Informal Work

Informality can describe an economic unit or an employment relationship. The International Labour Organization, or ILO, distinguishes the informal sector, which concerns enterprises, from informal employment, which concerns jobs. Its explanation of the earlier statistical framework includes unregistered or insufficiently protected paid work as well as certain unpaid work within income-producing enterprises. This distinction prevents “informal” from becoming a loose synonym for a particular occupation or workplace. s1

For Iran, the distinction has direct empirical importance. The World Bank’s Spring 2022 Iran Economic Monitor reports informal employment within formal enterprises as well as in informal enterprises and households. A business’s formal status therefore cannot, by itself, establish the protection attached to every job inside it. The report’s table separates the distribution of informal jobs across these settings from informality rates within population groups; those denominators should not be confused. s2

Why enterprise status does not fully describe a job

The arrows classify where informal employment can occur and distinguish the enterprise from the job. They do not represent movements of workers, employment shares or a test of an individual worker’s legal status.

The Economic Monitor’s evidence for the reporting periods labeled 2019/20 and 2020/21 shows substantial differences between parts of Iran’s labor market. Informality was more prevalent in rural than urban employment, and in agriculture than services. It was also less prevalent among university-educated workers than among workers without formal education. These are historical associations; the table does not show that education alone determines employment protection or that all agricultural work is informal. s2

These distinctions matter when describing livelihoods. Rural residence, educational attainment and industry identify different dimensions of employment, rather than mutually exclusive categories that can simply be added together. A worker can belong to several groups simultaneously. The report is useful for identifying uneven exposure to informality, but its observations should not be relabeled as a current national survey or extended into an invented annual trend. s2

International measurement has continued to evolve. In its October 2023 account of new statistical standards, ILOSTAT distinguishes the broad concept of informal work from the narrower concept of informal employment. The latter concerns production for pay or profit that is not effectively covered by formal arrangements. The broader framework also recognizes productive activities undertaken for other purposes, including own-use production, volunteer work and unpaid training. s3

This evolution creates a practical comparability issue. An older estimate can include activities that a newer framework classifies separately. Applying a newer definition retrospectively without reprocessing the underlying survey would risk changing the meaning of the figures. ILOSTAT also explains that updated classifications recognize dependent contractors, reflecting relationships that blur the boundary between employees and the self-employed. s3

For readers, the central questions are therefore what activity is being measured, whether the classification concerns a job or an enterprise, and which protections are effectively available. The historical Iranian evidence establishes that informality crosses enterprise boundaries and varies across groups. It does not support treating every self-employed person, household worker or employee in a small business as having the same employment conditions. s1s2s3