52 Concepts and Definitions
6.1.2 Employment According to the international definition, the employed population includes all persons above a specified age (usually 15 years or above) who did some work (for one hour or more) in the reference period either for pay in cash or in kind (paid employees) or who were in self employment for profit or family gain, plus persons temporarily absent from their work. Self employment in cludes persons working on their own farms or doing any other income generating activities. Unpaid family workers in family businesses are included in the category of employed persons.
6.1.3 Main and Secondary Activity Main activity refers to an activity t hat an employee spends most of the time in case he/she has more than one activity, while the other activity is categorised as a secondary activity.
6.1.4 Temporary Absences from Employment Refers to persons who did not work in the reference period but hav e a work from which they are temporarily absent and they keep a strong attachment to the job and there is a definite expectation that they will return to it.
6.1.5 Status in Employment Status in employment is distinguished by the following categories:-
6.1.5.1 Paid employees
Are persons who perform work for a wage or salary in cash or kind. It includes permanent,
temporary and casual paid employees.
- 1.5.2 The self-employed (non-agriculture)
Are persons who perform work for profit or family gain in their own non -agricultural enterprise. This includes small and large business persons working on their own enterprises. The category is sub-divided into those with employees and those without employees.
6.1.5.3 Unpaid family helpers (non-agriculture)
Are persons working completely without payment in cash or kind in family enterprises other
than in the family farm.
6.1.5.4 Agricultural workers Are persons working on their own farms either in crop growing, forestry, livestock or fishing as either self-employed persons or as unpaid family helpers.
53 Concepts and Definitions
6.1.6 Other Concepts includes; Regular Employees are all permanent and temporary wage earners and salaried persons who were engaged throughout the working days of the reference month. Casual Workers are persons receiving daily wages and permanent or temporary wage earners and salaried persons who were engaged for a period of less than one month during the reference period.
6.1.7 Unemployment
Under the internationally recommended definition, a person is classifi ed as unemployed if
she/he meets all the following three conditions during a specified period (usually one week),
that he/she is:
a. without work,
b. available for work, and
c. seeking work (had taken specific steps in a specified period to seek paid
employment or self-employment).
This type of unemployment is termed as Strict International Definition.
Relaxed International definition of unemployment allows the relaxation of condition (c) above, i.e. seeking work, especially in countries where a large proportion of the population is engaged in agriculture and informal activities with generally low knowledge of labour market developments in the rest of the economy.
The national definition of unemployment is the sum of unemployed who fulfilled categories A and B and working persons with extreme marginal attachment to their employment.
6.1.8 Discouraged Workers The discouraged workers are persons who are without work and available for work but did not seek work because they felt that no work would be available to them. These are those who have given up any hope of finding work for reasons such as lack of proper qualifications, no suitable work is available or does not know where or how to look for work.
6.1.9 Underemployment Underemployment reflects underutilisati on of the productive capacity of the employed population. It refers to persons whose actual hours of work were less than 40 per week due to economic reasons if he/she indicated to be availability for more work.
54 Concepts and Definitions
6.1.10 The Economically Inactive (not in the labour force) These are persons who were neither employed nor unemployed in the reference period. This includes persons doing solely unpaid domestic work in their own houses; those engaged in full time studies and persons not working because they were s ick, retired or did not want to work.
6.1.11 Usual Activity The usually employed refer to persons who were usually economically active and spent six or more months working. The usually unemployed refer to persons who spent six or more months not working but available for work. The usually economically inactive refer to persons who did not work and were not available for work for more than six months.
6.1.12 Informal Sector Informal sector comprises all units/enterprises that are engaged in production of goods or services aiming at generating employment and incomes for persons concerned. These are private unincorporated enterprises (excluding quasi corporations) owned by individuals or households that are (i) not constituted as separate legal entities inde pendent of their owners, and for which no complete accounts are available (ii) They are not registered under specific forms of national legislation and/or their employees (if any) are not registered (iii) All or at least some of the goods or services produ ced are meant for sale or barter (iv) Their employment size is less than 5 employees (v) They are engaged in non agricultural activities, including secondary non agricultural activities of enterprises in the agricultural sector.
6.1.13 Informal Employment Informal employment refers to jobs that generally lack basic social or legal protections or employment benefits and may be found in informal sector, formal sector enterprises or households.
6.1.14 Vulnerable Workers The vulnerable workers include contri buting family and own account workers. These two status groups are considered as vulnerable because such workers are unlikely to have formal employment arrangements or access to benefits or social protection programmes, and they are more at risk to the effects of economic cycles.
6.1.15 Child Labour Child labour is a work which is hazardous or is likely to be harmful to the child's health and development and that affect the child's attendance at school, participation in vocational orientation or training programmes approved by the competent authority or the child's capacity to benefit from the instruction received.
55 Concepts and Definitions
6.2 Price Statistics
6.2.1 Consumer Price Index (CPI) CPI is a measure estimating the average price of consumer goods and services purchase d by households. It measures changes in the price of a fixed basket of consumer goods and services commonly purchased by households over a period of time on a monthly basis
6.2.2 Price Index Price index is a normalized average of prices for a given class of goods and services in a given region, during a given interval of time. It is a statistic designed to help to compare how these prices, taken as a whole, differ between time periods or geographical locations.
6.2.3 Laspeyres Price Index
Is the Price Index taking the bundle of goods using current prices and current quantities as
the numeraire.
6.2.4 Paasche Price Index
Is the price index where the numeraire is the bundle of goods using base year prices but
current quantities.
6.2.5 Inflation Inflation is defined as a sustained increase in the general level of prices for goods and services over a period of a year.
Several variations on Inflation:
Deflation is when the general level of prices is falling.
Hyperinflation is unusually rapid inflation. In an extreme cases, this can lead to the breakdown of a nation`s monetary system.
Stagflation is the combination of high unemployment and economic stagnation with inflation.
6.2.6 Base period
Is a point in time used as a reference point for comparison with some later period. E.g. NBS
produces the NCPI using October 2010 as base price period and weights are derived from the
2007 HBS results
6.2.7 Consumption
Is any activity in which households use goods and/or services to satisfy their needs and wants
but not for business purposes nor for the acquisition of wealth. Thus investment in all forms
of assets is excluded.
56 Concepts and Definitions
6.2.8 Price relative
Ratio of a single price at a given point in time to the corresponding price in the previous
period.
6.2.9 Weight
Is the relative consumption share of an item or group of items to the total consumption of
households. It measures the importance attached to an item or group of items in the basket
of goods and services e.g. on average 47.8% of a household's consumption in Tanzania is on
food and non alcoholic beverages.
6.2.10 Basket of goods and services
refers to a sample of goods and services that are commonly purchased by persons including
all expenditure groups and households in the country.
6.2.11 A representative item
Is an item that has been selected to represent the consumption pattern in the basket of
selected items in the Consumer Price Index. This should be an item that has the largest share
of consumption compared to the items of the same type, e.g. 'lemon cream' may have the
largest share of consumption compared to other cream biscuits. There are 224 items in the
CPI basket.
6.2.12 Brand
Is the trade name of the item which may be the manufacturer’s name or the name that the
item. Note that the same bran d name may be used for different items, e.g. cooking oil,
maize, salt etc.
6.2.13 An Outlet
Are places where goods and services are sold to the final consumers, e.g. shops, markets,
supermarkets etc
6.2.14 Consumption
Is any activity in which households use goods and/or services to satisfy their needs and wants
but not for business purposes nor for the acquisition of wealth. Thus investment in all forms
of assets is excluded.
6.2.15 An item variety
Is the description and specification of the represe ntative item to be priced. The item name
may be too broad e.g. biscuits. The variety includes specification of quality, kind, style, size
quantity and the brand name. Take special note that item variety means the full item
specification.
57
Concepts and Definitions
Example : Representative item
:Maize,
Item variety Specification : 5kg, white
Brand
: Red Seal
6.2.16 Substitution
This refers to the replacement of either item varieties or Outlets.
58 Concepts and Definitions
CHAPTER SEVEN
POVERTY AND WELFARE STATISTICS
7.0 Poverty Poverty refers to an assessment of the basic costs of a minimum standard of living in a particular society and measures the number of households and/or the proportion of the population that are deemed not to be able to meet these basic needs. Poverty analysis tries to identify within each society who are the poor , where they live and what are the characteristics that set these poor households apart from those that are better -off. The goal of the analysis is to be able to develop targeted pro -poor poverty reduction or alleviation strategies that will help to understand why some are poor and others are not.
Poverty is a result of many and often mutually reinforcing factors, including lack of productive resources to generate material wealth, illite racy, prevalence of diseases, discriminative socio - economic and political systems, natural calamities such as drought, floods, HIV and AIDS and man-made calamities such as wars.
7.1 Welfare It is the level or standard of living of an individual, househol d or community. Two approaches are commonly used to measure welfare. The first approach is in terms of needs satisfaction. The more an individual, household or community satisfies its needs, the higher the level of welfare and vice versa.
The second appr oach is in terms of the household’s command over resources in terms of food, money, property, health, schooling, working conditions, housing, security against crime, means of transport & communication as well as liberty. This enables individuals to have th e capacity to satisfy their needs and broaden their opportunities and choices.
7.1.1 Human Poverty Index (HPI) Measures deprivations in the three basic dimensions of human development such a lack of a long and healthy life, lack of knowledge and lack of a decent standard of living.
7.1.2 Poverty Head Count Ratio The poverty headcount ratio is the proportion of the national population whose incomes are below the official threshold (or thresholds) set by the national government. National poverty lines are u sually set for households of various compositions to allow for different family sizes. Where there are no official poverty lines, they may be defined as the level of income required to have only sufficient food or food plus other necessities for survival.
59 Concepts and Definitions
7.1.3 Poverty line A poverty line typically specifies the income (or level of spending) required to purchase a bundle of essential goods (typically food, clothing, shelter, water, electricity, schooling and reliable healthcare). Or it implies a minimum c onsumption expenditure level required by a person to procure a standardized basket of goods and services to satisfy basic needs.
7.1.4 Poverty Gap Index (PGI)
This is a measure of the depth/intensity of poverty. Poverty gap index is an improvement
over th e poverty measure headcount ratio which simply counts all the people below the
poverty line in a given population and considers them equally poor.
Poverty gap index (PGI) is calculated as:
n
i
i
N
yzPGI
1
Where: N is the total population, n is the total population of poor who are living at or below
the poverty line, z is the poverty line, and yi is the consumption of the poor individual
7.1.5 Depth of poverty (poverty gap).
This provides information regarding how far off households are from the poverty line. This
measure captures the mean aggregate income or consumption shortfall relative to the poverty
line across the whole population.
7.1.6 Squared Poverty Gap Index (SPGI) This is a measure of the severity of poverty being experienced by a pop ulation or subpopulation. Squared poverty gap is related to poverty gap index but it’s calculated by averaging the square of the poverty gap ratio, by squaring each poverty gap data, the measure puts more weights the further poor persons observed income fa lls below the poverty line. The squared poverty gap index is one form of a weighted sum of poverty gaps, with the weight proportionate to the poverty gap. Poverty severity (squared poverty gap) takes into account not only the distance separating the poor from the poverty line.
7.1.7 Gini Coefficient and Quintile Ratios: The Gini Co-efficient and Quintile ratios are the most common indices or indicators used to measure the depth of inequality (by per capita income) of a distribution
7.1.8 The Gini Co-efficient
is the measure of inequalities among the population. It refers to the extent to which income is
distributed in an uneven manner among the population and ranges from 0 (every person has
the same consumption) to 1 (one person has all of the consumptio n in the country). It is
60 Concepts and Definitions
defined as the ratio between the area demarcated by the diagonal and the Lorenz curve and the triangular region underneath the diagonal of the Lorenz plot.
7.1.9 The Quintile Ratio
is a ratio of consumption of the richest 90 percent to consumption of the poorest 10 percent.
7.1 10 Relative poverty lines:
These are defined in relation to the overall distribution of income or consumption in a
country; for example, the poverty line could be set at 50 percent of the country’s mean
income or consumption.
7.1.11 Absolute poverty lines: For monetary measures, these absolute poverty lines are often based on estimates of the cost of basic food needs, that is, the cost of a nutritional basket considered minimal for the health and well-being of a typical family, to which a provision is added for non-food needs.
7.1.12 Food Poverty Food poverty is the inability to access a nutritionally adequate diet and the related impacts on health, culture and social participation.
7.1.13 Food Poverty line
This is the cost of buying the food bundle or basket that can provide the minimum nutritional
requirements of a poor person. It is calculated by having prices of all food items in the
basket.
7.1.14 Basic Needs Poverty line This is the cost of expenditure on non-food essentials.
7.1.15 Indicator It is a measure that reflects progress, stagnation or deterioration in a particular phenomenon or situations such as literacy, economic, heath and poverty over time.
7.1.16 Monitoring It is a process of following up the course of an event or process towards a pre -determined destination or target.
For monitoring purposes the following are essential requirements: ▪ There must be a set of monitoring indicators that will be used to measure changes in a given situation over time.
61 Concepts and Definitions
▪ A monitoring system must be in place. This includes actors or institutional set-up, the
frequency of monitoring and the mode of monitoring.
7.1.17 Food Security Food security refers to a situation under which an individual, household or community has access to an adequate supply of food throughout the year. This situation is determined by the amount of available food in relation to actual daily calorific requirement of the individual, household or community. Food security exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life.
7.1.18 Food Insecurity Is a situation where by a Household/Village/District/Regional/National level faces food deficit. For example, percentage of household with adults eating less than 2 meals a day (1 meal or no meal), and percentage of children aged 6 months to 59 months eating less than 3 meals per day, can be a cut off point for households considered food insecure. It also relates to the nutrition status of a family and food shortage at the household level. However, the criteria are subjective and may need other objective criteria to specify food insecurity at the household level.
7.2 Human Development Indices Human Development is a process of enlarging people’s choice at all levels of development. The process therefore, focuses on formulation of human capabilities such as improved health, knowledge and skills and utilization of their acquired capabilities.
7.2.1 Human Development Index (HDI) Is a summary measure of human development. It measures the average achievements in three basic dimensions of Human Development indicated as;
HDI = LEI + LRI + GDPI
▪ A long and health life, measured by life expectancy at birth. 25 85 25 LE LEI
Where; LEI is Life Expectancy Index
▪ Knowledge, measured by adult literacy rate and the combined primary, secondary
and tertiary gross enrollment.
GER
ALR
LRI
3
1
3
2