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Bernard Bwoni Correspondent
In Zimbabwe the actual unemployment rate is in the region of 10,5 percent, contrary to some sensational figures of 85-90 percent as carelessly paraded by some economists. The majority of people in the country are economically active and as long as a person does an hour’s work per day or per week they are employed.
This is the criteria used by the International Conference of Labour Statisticians (ICLS) when defining employment. The definition means having done some “work” over the past day or week and anyone who has worked at least one hour over the day or week is in fact employed.

This is in no way meant to understate the economic challenges impacting on the majority of the people in the country. However, an understanding of the country’s informal sector is relevant to addressing some of the economic challenges which continue to burden the country.

According to the ICLS “the concept of informal employment is considered to be relevant not only for developing and transition countries, but also for developed countries, for many of which the concept of the informal sector is of limited relevance”. In the developed world informal employment is synonymous with self-employment. In the developing world there is formal and informal employment and in the UK they use employed and self-employed and is the same in most industrialised countries.

So in the context of labour statisticians’ definition, any “work” including those engaged in the production of goods and services, are in fact employment. In Zimbabwe the distinction between employed and “employed” is not clear.

Only formal employment often makes it to the statistics records whilst informal employment is neglected. But it is partly due to the informal sector that the country is still on its feet in the face of the ‘economic’ sanctions against Zimbabwe.

A young man who heads cattle in the rural areas on behalf of a family in Harare and at the end of the month earns US$140. Is that young man employed or unemployed? A lady who sells her wares at the market every day and at the end of the week takes home US$500 and has been doing that for over 15 years.

Is that lady unemployed? A gentleman who is rearing chicken in his back garden earns US$2000-US$3000 a month from his project. Is that gentleman unemployed? What of the newly resettled farmer who suddenly realised US$20000 from the tobacco auction floors?

The list is endless and most of the proceeds from these informal set-ups do not make it in the formal monetary system. This is an untapped tax revenue base that is ready for harnessing.

In Zimbabwe you have people who have not known formal employment, some by choice others not for a very long time and engaged in a number of informal work activities. Many have excelled as informal sector workers and employers. These individuals are economically active and ‘gainfully’ employed and if we are to measure ‘gainful’ with property ownership and possessions, many have acquired properties, cars and other tangible assets. The issue in Zimbabwe is that most people would only consider themselves as employed if they are in a formal work setting and hence the distorted employment and unemployment statistics. There are many people in the country who work in the informal sector who earn more than those who are formally employed. How can we justify calling such persons unemployed? This is not to downplay the fact that more people in the informal sector or self-employed might point to some weaknesses in the labour market. However, it cannot be ignored that those engaged in the informal sector are indeed economically active.

The unemployment rate measures the number of people actively seeking work or a job as a percentage of the labour force. The statisticians in their definition treat all those who ‘work’ as employed. There is informal and formal work, informal and formal employment, employed and self-employed, depending on where you are. According to the Organisation for Economic Co-operation and Development (OECD), the unemployment rate gives the number of unemployed persons as a percentage of the labour force, that is, the total number of people employed plus unemployed.

The ICLS recognises all economic activity as “work” and thus includes people engaged in activities such as farming, whether commercial or communal and all those who work in the informal sector. According to the Zimbabwe Statistics Agency 50 percent of the country’s population was employed in the agricultural sector, 42 percent were classified as communal farmers or communal farm workers and the rest of the employed figure was 58 percent.

From the data on activity for Zimbabwe from the 2012 population census, the economically active population was 67 percent, the unemployed population was 11 percent and the figure for those employed was 89 percent.

In Canada 2,67 million people are self-employed, which represents around 15,4 percent of all employed workers in the country’s economy. In the UK 4.5 million are self-employed, which accounts to more than 15 percent of the entire country’s labour force. In the USA 15,3 million are self-employed, both incorporated and unincorporated and that is 1 in 9 people self-employed.

In many countries throughout the world, self-employed figures are incorporated into national statistics. In South Africa, 10 percent of the workforce is self-employed, that is a figure of 1.3 million self-employed. In Zimbabwe around 60 percent of the country’s economy is informal and hence you often hear of the staggering figures of 80 percent or 90 percent unemployment. That is because it does not factor in the self-employed statistics and the informal economy of the country.

The national unemployment and GDP figures in Zimbabwe do not reflect the highly informalised economy in the country. Once the country starts formalising the informal sector and starts incorporating the figures into GDP and employment statistics, this will reveal a solid economy on a sound backdrop of an economically empowered indigenous majority.

The trickle-down effect of an economy propped up by indigenous stakeholders is that they have a higher propensity to invest back into the country unlike erstwhile minority investors and multinationals who abandoned Zimbabwe in her time of most need following the necessary and highly successful land reform.

It is imperative that formal studies are carried out to gauge the actual size of the Zimbabwe informal economy and GDP in nominal terms. If you look at trade in the country, it happens mostly informally at flea-markets, market traders, in homes, flourishing greenhouses, the chicken rearing in the back gardens, fish-farming in the backyards and these are the figures that are not reflected in the national GDP and national economy.

The country currently has a negative trade balance as a whole with more imports than exports, as Minister Chinamasa recently lamented.
But a closer look would reveal that informally the exports that are happening on a cash basis are also not reflected in national trade figures. All that money is not filtering into the formal banking systems and hence the distorted trade balance figures.

The solution is to carry out that study to find out the exact figures of the informal economy, getting the self-employed to incorporate their activities, registration and means of follow up and action plans.

A huge task and ask but it is something that needs to be done. Incorporating the informal sector figures, Zimbabwe’s GDP would more than double. This is not to suggest that this is the panacea to all the country’s economic challenges but the informal sector is a major source of revenue that the country is missing out on.

The big question is; how much is the informal economy worth in Zimbabwe? If we are saying over 60 percent of the economy is informal, a tax revenue base not realised by government, what would be the country’s GDP if the revenue from the informal sector was harnessed?

As always, these are merely questions being posed and not meant in any way to undermine and antagonise. — http://bernardbwoni.blogspot.com