Definitions of informal economy, informal sector and informal employment

The concept of “informality” was first introduced in the 1970s (Hart, 1973[1] ILO, 1972[2]). For more than four decades, there has been much discussion on the causes of informality around the world but also about the definition and the measurement of informality. In 2015, the ILO Recommendation n°204 concerning the transition from the informal to the formal economy describes the “informal economy” as referring to all economic activities by workers and economic units that are – in law or in practice – not covered or insufficiently covered by formal arrangements. The informal economy does not cover illicit activities. The Recommendation refers to the guidelines concerning the statistical definition of informal employment adopted by the 17th International Conference of Labour Statisticians in 2003 that themselves refer to earlier guidelines related to the informal sector. These guidelines are applied by many emerging and developing economies to measure informal employment, while developed economies typically do not measure such employment.