Humanity at Work: Towards a Comprehensive Statistical Picture

Concilium Civitas 2019/2020, Concilium Civitas, konkurs dla maturzystów, matura 2020

Humanity at Work: Towards a Comprehensive Statistical Picture

[1] Contemporary global labour statistics refer, at least implicitly, to a conceptual apparatus that was derived from the realities of the labour market in industrialized countries during the ‘golden age of capitalism’. At that time, the formal employment contract was both the statistical norm and the global normative standard. Over the last decades the normative standard has continued, but the labour market’s realities have changed, also in developed countries.
The International Conference of Labour Statisticians, held every five years under the auspices of the International Labour Organization (ILO), has recently begun to tackle ‘non-standard forms of employment’ and seeks to shed more light onto such categories as ‘informality’, which is still mainly defined, by default, as the absence of a formal work contract. This conceptual and methodological work is, for the time being, still a long way from being put into operational implementation at the global level. This means that currently available labour statistics fail to provide a comprehensive picture of contemporary labour’s realities.

The recent report Work for a Brighter Future, produced by the Global Commission on the Future of Work, an independent commission under the auspices of the ILO, has also failed to draw a sharp, factual distinction between the real situation of work as it happens in today’s world and the otherwise perfectly legitimate normative aspiration to provide the benefits of formal employment to all [2].

The purpose of this short piece is to extend the perspective beyond the narrowly defined ‘labour market’ and suggest, based on existing statistics, a way to provide a broad estimate that would answer the question, ‘Where is humanity working?’ This will be achieved in four steps: first, by offering a different view of ‘labour force’; second, by deepening the notion of informality; third, by expanding the notion of work beyond its current statistical use; and finally by providing a global estimate.

  1. From working age population to labour force

According to globally agreed statistical definitions, teenagers enter the ‘age of work’ on their 15th birthday, leaving it only with their death. This broad definition allows one to bypass the disparities between countries regarding education and retirement regimes, whether they exist or not. According to our estimates, based on ILO statistics, the world’s ‘working age population’ is around 5.5 billion today, which corresponds to 75 per cent of the world’s total population [3].

Having said that, the ‘working age population’ (over 15 years) is further statistically divided into two categories: the ‘labour force’ (62 per cent of the total, at the world level) and ‘outside the labour force’ (the remaining 38 per cent). In this respect, country-specific differences in relation to education systems and retirement age play a major role, as do income disparity levels.

Figure 1: ‘Labour force’ and ‘Outside the labour force’ populations
Figure 1: ‘Labour force’ and ‘Outside the labour force’ populations

Figure 1 shows the division of working age population between ‘labour force’ and ‘outside the labour force’ in a selected set of countries. Japan is at one extreme with 40 per cent of its working age population outside the labour force, of which 58 per cent is older than 65. At the other extreme, there is Uganda with 29 per cent of the working population outside the labour force, of which only 7 per cent is older than 65. Depending on the country, similar or greater differences may occur across all age intervals.

How has the working age population been divided? Most probably, mainly by subtracting labour force figures derived from labour market data from the working age population. This approach sets portions of the working age population aside from the labour force on the grounds that they are absent from what economists call the ‘labour market’ or ‘employment forms’ (employees, unemployed and …). In reality, however, a large part of that population, even if statistically regarded as lying outside the labour force, is active and working in the broad multiform domestic (informal) economy. One might, in fact, question the meaningfulness of using a labour market criterion that may lead to the exclusion, on fuzzy formal grounds, of part of the working age population from the labour force. Indeed, as discussed below, the very definition of work that the ILO has adopted goes well beyond the labour market definition. Thus the labour force has, most probably, been underestimated, especially in developing countries. In order to compensate for this bias, we suggest expanding the labour force definition and consequently obtaining the ‘real labour force’ – see below.

  1. Work forms and informality in labour force data

Figure 2 shows how the labour force is distributed across what labour statisticians call different ‘forms of work’ that together make up the labour market. Those are employees, employers, the own account workers, family workers and the unemployed. Recorded unemployment is marginal on the global scale and for this reason has not been recorded in the graph.

In Figure 2 countries are grouped by their income levels per head, in line with the World Bank’s classification.

Figure 2: Work forms and labour force
Figure 2: Work forms and labour force

In high income countries (most OECD members), 84 per cent of the labour force works as employees. In countries with low incomes per head (below US$995) and lower-middle incomes, the share of this, mainly formal employment, varies between 25 per cent and 45 per cent of the labour force. This indicates that most work performed by the labour force in these countries takes the form of self-employment, or family work on farms and in family businesses. By definition, self-employment and family work are barely formal, especially in developing countries, which does not mean, though, that they should be systematically considered as making up the informal, and even less the grey, or black economy.

In order to better grasp the phenomenon of informality in the context of the labour market, the International Labour Organisation has recently published a study that gives a consolidated global picture, even if it is well known that informality is multidimensional and largely depends on country-specific factors. The study is based on existing national estimates and knowledge. This effort should be seen as shedding new light on existing labour force statistics that are unable, for the conceptual reasons explained above, to address informality as such, directly [4].

Drawing on the ILO study, Figure 3 shows five different patterns of informality: US, Poland, Brazil, Bangladesh and the Democratic Republic of Congo. In each, informality is considered from two different angles: on the left, its share is estimated in rural and urban areas; while the right side of the graph shows the share of informality in each of four forms of work that, together with unemployment, make up the labour market.

Figure 3: Estimated informality in urban and rural areas, and according to forms of work, in five countries
Figure 3: Estimated informality in urban and rural areas, and according to forms of work, in five countries

The range of situations spotlights how difficult it is to obtain a coherent global picture of humanity at work. In the US, aggregate informality concerns less than 20 per cent of the labour force, whereas it represents 92 per cent of the labour force in the Democratic Republic of Congo. Clearly, informality is mainly, but not only, a rural reality. It is present in all forms of work, but is exacerbated among family workers and the self-employed. However, even in the US, more than 10 per cent of employees work informally.

One of the key results of that study is that globally, 61 per cent of the labour force works in informal contexts. This figure represents 38 per cent of the working age population. This finding has important conceptual consequences, because it reminds us that the dominant context in which labour market related work takes place is ‘informal’ rather than ‘formal’.

In this light, the notion of informality (often used as a default notion to express the lack of formality) has to be revisited and conceptually refined, so as to allow the emergence of statistical categories that are better able to help identify the diversity of situations and work contexts. The current work aimed at refining the notion of on ‘non-standard work forms’ is promising, despite the fact that its very wording is more normative that descriptive. Refining the reality of informal work, which ultimately should result in changes in terminology, is not incompatible with retaining, at the normative level, the ‘standard formal work contract’ as the ultimate political objective of ILO’s mission and, more generally, of social dialogue.

  1. Work: an ambitious definition awaiting full implementation

In 2013, Resolution 1 of the 19th International Conference of Labour Statisticians defined work in the following way: ‘Work comprises any activity performed by persons of any sex and age to produce goods or to provide services for use by others or for own use. Work is defined irrespective of its formal or informal character or the legality of the activity.’ [5] The same resolution lists the various contexts (economic units) in which the above-defined work may take place: market units (corporations, quasi-corporations and household unincorporated market enterprises); non-market units (government and non-profit institutions serving households) and households that produce goods or services for own final use.

The comprehensiveness of the definition of work is very promising. It should help, in the future, to ensure that activities performed outside the narrow definition of the labour market and its related forms of work are included within labour statistics. However, an effective implementation of this definition collides with another, well established, principle which uses the person as the statistical ‘unit of analysis’ (and record). This principle means that a given person’s activity is statistically attributed to only one type of economic unit. The implications are far-reaching: in real life, during the same day, most persons work in more than one type of economic unit. But this multiple reality remains largely unobserved, because the unit of analysis requires that only one of these contexts may be recorded. This leads to a systematic underestimate of domestic economy related activities, because the labour market is the main source of statistical information. This same bias is present in national accounts used to derive national product and revenue.

  1. Humanity at work: a tentative assessment

The tentative answer to the question, ‘Where is humanity working?’ has to take stock of the intermediate conclusions made so far. These show that:
– the present labour force definition is too narrow, because it leaves aside, as idle, all those who are absent from the labour market and its work forms;
– the principle of a person as a unit of analysis does not allow labour force statistics to pay the same attention to work performed in all types of units of economic activity. Consequently, the importance of certain units is grossly underestimated;
– informality, even as a default category, is the statistically dominant context in which work is performed.

Each of these points deserves further investigation and precision, but even at this stage they provide guidelines for estimating the statistical reality of human work across different contexts. Three steps are required: First, the labour force has to be reassessed in order to gauge the ‘real labour force’, which includes those that are active but not on the labour market. A first prudent approximation of the ‘real labour force’ may be obtained by subtracting from the working age population those who are under 24 and over 65, who are not a part of the labour force, as they may be either at school or non-productive. This means that the ‘real labour force’ comprises all of the labour force and the entire remaining population aged between 24 and 65.

Second, the estimate has to avoid the convention of treating a person as a unit of analysis. To achieve this, the unit of analysis has to be changed from person/year to person/hour. A limited range of household time surveys (especially for India, France and Switzerland) show that the working age population works (in the sense defined by the ILO) for about 12 hours per day. For those that are part of the labour force, the distribution is as follows: 8 hours are spent at work in the economic unit, while the remaining 4 hours are spent working in the domestic economy.

Therefore, a labour market participant’s active day lasts 12 hours, of which 8 hours are given over to one type of market economic unit and the remaining 4 hours are dedicated to household activity, called here the domestic economy. The labour force defined in this way could be called the ‘expanded real labour force’.

Third, the ‘expanded real labour force’ is active in three different contexts: labour market–related activities taking place in a formalized context; labour market–related activities performed in non-formal contexts; the domestic economy made up of household activities in their broad sense.

Figure 4 shows the results of our estimate for the world as a whole and for six selected countries. The graphs present the distribution of the work time available to the ‘expanded real labour force’ during one normal (i.e. working) day across the three contexts mentioned above.

Figure 4: How does the ‘expanded real labour force’ allocate its working time?
Figure 4: How does the ‘expanded real labour force’ allocate its working time?

The main finding is that, at the global level, people in the ‘expanded real labour force’ (aged 24–65) devote 50 per cent of available time to the domestic economy; 31 per cent to informal activities and only 19 per cent to those in the formal economy. In all but one country (the Democratic Republic of Congo), the domestic economy is the main area of activity. As discussed above, the relative share of formal vs. informal labour market–related work depends on country-specific institutional factors.

These findings and orders of magnitude show that today, most human work remains uncaptured by labour statistics, while its contribution to economic performance, social harmony, happiness and well-being is essential. There is an urgent need to acknowledge this state of affairs and propose an in-depth review of the conceptual and methodological framework behind labour statistics, to ensure they better capture the social and economic realities of human work in its broad sense.

The 100th anniversary of the International Labour Organisation, celebrated in 2019, is an excellent opportunity to set in motion this kind of ambitious revision of the statistical framework.

Paul H. Dembinski (and Hannah Soissons – Observatoire de la Finance, Geneva)

Paul H. Dembinski studied political science in Geneva and received his doctorate in economics in 1982. In 1979 he was appointed lecturer and assistant professor at the University of Geneva, and in 1991 he was appointed visiting professor at Switzerland’s University of Fribourg, where he now occupies the chair of International Strategy and Competition on a half-time basis. In 1989 he and his associate Alain Schoenenberger founded Eco’Diagnostic, a fully independent, interdisciplinary economic research institute that still operates today. An expert on behalf of international organizations such as OECD and UNCTAD, he also conducts studies of Switzerland’s economic fabric (at both cantonal and federal level). Since 1999 he has been co-editor of the journal Finance & the Common Good/Bien Commun. Since 2005, following the launch of the Ethics and Finance – Robin Cosgrove Prize, he has co-chaired the two juries with Carol Cosgrove-Sacks and Domingo Sugranyes.

Footnotes:
[1] This research, by the Observatoire de la Finance is part of a global project, The Future of Work, Labour After Laudato Sì, https://futureofwork-labourafterlaudatosi.net/?lang=fr
[2] https://www.ilo.org/global/topics/future-of-work/brighter-future/lang–en/index.htm
[3] The database built for this project included 79 countries, representing 90 per cent of the world’s population and 94 per cent of world net income. The global picture was derived from extrapolating this data.
[4] Women and Men in the Informal Economy: A Statistical Picture (International Labour Office, Geneva, 3rd Edition, 2018), https://www.ilo.org/global/publications/books/WCMS_626831/lang–en/index.htm
[5] https://www.ilo.org/global/statistics-and-databases/meetings-and-events/international-conference-of-labour-statisticians/19/WCMS_230304/lang–en/index.htm

This work is licensed under a Creative Commons Attribution (BY) 3.0 Unported License (users are free to share and adapt the material providing attribution is made to the author and source)

Scroll to top