International standards concerning labour market concepts and definitions Farhad Mehran Economic Development Board (LMRA project) Bahrain, 9 May 2006
Three lectures on labour market data Labour market concepts and definitions: ILO international standards (9 May 2006) Sources of labour market data: A national statistical programme (June 2006) Combining data from different sources: Principles of labour accounting (July 2006) 2
Labour market concepts and definitions ILO international standards (5’) Slide 4 Employment, unemployment (20’) Slides 5 -20 Underemployment, inadequate Slides 21 -28 employment (10’) Status in employment (5’) Slides 29 -36 Wages (15’) Slides 37 -44 Hours of work (10’) Slides 45 -52 Private/Public sectors (10’) Slides 53 -56 Informal/Formal sectors (5’) Slides 57 -64 GDP and Labour market (5’) Slides 65 -66 Labour productivity (5’) Slides 67 -68 v Bibliography v Slides 69 -70 v Index v Slides 71 -72 p. pp. 1 2 -5 6 -7 pp. 8 -9 pp. 10 -11 pp. 12 -13 p. 14 pp. 15 -16 p. 17 p. 18 3
International labour statistics Scope of labour statistics – Economically active population, employment, underemployment – Income from employment, wage rates, earnings, labour cost – Normal hours of work, usual hours of work, actual hours worked, and hours paid for – Informal sector employment, and informal employment – Occupations – Status in employment – Occupational injuries and diseases – Labour disputes (& child labour, forced labour, decent work) International standards – ILO Convention 160 & ILO Recommendation 170 – ICLS Resolutions – ILO Manuals on concepts and methods http: //www. ilo. org/public/english/bureau/stat/standards/index. htm 4
Elements of the statistical system Wages, Hours of work Status in employment ICSE 1993 Labour cost, Productivity Worker-employer relationship Person Activity during reference period Economically active population ICLS 1982 Job Main tasks and duties Occupational category ISCO-1988 Establishment Main goods and services produced Branch of economic activity ISIC Rev 3 Enterprise Nature of legal entity Institutional sector SNA 1993 5
Economically active population Definition: All persons of either sex who furnish the supply of labour for the production of economic goods and services as defined by the UN systems of national accounts and balances during a specified time-reference period. 1, 2 Long reference period (e. g. one year) Short reference period (e. g. one week) Usually active population Currently active population (labour force) ILO, Resolution concerning statistics of the economically active population, employment, unemployment and underemployment, Thirteenth International Conference of Labour Statisticians, Geneva, October 1982. 1 Hussmanns, R. , Mehran, F. , and Verma, V. , Surveys of Economically Active Population, Employment, Unemployment and Underemployment: An ILO Manual on Concepts and Methods, ILO, Geneva 1990. 6 (Translated in Arabic, Persian, Portuguese, Russian, and Spanish. ) 2
Pop 15+ Conceptual framework ICLS 1982 Labour force Employed Inactive Unemployed of which Underemployed 7
Definition of employment Employed Paid employment At work With a job but not at work Selfemployment At work With an enterprise but not work 8
Definition of “at work” AT WORK = Performed some work for wage or salary, or profit or family gain, in cash or in kind during the reference period WORK = Engagement in economic activity SOME WORK = Work for at least one hour during the reference period 9
Definition of “economic activity” SNA production boundary Production of goods and services Goods For market Services For own final consumption For market For own final consumption Collecting Fire woods Carrying water at long distances 10
Definition of “Absence from work” Persons with a job but not at work = in paid employment if formal job attachment Continued receipt of wage or salary Assurance of return to work Limited elapsed duration of absence Persons with an enterprise but not at work = in self employment if Continued existence of enterprise Specific reason for absence 11
Treatment of particular groups Students, homemakers, pensioners engaged in economic activity Contributing family workers (unpaid family workers) Producers for own and household consumption Apprentices and trainees Members of the armed forces 12
Standard definition of unemployment Without work during reference week l Currently available for work l Actively seeking work in recent period l Two exceptions l Future starts l Lay-offs
Reference periods Job search period Interview date (Last four weeks) Basic reference period Last week Availability period (Last week + 2 weeks) 14
Active steps to seek work Registration at public or private employment exchange (for the purpose of obtaining a job offer) Application to employers Checking at worksites, farms, factory gates, market or other assembly places Seeking assistance of friends or relatives Looking for land, building, machinery or equipment to establish own enterprise Arranging for financial resources Applying for permits and licenses, etc. 15
Reasons for not seeking work Illness, disability, pregnancy Child care, family responsibilities School or other training Already found work to start later Awaiting recall to former job Awaiting replies from employers, results of competitions Awaiting busy season Believing no suitable work available (in area or relevant to one’s skills) Lacking employers’ requirements (qualifications, experience, age, etc. ) Could not find suitable work Do not know how or where to seek work Not yet started to seek work Other reasons (bad weather, holidays, awaiting national service call, near retirement age, etc. ) 16
Extended definition of unemployment Partial relaxation of “seeking work” criterion Persons temporarily laid off without formal job attachment Discouraged workers Seasonal workers awaiting busy season 17
Mo. L/BCSR Labour force survey December 2004 Bahraini non-institutional population (432’ 400) 292’ 700 139’ 700 Non-institutional population 15+ Non-institutional population <15 115’ 200 Worked last week Employed 117’ 000 Not worked last week With a job or enterprise but not at work last week 177’ 500 1’ 800 18’ 100 Do not want to work or disable Other reason for not working 157’ 600 27’ 000 Seeking work last four weeks Not seeking work last four weeks Available for work within two weeks Not available for work within two weeks 26’ 000 130’ 600 Inactive 149’ 700 Unemployed 26’ 000 18
Methods of job-search of unemployed Bahrainis Survey jobseekers - Ministry of Labour - CSB - Employment services - Newspaper ads - Internet - Friends & relatives - Starting own business - Other 1 10’ 600; 2 26’ 000 search effort =1. 7 12’ 9001 11’ 778 Mo. L 2003 3’ 3002 2’ 862 CBS 3’ 500 10’ 500 1’ 000 8’ 700 300 4’ 200 Total=44’ 400 3 4 2’ 800 among core jobseekers. Indicators of the Labour Market 2003 -2004, (in Arabic) by Isma Al-Khalifa, Sana Maci, Anwar Al-Khunaisi, Ministry of Labour, Kingdom of Bahrain, May 2005. 3 4 Civil Service Bureau, Kingdom of Bahrain, Annual Report 2004, p. 13. 19
Reservation wage of unemployed Bahrainis Reservation wage: Each worker has a specific wage rate that induces him or her to perform paid market work. A worker seeking work employment will accept jobs paying above his or her reservation wage, and reject those paying less. 20
Beyond unemployment Unemployment and its halo Underemployment l Over-employment l Soft-employment l Other issues: – Child labour – Full-time employment of women with low age children – Old age without pension
Underemployment and inadequate employment situations 1 Characteristic of “employment” Based primarily on “current capacities and work situations of worker” (not potential capacities and desires for work) Judged against “alternative employment situation in which worker is willing and available to engage” ILO, Resolution concerning the measurement of underemployment and inadequate employment situations, Sixteenth International Conference of Labour Statisticians, Geneva, October 1998. 1 22
Time-related underemployment Definition: Willing to work additional hours Available to work additional hours Worked less than a threshold relating to working time Two particular groups: Persons who usually work part-time schedules and want to work additional hours Persons who during the reference period worked less than their normal hours of work 23
Inadequate employment situations Skill-related inadequate employment wanting or seeking to change their current work situation in order to use their current occupational skills more fully, and were available to do so Income-related inadequate employment wanting or seeking to change their current work situation in order to increase income limited as result of low levels of organisation of work or productivity, insufficient tools or equipment and training or deficient infrastructure, and were available to do so Inadequate employment related to excessive hours wanting or seeking to work less hours either in the same job or in another job, with a corresponding reduction of income 24
Other forms of inadequate employment situations Wanting to change current work situation or to make changes to work activities and/or environment For following reasons: – – – – Excessive hours of work Precarious job Inadequate tools, equipment or training for assigned tasks Inadequate social services Travel to work difficulties Variable, arbitrary or inconvenient work schedules Recurring work stoppages because of delivery failures of raw material or energy – Prolonged non-payment of wages – Long overdue payments from customers 25
Underemployment and inadequate employment situations Employed Bahrainis (117’ 000) Seeking another job Not seeking another job 82’ 600 Reason 34’ 400 Low income Income-related inadequate employment 24’ 500 Inadequate use of qualification Skill-related inadequate employment 1’ 300 Short hours of work Time-related underemployment 100 Long hours of work Over-employment 1’ 300 Other reason 7’ 200 26
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Status in employment 1 Classification: Employees Employers Own-account workers Members of producers’ cooperatives Contributing family workers Workers not classifiable by status ILO, International Classification of Status in Employment, Fifteenth International Conference of Labour Statisticians, Geneva, 1993. 1 29
Employees Definition: Working in “paid employment job” – Holding explicit (written or oral) or implicit employment contract – Remuneration not directly dependent upon the revenue of the unit for which they work Remuneration: – – – Wages and salaries Commission from sales Piece-rates Bonuses In-kind payments such as food, housing or training 30
Employers Definition: Working on own-account or with one or a few partners In “self employment job”: Remuneration is directly dependent on the profits (or potential for profits) derived from the goods and services produced or for own consumption Engaging one or more “employees, ” on a continuous basis, determined by national circumstances 31
Own-account workers Definition: Working on own-account or with one or a few partners In “self employment job Not engaging any “employees, ” on a continuous basis, during the reference period 32
Members of producers cooperatives Definition: Working in a cooperative producing goods and services In “self employment job” Engaging or not any “employee” on a continuous basis 33
Contributing family workers Definition: Working in a market-oriented establishment operated by a household member, who cannot be regarded as partner In “self employment job” Engaging or not any “employee” on a continuous basis 34
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Source: http: //laborsta. ilo. org 36
System of Wages Statistics Wages as price of labour: Wage rate 1 Wages as income to worker: Earnings 1 Wages as cost to employer: Labour cost 2 Income from employment 3 1 Twelve International Conference of Labour Statisticians, Geneva, October 1973. 2 Eleventh International Conference of Labour Statisticians, Geneva, October 1966. 3 Sixteenth International Conference of Labour Statisticians, Geneva, October 1998. 37
Wage rate Definition: Rate of pay period of time or per unit of production for an employee on a given job. Includes: q Basic wages q Cost-of-living allowances q Other guaranteed and regularly paid allowances Excludes: Overtime payments, Bonuses and gratuities, Family allowances, Other social security payments by employers, Payments in kind, supplementary to normal wage rates 38
Earnings Definition: Remuneration in cash or in kind paid to employees, as a rule at regular intervals, for time worked or work done together with remuneration for time not worked such as annual vacation and other paid leave or holidays. Direct wages and salaries Remuneration for time not worked Bonuses and gratuities Payments in kind Excludes: Employers’ contributions to social security and pension schemes, severance and termination pay. 39
Labour cost Definition: Labour cost is the cost incurred by the employer in the employment of labour. Earnings + Employers’ social security expenditure Cost of vocational training Cost of welfare services Taxes regarded as labour cost Other (transport, clothing, recruitment) 40
Three types of labour cost Basic labour cost: Hourly labour cost: Unit labour cost: Labour cost per worker Labour cost per hour Labour cost per unit of output Labour cost index: The labour cost index measures the change in labour cost during a given period adjusted for employment shifts among occupations and branches of economic activity in that period. 41
Employment-related income Definition: Payments, in cash, in kind or in services, which are received by individuals, for themselves or in respect of their family members, as a result of their current or former involvement in paid or self-employment jobs. Income related to paid employment Earnings Profit-related pay Employment-related social security benefits received directly from employer, or from social security or compulsory insurance schemes or the State Income related to self-employment Gross profit (or share of profit) Remuneration received by owner-manager of corporations and quasicorporations Employment-related social security benefits received Excludes: Income derived from property income, annuities, gifts, etc. and allowances paid by social security schemes or the State without regard to employment status 42
Jordan 1997 Economic activity Isic Earnings Rev 3 Labour cost * Dinars/Month Ratio Dinars/Year Textile 17 151. 8 1980 1. 09 Office machinery TV, radio, etc 30 196. 7 3009 1. 27 32 193. 5 2050 1. 65 * Compensation of employees 43
Labour cost = wage rate * (1 + r) + a r = variable component a = fixed component 44
Hours of work 1 Normal hours of work Actual hours worked Usual hours of work Hours paid for Tenth International Conference of Labour Statisticians, Geneva, October 1962. 1 45
Normal hours of work Definition: Hours of work fixed by or in pursuance of – – – laws and regulations collective agreements arbitral awards (If not fixed as above) Hours of work in excess of which – remuneration is at overtime rate, or – forms an exception to the rules or customs of the establishment relating to the class of workers concerned 46
Actual hours worked Definition: Hours worked during normal hours of work Overtime work Time spent at the place of work on – preparation of work – waiting or standing by – short rest periods including tea or coffee breaks 47
Hours paid for Definition: Hours actually worked Hours paid for but not worked – Paid annual leave – Paid public holidays – Paid sick leave – Paid meal breaks – Time spent travelling between home and workplace 48
Usual hours of work Definition: Hours worked in an activity during a typical week Calculation: Modal value of hours actually worked per week over a long period 49
Source: http: //laborsta. ilo. org. 50
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Institutional units Household Legal or social entity Household unincorporated market enterprise Government unit Household enterprise producing for own final use Corporation Other types of household Company Partnership Definition of an institutional unit: An economic entity that is capable, in its own right, of owning assets, incurring liabilities and engaging in economic activities and in transactions with other entities. Cooperative Proprietorship Other legal forms Non-profit institution http: //unstats. un. org/unsd/sna 1993/toctop. asp 53
Institutional units by sector Sectors Institutional units Corporations 1 Nonfinancial corporatio ns sector x Financial General NPI Housecorporations govern serving hold sector ment sector hslds sector x Government units Non-profit institutions Households x x x 1 Including all quasi-corporations, whether owned by households, government units or non-resident institutional units. 54
Public – Private sector boundaries 1 Total economy Public sector Non-market sector “controlled + mainly financed” Ability to determine the entity’s general corporate policy, by appointing directors, if necessary Market sector General government Private sector “economically significant prices” Prices that have a significant influence Public corporations on the amounts the producers are willing to supply and on the amounts the purchasers wish to buy Public non-financial corporations Public financial corporations United Nations, “Government/Public Sector/Private Sector Delineation Issues, ” Task Force on Harmonisation of Public Sector Accounting, Fourth meeting of the Advisory Expert Group on National Accounts, 30 January – 8 February 2006, 55 Frankfurt, SNA/M 1. 06/17. 1
Public sector employment in Bahrain, 2004 Sub-sector Total employed Government services and public 83’ 800 administration Public non-financial corporations Public financial corporations Other (education and health? ) Total (32%/49% of total employment) Bahraini employed 49’ 300 13’ 100 9’ 100 700 600 97’ 600 59’ 000 Source: Ministry of Labour, Bahrain Centre for Studies and Research, Labour Force Survey, December 2004. 56
Domestic workers Free visas Ghost workers 57
Informal sector 1 - Economic units with informal features Informal employment 2 - Jobs with informal features ILO, Resolution on the measurement of employment in the informal sector, Fifteenth International Conference of Labour Statisticians, Geneva, January 1993. 1 ILO, Guidelines on statistics of informal employment, Seventeenth International Conference of Labour Statisticians, Geneva, November 2003. 2 58
Informal sector enterprises Subset of household enterprises (SNA unincorporated enterprises owned by households) Informal own-account enterprises – Either all own-account enterprises – Or, only those that are not registered under specific forms of national legislation Enterprises of informal employers – Small in terms of employment – Not registered (in the same sense as for informal own-account enterprises) – Non-registration of its employees 59
Household sector Employers Enterprises of informal employers Own-account workers Informal own-account enterprises Informal sector Employees Recipients of property and transfer incomes Recipients of property income Recipients of pensions Recipients of other transfer incomes 60
Informal employment Combination of following criteria: Written or oral contract Paid annual leave Paid sick leave Employer’s contribution to social security schemes 61
Employment in the Informal Economy (Brazil, percentages, 1999) Informal employment Formal employment Informal sector A (33. 1%) B (4. 7%) Other sectors C (27. 4%) D (34. 8%) Employment in the informal sector: A+B Informal employment: A+C Informal employment outside the informal sector: C Employment in the informal economy: A+B+C (37. 8%) (60. 5%) (27. 4%) (65. 2%) 62
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GDP and the Labour Market 1 Population 2 2/1 3 Population 15+ Labour force 3/2 Proportion of population aged 15 years and over Labour force participation rate 4 Employed 4/3 1 -Unemployment rate 5 Hours worked 5/4 Average hours worked 6 GDP 6/5 Labour productivity 6/1 GDP per capita 65
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Labour productivity Amount of output per unit of labour Value-added based measure: Quantity index of value added Quantity index of labour input Output based measure: Quantity index of gross output Quantity index of labour input 67
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Bibliography http: //www. ilo. org/public/english/bureau/stat/standards/index. htm http: //laborsta. ilo. org http: //unstats. un. org/unsd/sna 1993/toctop. asp http: //web. worldbank. org ILO, Resolution concerning statistics of hours of work, Tenth International Conference of Labour Statisticians, Geneva, October 1962. ILO, Resolution concerning statistics of labour cost, Eleventh International Conference of Labour Statisticians, Geneva, October 1966. ILO, Resolution concerning an integrated system of wages statistics, Twelve International Conference of Labour Statisticians, Geneva, October 1973. ILO, Resolution concerning statistics of the economically active population, employment, unemployment and underemployment, Thirteenth International Conference of Labour Statisticians, Geneva, October 1982. ILO, International Classification of Status in Employment, Fifteenth International Conference of Labour Statisticians, Geneva, 1993. ILO, Resolution concerning of statistics of employment in the informal sector, Fifteenth International Conference of Labour Statisticians, Geneva, January 1993. ILO, Resolution concerning the measurement of employment-related income, Sixteenth International Conference of Labour Statisticians, Geneva, October 1998. ILO, Resolution concerning the measurement of underemployment and inadequate employment situations, Sixteenth International Conference of Labour Statisticians, Geneva, October 1998. 69
Bibliography (cont’d) ILO, Guidelines on statistics of informal employment, Seventeenth International Conference of Labour Statisticians, Geneva, November 2003. ILO, Hussmanns, R. , Mehran, F. , and Verma, V. , Surveys of Economically Active Population, Employment, Unemployment and Underemployment: An ILO Manual on Concepts and Methods, ILO, Geneva 1990. (Translated in Arabic, Persian, Portuguese, Russian, and Spanish. ) Kingdom of Bahrain, Ministry of Labour, and Bahrain Centre for Studies & Research, Labour Force Survey, December 2004, SPSS data file. Kingdom of Bahrain, Central Informatics Organisation, Census of Population, Housing, Buildings, and Establishments – 2001, Part two The Demographic, Social, Economic Characteristics of the Population, Housing, Buildings and Establishments, December 2004. Kingdom of Bahrain, Civil Service Bureau, Annual Report 2004, p. 13. Kingdom of Bahrain, Ministry of Labour, Indicators of the Labour Market 2003 -2004, (in Arabic) by Isma Al-Khalifa, Sana Maci, Anwar Al-Khunaisi, Ministry of Labour, May 2005. United Nations, “Government/Public Sector/Private Sector Delineation Issues, ” Task Force on Harmonisation of Public Sector Accounting, Fourth meeting of the Advisory Expert Group on National Accounts, 30 January – 8 February 2006, Frankfurt, SNA/M 1. 06/17. 70
Index Economically active population Currently active population Usually active population Labour force participation rate Economic activity Production boundary Work Employment-population ratio Seeking work Availability for work Unemployment rate Seasonal worker Discouraged worker Underemployment Time-related underemployment Inadequate employment Skill-related inadequate employment Income-related inadequate employment Over employment Job Occupation Branch of economic activity Absence from work Formal job attachment Paid employment job Self-employment job Status in employment Employee Employer Own-account worker Unpaid family worker (Contributing family worker) Member of producer’s cooperative 71
Index (cont’d) Wages Wage rate Earnings Labour cost index Unit labour cost Hourly labour cost Employment-related income Hours of work Normal hours of work Actual hours worked Usual hours of work Hours paid for GDP Goods Services Value added Labour productivity Establishment Institutional unit Enterprise Corporation Quasi-corporation Government unit Non-profit institution Public sector Private sector Market sector Non-market sector Household sector Informal employment Informal economy Hidden economy Unrecorded activities 72
Questionnaire 1. Among the topics discussed in the lecture, which do you think are more relevant for the analysis of the labour market in Bahrain? a. _____________ b. _____________ c. _____________ 2. Are there any other topics not discussed in the lecture that you think should be included in relation to the analysis of the labour market in Bahrain? a. _____________ b. _____________ c. _____________ 3. Which topics have been the most clearly described? a. ____________ b. ____________ c. ____________ 4. Which topics, in your view, require further clarification? a. _____________ b. _____________ c. _____________ 5. Were the numerical examples appropriate for comparing Bahrain in relation to other countries? a. Yes, explain _______ b. No, explain _______ 73
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