Abstract

While the term “informal sector” had gained wide recognition during the past years, its concept remained ambiguous and its definition elusive. This study attempted to look into the informal sector using previous studies with the aim of providing a definition of the informal sector, at least in the Philippine context, in order to formulate a methodological framework for the quantification of the contribution of the informal sector. This was the recommended definition: “The informal sector consists of household unincorporated enterprises which are market producers whose operations are characterized by the following: (a) operated by own-account workers, who may employ unpaid family workers as well as occasionally hired workers, for those enterprises engaged in agriculture, fishery and forestry; (b) absence of division between household and production operations, or absence of division between labor and capital of operator, for those enterprises engaged in industry; and (c) absence of division between household and production operations, or absence of division between labor and a capital of operator, for those enterprises engaged in services. Own-account professional services are excluded from the scope of informal activities for the services sector.” The study discussed the scope of the informal sector and the methodology for measuring its contribution to domestic production as well as the data requirements for industry and for agriculture, fishery and forestry. A comprehensive, reliable and detailed information on the contribution of the informal sector to Gross Domestic Product can only be obtained through direct measurement using the production approach.