techniques and available survey data from countries, some 487 million workers, 300 million of whom live in Asia, who do not earn enough to lift themselves and their families above the US$1/day poverty line (ILO 2008) This ILO report determined that five out of 10 people in the world are in vulnerable employment, being either contributing family workers or own-account workers with a higher risk of being unprotected. More and better employment opportunities must be created and efforts to influence the informal enterprises to register and extend benefits to their workers must be amplified Such reorientation of economic policies may not be possible, unless data on those engaged in the informal sector and in informal employment outside the informal sector are available for economic analysis. The study explored possible ways in which the LFS questionnaire can be improved and expanded for future survey rounds so that it could be effectively utilized in analyzing the links between employment and poverty and in the construction of a sampling frame for HUEM surveys
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