Living Standards Measurements Study - Serbia 2002 - 2007

9.3. Employment in the informal
sector
The definition of the employed in the informal
sector is the same as that used in LSMS 2002.
According to that definition, persons employed in
the informal sector were all people without a formal
and legal regulated employment relation i.e. persons
who are not employed in registered companies, have
no own registered company or have no
employment-related insurance. According to LSMS
2007, almost 35 percent of employed persons were
engaged in the informal sector, some 4 percent more
compared to 2002, but at the same level as in 2003.
In urban areas the number of the employed in
the informal sector fell by 0.3 percent. In rural
areas over 52 percent of employees work in the
informal sector, 11.3 percent up on 2002. Given that
people in rural areas represent the majority of those
employed in the informal sector, it can be assumed
that such persons mainly work in agriculture. The
high percentage of people employed in the informal
sector is, among other things, the result of greater
flexibility offered by such type of work in terms of
timing and number of working hours and avoidance
of costs related to the payment of contributions and
taxes.
There are significant regional differences in
the informal sector. The lowest percentage of people
employed in the informal sector is in Belgrade (21
percent) and the highest (over 47 percent) is found
in West Serbia which, simultaneously, has the
largest number of employed persons (55 percent).
Since 2002, the trends shows that the informal
sector has been increasingly absorbing unqualified
and unskilled labour. Of the total number of employees
in the informal sector, 53 percent are educated
up to primary school level, 39 percent secondary and
8 percent to college and university level.
Even though, compared to 2002, the number of
employed at all educational levels increased in the
informal sector, those with lower education
represents the overwhelming majority. Whereas in
2002, some 49 percent of employed persons with
primary school education were engaged in the
informal sector, in 2007, than number reaches some
70 percent. Of the total number of employed people
with secondary education, a little less than 28
percent, work in the informal sector, whereas the
smallest percentage of persons with college and
university education are employed in the informal
sector.
Employment status
Graph 9.3. Formal and informal employment by
education level, LSMS 2007
elementary
secondary
tertiary
11,1%
8,3%
25,6%
Formal
38,9%
Informal
52,8%
63,3%
As compared to 2002, significant changes have
taken place in the social and economic position of
the employed in the formal and informal sectors.
While in 2002, a higher percentage of employees in
the formal sector were reported living below the
poverty line (58 percent) as compared to the
informal sector (42 percent), the data for 2007 point
to the reverse situation. Of the total number of
employed persons below the poverty line, over 72
percent work in the informal sector.
Among the employed in the poorest quintile,
40 percent are engaged in formal employment and
60 percent work in the informal. While for the 20%
from the richest quintile 82 percent have formal
employment and 18 percent informal.
The data testifies that the economic position of
the formally employed has substantially improved.
9.4. Transformation from state to
private ownership
Over recent years, ownership transformation
led to the prevalence of the private sector over the
state one, while the social sector, which was
dominant in the socialist regime, was reduced to a
little more than 4 percent of employed persons. The
privatization of the remainder of socially-owned
enterprises, which is to be completed by the end of
2008, will remove the social ownership sector from
the historical scene. Private ownership, with 48.4
percent of the employed in the registered and 19.7
percent in the unregistered form, has become the
most widespread ownership type in which the
working activity of Serbians is undertaken.
Compared to LSMS 2002, the number of employed
in private companies rose by 28.7 percent. Both
registered and unregistered companies saw an
increase.
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