TVETipedia

The informal sector consists of unregistered and small, unincorporated private enterprises engaged, at least partly, in producing goods and services for the market. An enterprise is unregistered when it is not registered under national laws, such as commercial acts, tax or social security laws, or professional associations’ regulatory acts. An enterprise is considered small when it has fewer permanent employees than a certain number (for instance five employees). The number is set in the national context. An enterprise is unincorporated if it is not a legal entity set up separately from its owners. This usually means that no complete set of accounts is kept. When people produce goods or services just for their own household’s consumption, such as food or childcare, this is not counted as an informal sector activity.

(Informal economy) Part of the market economy in that it produces (legal) goods and services for sale or other forms of remuneration, covers informal employment both in informal enterprises (small unregistered or unincorporated enterprises) and outside informal enterprises; not recognized or protected under existing legal and regulatory frameworks.

(also Informal economy)

This is defined by governments as the part of an economy that has no annual accounts, not taxed, not monitored by any form of government, not belonging to the chamber of commerce and not included in any Gross National Product (GNP), unlike the formal economy. The GNP is defined as the market value of all products and services produced in one year by labor and property supplied by the residents of a country. In developing countries, some 70% of the potential working population are self-employed outside the formal economy and not on anyone's payroll and earn their living in the informal sector. They live and work in the informal sector not because it is their wish or choice, but because they have no chance to be hired by an employer from the formal sector except for a few hours or days, with no legal right to be hired again.

Consists of units engaged in the production of goods and services with the primary objective of generating employment and income to the persons concerned in order to earn a living.

Source: (NSCB Resolution No. 15, s. 2002)