Status in employmentClick here for detail indicators
Introduction & Background
The status of employment indicator is used to separate two categories of the total employed workforce in the country. The first predominant group is made up of wage and salaried workers (usually also referred to as employees), the second group represents a range of self-employed workers. The self-employed workers are further divided into 5 sub-groups comprising a) employers, b) own-account workers, c) members of producers’ cooperative, d) contributing family members (also known as unpaid family workers) and e) non classifiable workers. The definition of each category and sub-group follows the ILO standards agreed at the 1993 15th International Conference of Labour Statisticians (ICLS), viz:
Waged and salaried workers
these workers usually have the kind of job that is consider as paid employment and usually have oral or written contract of employment with entitlement to basic remuneration.
Self-employment jobs comprise:
People who work on their own account or with the help of one or few partners and for which their remuneration is directly dependent on the profits from goods and services produced. Employers have the capacity to engage continuously one or more persons as employees.
People who work on their own account or with one or more partners and for which their remuneration is directly dependent on the profit from goods and services produced. However, they do not engage continuously employees to work for them.
Workers who receive remunerations through revenue and profits generated by cooperatives producing goods and services.
Workers who are engaged in a market oriented establishment operated by a related person living within the same household and for which they may or may not receive a set remuneration.
Workers not classifiable by status are those persons who do not fit into any of the sub groups above or where insufficient information is available.
In Malaysia information is available for only 3 sub-groups of the self-employed which are: employers, own account workers and contributing family members.
The status of employment data in Malaysia is obtained through the Labour Force Survey that is conducted by The Department of Statistic Malaysia. The two categories of workers in KILM 3 are presented as a percentage of the total employed, and also further disaggregated by socio-economic factors, e.g. gender.
Why KILM 3 is important?
This indicator provides information on the proportion of the working population that are salaried employees, which over time also traces the transition path of a country as it moves from low income to middle income and eventually to high income status. A large proportion of salaried workers is consistent with an economy in advanced development and is associated with the prevalence of decent work. The tendency is for the ratio of salaried workers to rise in the initial stage of economic development reflecting the creation of remunerated jobs in the formal economy, which then peaks before the country enter the high income stage, as a larger proportion of the population become highly skilled and are able to work on their own account or start their own businesses as self-employed or employers particularly in the knowledge-based services sector. The experience from developed economies demonstrates that the services sector become the dominating area of economic activities as the degree of entrepreneurship of the working population prospers. An economy with significant proportion of the workers as self employed without employees and as unpaid family workers is associated with a low level rural agricultural environment with few formal job opportunities and prevalent poverty. Unpaid family workers often have no formal work arrangements, lack elements of decent employment, social security and labour rights. Such workers in self-employed status are considered to be in a vulnerable employment position, which is common in low income countries.
The quality of the questions posed in the LFS is important for collating KILM 3 information. For example, it is not very clear if salaried workers have formal or regular contracts or are casual workers. Moreover, it is unclear if salaried workers have protection from unfair dismissals to be deemed decent work. The category of self-employed as workers in cooperatives is not recorded in Malaysia. When benchmarking against other countries due care has to be taken because of the different definitions and survey methods used by some countries.
Efforts would need to be devoted to better understand the situation of unpaid family workers to ensure decent job status and to move them to salaried worker positions. In recent years, this category of workers has seen increases in the urban areas. Finally, analysis of KILM 3 by state could provide insights into the evolving job markets nationwide.