The Invisibility of Wage Employment in Statistics on the Informal Economy in Africa: Causes and Consequences

Abstract

This article challenges the claim, along with the statistics that support it, that self-employment is by far the dominant employment status in the informal economy. The article begins by reviewing key insights from relevant literature on the informal economy to argue that conventional notions of ‘wage employment’ and ‘self-employment’, while unfit for capturing the nature and variety of employment relations in developing countries, remain central to the design of surveys on the workforce therein. After putting statistics on Tanzania’s informal economy and labour force into context, the analysis reviews the type of wage employment relationships that can be found in one instance of the informal economy in urban Tanzania. The categories and terms used by workers to describe their employment situation are then contrasted with those used by the latest labour force survey in Tanzania. The article scrutinises how key employment categories have been translated from English into Swahili, how the translation biases respondents’ answers towards the term ‘self-employment’, and how this, in turn, leads to the statistical invisibility of wage labour in the informal economy. The article also looks at the consequences of this ‘statistical tragedy’ and at the dangers of conflating varied forms of employment, including wage labour, that differ markedly in their modes of operation and growth potential. Attention is also paid to the trade-offs faced by policy-makers in designing better labour force surveys.