International standards concerning labour market concepts and definitions

1. International standardsconcerninglabour market concepts and definitions Farhad Mehran Economic Development Board (LMRA project) Bahrain, 9 May 2006

2. 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)

3. ILO international standards (5’) Employment, unemployment (20’) Underemployment, inadequate employment (10’) Status in employment (5’) Wages (15’) Hours of work (10’) Private/Public sectors (10’) Informal/Formal sectors (5’) GDP and Labour market (5’) Labour productivity (5’) Bibliography Index Slide 4 p. 1 Slides 5-20 pp. 2-5 Slides 21-28 pp. 6-7 Slides 29-36 pp. 8-9 Slides 37-44 pp. 10-11 Slides 45-52 pp. 12-13 Slides 53-56 p. 14 Slides 57-64 pp. 15-16 Slides 65-66 p. 17 Slides 67-68 p. 17 Slides 69-70 p. 18 Slides 71-72 p. 18 Labour market concepts and definitions

4. International labour statistics • Scope of labour statistics • Economically active population, employment, unemployment, 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

5. Elements of the statistical system Person Activity during reference period Economically active population ICLS 1982 Wages, Hours of work Job Main tasks and duties Occupational category ISCO-1988 Worker-employer relationship Status in employment ICSE 1993 Establishment Main goods and services produced Branch of economic activity ISIC Rev 3 Labour cost, Productivity Enterprise Nature of legal entity Institutional sector SNA 1993

6. 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) 1 ILO, Resolution concerning statistics of the economically active population, employment, unemployment and underemployment, Thirteenth International Conference of Labour Statisticians, Geneva, October 1982. 2 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.)

7. Conceptual framework ICLS 1982 Pop15+ Labour force Inactive Employed Unemployed of which Underemployed

8. Definition of employment

9. 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

10. Definition of “economic activity” SNA production boundary

11. 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

12. 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

13. Standard definition of unemployment Without work during reference week Currently available for work Actively seeking work in recent period Two exceptions Future starts Lay-offs

14. Reference periods Job search period (Last four weeks) Interviewdate Basic reference period Last week Availability period (Last week + 2 weeks)

15. 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.

16. 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.)

17. 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

18. MoL/BCSRLabour force survey December 2004 Employed 117’000 Inactive 149’700 Unemployed 26’000

19. Methods of job-search of unemployed Bahrainis Survey jobseekers26’000search effort =1.7 • Ministry of Labour 12’900111’7783MoL2003 • CSB 3’3002 2’8624 CBS • Employment services 3’500 • Newspaper ads 10’500 • Internet 1’000 • Friends & relatives 8’700 • Starting own business 300 • Other 4’200 Total=44’400 1 10’600; 2 2’800 among core jobseekers. 3 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. 4 Civil Service Bureau, Kingdom of Bahrain, Annual Report 2004, p. 13.

20. 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.

21. Beyond unemployment Unemployment and its halo Underemployment Over-employment Soft-employment Other issues: Child labour Full-time employment of women with low age children Old age without pension

22. Underemployment and inadequate employment situations1 • 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” 1 ILO, Resolution concerning the measurement of underemployment and inadequate employment situations, Sixteenth International Conference of Labour Statisticians, Geneva, October 1998.

23. 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

24. 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

25. 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

26. Underemployment and inadequate employment situations 82’600 34’400 24’500 7’200

29. Status in employment1 Classification: • Employees • Employers • Own-account workers • Members of producers’ cooperatives • Contributing family workers • Workers not classifiable by status 1 ILO, International Classification of Status in Employment, Fifteenth International Conference of Labour Statisticians, Geneva, 1993.

30. 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

31. 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

32. Own-account workers • 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 Definition:

33. Members of producers cooperatives • Working in a cooperative producing goods and services • In “self employment job” • Engaging or not any “employee” on a continuous basis Definition:

34. Contributing family workers • 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 Definition:

36. Source: http://laborsta.ilo.org

37. Wages as price of labour: Wages as income to worker: Wages as cost to employer: Income from employment3 Wage rate1 Earnings1 Labour cost2 System of Wages Statistics 1Twelve International Conference of Labour Statisticians, Geneva, October 1973. 2Eleventh International Conference of Labour Statisticians, Geneva, October 1966. 3Sixteenth International Conference of Labour Statisticians, Geneva, October 1998.

38. Wage rate • Basic wages • Cost-of-living allowances • 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 Definition: Rate of pay per period of time or per unit of production for an employee on a given job. Includes:

39. 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.

40. 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)

41. Basic labour cost: Hourly labour cost: Unit labour cost: Labour cost per worker Labour cost per hour Labour cost per unit of output Three types of labour cost 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.

42. 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 quasi-corporations • 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

43. Jordan 1997 * Compensation of employees

44. Labour cost = wage rate * (1 + r) + a r = variable component a = fixed component

45. Hours of work1 • Normal hours of work • Actual hours worked • Usual hours of work • Hours paid for 1 Tenth International Conference of Labour Statisticians, Geneva, October 1962.

46. 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

47. 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

48. 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

49. Usual hours of work • Hours worked in an activity during a typical week • Modal value of hours actually worked per week over a long period Definition: Calculation:

50. Source: http://laborsta.ilo.org.