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1.1 Introduction

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Alessio Lupi10 May 2018

 

Informality has inspired authors with many zoological metaphors. Hans Singer, one of the fathers of the concept in the early 1970s, compared the informal sector with a giraffe, “difficult to define by usual standards, but easy to recognise when you meet one.” It is not a giraffe, but a unicorn, replied Bruno Lautier (1980): the literature abounds with definitions, but you will never have the opportunity to meet one, because it does not exist. The giraffe is sometimes re-appropriated and changed into an elephant (Donald Mead and Christian Morrisson, 1996), a metaphor that would rather suggest, beyond the difficulty of definition and the ease of recognition, that it is “too big to fail!” or at least too big for the State to get rid of it by simple policy measures. One could also compare it to a chameleon, for its ability to become invisible when the State or the law is too restrictive or inappropriate. Most certainly it is not a dinosaur at risk of extinction. Serge Latouche (1994) used to say that informal sector operators are “ingenious but not engineers, enterprising but not entrepreneurs, industrious but not industrialists,” a way of saying that they cannot be well understood through usual standards and norms.

Such anecdotes highlight the persistent difficulty of reaching an agreement on a common definition that would satisfy all users of the concept. Unfortunately and despite many efforts aimed toward creating an international definition, there are still many different thoughts and means of capturing and understanding the phenomenon, even if there are not as many definitions as there are authors, as it was the case in the 1970s and 1980s. Besides the international definitions of labour force concepts adopted in 1993 and 2003 by the International Conference of Labour Statisticians (ICLS) under the auspices of ILO, and their insertion into the System of National Accounts (SNA, in its 4th and then 5th revision, 2008), the concepts of underground, black, grey, parallel, non observed economy remain a complementary, though different, alternative way of approaching the phenomenon (OECD, 2002; Schneider and al., 2000 and 2010). Some authors however continue to assimilate, confound or restrict informality to self-employment.

An example serves to shed light on these variations for the understanding of the concept. In 1987, during the 14th ICLS, a preliminary discussion took place about the informal sector. As the discussion pressed on, focusing mainly on ‘moonlighting’, a term widely used to characterise the underground economy, the representative of Kenya – the country where the concept of the informal sector was coined at the beginning of the 1970s – asked for the floor and expressed to the audience that in his country, the informal sector was not comprised of these persons who operate in the moonlight, but rather of those working in the open sun. As a matter of fact, in Kenya the term “Jua Kali” or “under the burning sun” in Swahili, is used to define the operators of the informal sector. The 15th ICLS resolution adopted in 1993 hence stipulated that activities performed by production units of the informal sector are not necessarily performed with the deliberate intention of evading the payment of taxes or social security contributions, or infringing labour or other legislations or administrative provisions. Accordingly, the concept of informal sector activities should be distinguished from the concept of activities of the hidden or underground economy”.

 

Jua Kali’: origins of local concept for designating the informal sector

Kenneth King whose first works on the informal sector in Kenya date from the first half of the 1970s and book on the ‘African Artisan’ dates from 1977, wrote in 1996: “Jua Kali in Swahili means ‘hot sun’. But over the course of the 1980s, and perhaps a little earlier, it came to be used of the informal sector artisans, such as car mechanics and metalworkers who were particularly noticeable for working under the hot sun because of the absence of premises. People began to talk of taking their car to jua kali mechanics. Gradually the term was extended to refer to anyone in self-employment, whether in the open air or in permanent premises. On 28 May 1988, The Standard reported that the Minister of Technical Training and Applied Technology wished to encourage the use of the term jua kali rather than informal sector, and had therefore announced that the small-scale industry which had come to be known as the informal sector would henceforth assume the name Jua Kali Development Programme”(King, 1996).

 

This section provides a brief history of the concepts of the informal sector, informal employment and informal economy. It  discusses the prevailing definitions of the informal economy and their related methods of measurement, and it presents an assessment of trends in size of the informal economy, including the contribution of the informal economy to GDP.

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