STD/NA(2001)30

TABLE OF CONTENTS

1. Introduction...........................................................................................................................................3

2. Issues related to measurement of employed foreigners.......................................................................4

3. The definition of non regular employment in the system of national accounts....................................5

4. Sources of data on regular and non regular employed foreigners.........................................................9

5. Methodology for estimating regular and non regular foreign workers...............................................105.1. The estimation of regular foreign workers.................................................................................105.2. The estimation of non regular employed foreigners..................................................................12

6. The results achieved............................................................................................................................15

7. Conclusions.........................................................................................................................................18

Bibliography...............................................................................................................................................20

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NON REGULAR FOREIGN INPUT OF LABOURIN THE NEW NATIONAL ACCOUNTS ESTIMATES

1. Introduction

Italy registers a continually increasing flow of immigrants that contributes to making the presence of foreigners in the country more and more substantial, and particularly of those who are compelled to leave their home countries seeking for better economic conditions. In the last few years, the elements that have contributed to an increase in the presence of foreigners in the country can be identified in the openings created by the new regulatory policies governing entries and residence on one hand, and on the other, in the growing demand for foreign workers, regularly registered or not, to be introduced in the labour market.

Since 1998 the Unified Text of measures governing immigration regulates the entry and permanence of foreign citizens in Italy, a law designed to contain migratory flows to the country which plans and sets limits for legal entries1. In fact, the regulatory framework in Italy, as well as in other European countries, appears to be changing, as the planning policies for migratory flows become a more widespread practice, while the more restrictive policies, tending towards a containment of the migratory phenomenon by fostering the complete closure of boundaries, are reviewed.

The labour market itself seems to be partly changing compared to the recent past. The gradual desertion by Italian workers of unskilled and low salaried jobs seems to have encouraged the flourishing of non regular or transitory employment thus allowing the survival of sectors undergoing crisis, such as agriculture for instance. Simultaneously, entrepreneurs are gradually being pushed by the state of affairs to demand for foreign workers and thus for an increase in the entry flows planned by the government, particularly in the local situations where it is difficult for the work offering to meet the demand2.

Nevertheless, quantitative analyses reveal several difficulties in the monitoring of employment of immigrants. The factors that determine this situation are primarily related to the sources of information not being exhaustive and thus unable to measure the phenomenon as a whole. In fact, to this day what is available is only a number of different hypotheses as to the amount of non regular workers in Italy; and an exhaustive statistical survey on the number of regularly employed foreigners is not yet available.

1 The Unified Text on immigration namely pursues four objectives: a) planning of legal entries within the quotas stipulated annually with the local Bodies; b) a more effective hindrance to illegal immigration; c) higher support to favour paths of integration for regularly residing immigrants; d) an active international policy of co-operation with the Nations of origin and transit, to facilitate the re-entry of illegal immigrants and those who have committed crimes. The new regulation has, in addition, introduced an important novelty in that it offers foreigners who have been residing in Italy for at least five years and who respond to certain requirements, the possibility to apply for a permit with unlimited duration. For further details refer to “Rapporto immigrazione. Dall’emergenza alla programmazione” (Report on immigration. From emergency to planning) published by the Ministry for Internal Affairs (2000).

2 In the ISFOL 2000 report “Formazione e occupazione in Italia e in Europa” (Training and employment in Italy and Europe) a reference is made to the empirical evidence emerging from the enquiry on a sample of enterprises. According to the information gathered, entrepreneurs of enterprises participating in the sample (i.e. Excelsior Information system) planned to employ 200,000 foreign workers for the years 1999-2000.

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The aim of this paper is to describe the methodological approach and the results of the estimation of non regular employed foreigners produced every year within the context of the national account estimates. Non regular employed foreigners represent in fact a typology of workers that has been influencing the labour volume level and dynamic which takes part in the production of income and whose contribution, in terms of Gross National Product, tends to grow in time.

2. Issues related to measurement of employed foreigners

Researches on the migratory phenomenon still tends to classify the different segments of employed foreigners not so much according to whether they are visible to the institutions for taxes, social security and assistance, but rather in relation to their status with reference to the entry and residence provisions for immigrants, which define the stock and flows of foreigners as regular and non regular, according to whether they possess the necessary documentation or not3.

In addition, a lot of researchers believe that the migratory phenomenon comes to assume a legal or illegal character, according to the kind of immigration legislation or experience that was being enforced previously. This consideration implies that the more stringent the quotas for regular entries set by the hosting country, the higher the level of illegality for those people who have nevertheless chosen to emigrate. A drag effect has moreover been observed, by which the higher the number of immigrants, the higher the flow of new immigrants, at parity of other conditions. If the former have entered the country illegally, the latter will do the same4.

At least in theory, in Italy it appears quite easy to make a study on the numbers of the foreign presence, their social-economic features and new entries of regularly employed foreigners, since the existing regulations require foreigners to produce documents related to their residence, stay and job.

The measure of foreign regular workers can be determined, in particular, by using flow and stock data 5, generally deriving from administrative sources, such as:

− the entry flow of foreign citizens arriving in the country in a certain period of time with the purpose of obtaining a job;

− the outward flow of foreign citizens leaving the country with the aim, for example, of obtaining a job in another country or going back to their own;

− the stock of foreign workers that at a particular date or during the course of a specific period of time can be considered as employed in the hosting country.

Nevertheless, the precise determination of the phenomenon, is highly influenced by the condition of official sources that often supply conflicting information about individuals belonging to the same universe6.

3 Natale M. and Strozza S., “Gli immigrati stranieri in Italia. Quanti sono, chi sono, come vivono ?”, (Foreigners immigrants: how many people; where they live; how they live?) Cacucci Editor, Bari, 1997.

4 Dallago B. , “L’economia irregolare” (Hidden economy), Franco Angeli, Milano, 1988.5 Hoffmann E., “Administrative records and surveys as basis for statistics on international”, International

Statistical Review, vol.65, number 2, august, Statistics Netherlands, Voorburg, 1997.

6 Baldassarini, A.,“Gli occupati stranieri in Italia: aspetti qualitativi e quantitativi di un fenomeno in espansione” (Foreigners workers in Italy: qualitative and quantitative aspects of a growing phenomenon), Studi di popolazione. Temi di ricerca nuova. Secondo Convegno dei Giovani Studiosi dei Problemi di Popolazione.

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To achieve a precise quantification of the phenomenon, one also needs to consider the high incidence of non regular workers who do not have a residence permit or have one that has expired.

Estimates on non regular foreign workers are, nevertheless, very uncertain. In the past they were retrieved by making control inspections on enterprises or by occasional enquiries carried out on individuals and households7. Starting from the Nineties, an additional source of information comes from the numerous requests for regularisation, subsequent to the entry into force of new regulatory provisions, aimed at legalising non regular positions of foreigners residing in Italy before the new laws were approved, as well as limiting immigration flows.

For the non regular component of employment, therefore, there are estimates available that are generally obtained through indirect methods, and often present significant discrepancies one from the other. In reality, the majority of the methods used are based on a set of hypotheses that generally tend to condition the results.

Nevertheless, it is also true that when considering non regular employment of foreigners, the lack of statistical apparata in the different administrative offices that are in charge of registering and controlling the population sample being examined, but also the nature of the phenomenon itself, gives rise to many problems of measurement, since this component is not so easy to keep under survey.

In this context it becomes of crucial importance to use definitions and classifications taken from current regulations, which allows estimates on numbers, working conditions and main features of the universe of employed foreigners to be obtained.

3. The definition of non regular employment in the system of national accounts

The concept of employment that is not directly observable is closely connected to the more general one of hidden production and income. These interactions among hidden units, hidden production activities and economic aggregates cause some conceptual confusion on a phenomenon that can be studied from many different points of view and which definitions differ one from the other.

At an international level it is generally recognised that the system of economic accounts of various countries ought to capture the effects that different forms of hidden production activities have on economic aggregates and, thus give the weight of the corresponding non regular working activity, of which the foreign workers component plays an important part. Not to include this component in the economic aggregates would determine a false measurement and analysis of the production system of a country8.

Among the member states of the European Union are recognized two relevant definitions and distinctions that are related to the work concepts and definition of national accountants.

Roma, 25-27 giugno 1996, a cura di P.Giorgi e S. Strozza, Dipartimento di Scienze Demografiche, Roma, October 1997.

7 Bonifazi C. and Chiri S., “Il lavoro degli immigrati in Italia” (The labour of immigrants in Italy), Rome, 1999.8 Not to include underground production activities in the national economic accounts would imply in particular:

a) an overestimation of the level of unemployment and consequently an undersestimation of the share of employed people; b) an incorrect estimate of the rate of development of the economic system in the case that legal and illegal economies were to have different growth rates; c) an income distribution that would penalize the labour factor; d) an incidence of tax revenues on Gross Domestic Product (GDP) which would be lower than it actually is; e) an overestimation of public economy over private.

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One distinction is between observed and non observed economic activities. The statistical aim is to reduce the area of non observed economic activities, that is of getting an exhaustive set of estimates, as defined by the Commission decision well known as the “exhaustiveness criterion”9. That decision contains a detailed description on the programmes and activities undertaken by each member states on the subject of the exhaustiveness as, in particular, the provision of any available official estimates of the number of clandestine immigrants by economic branches (article 10).

Another conceptual distinction is between illegal economic activities and economic activities that are legal but are conducted in violation of fiscal or social securiry laws. The international system of accounts (SNA93)10 and the one adopted with partial changes in the European context (ESA95)11 give an explicit definition of what should be intended by non observable production activities in a broad sense, establishing the boundaries of those economic activities that contribute in creating goods and services meant to fulfil human needs.

Encompassed within the boundaries of the production system are the following activities:

• illegal activities, subject to penalties, producing income, such as goods and services, which it is prohibited by law to sell distribute and own, as well as all those legal production activities that become illegal if they are performed by non authorized operators according to current regulation (for instance, smuggling, usury, illegal gambling)12;

• production activities, subject to administrative sanctions since they are performed with the deliberate intention to evade taxes or not to respect contributory and tax regulations in the attempt to reduce production costs, the latter being an aggregate currently defined as economic underground;13

• non registered production activity due to the non compilation of the administrative forms and/or statistical questionnaires prepared for enterprises or households, and thus statistical underground;

• informal activities consisting in all the small-scale production activities with low levels of organisation and little or no distinction between capital and labour. Encompassed within this sphere are the non-registered activities that are not subject to administrative obligations, such as the activities of craftsmen, small traders, non-licensed street vendors, and house workers14.

9 The principle of exhaustiveness was defined by the European Decision no.94/168/EC of February 1994. When the economic aggregates of production, primary income and expenditure are measured directly and not directly through the statistical surveys and administrative archives, it is said that the national economic accounts meets the criteria of exhaustiveness.

10 United Nations, Eurostat, IMF, OECD, Word Bank, “ System of National Accounts”, Brussels, Luxembourg, New York, Paris, Washington D.C., 1993.

11 EUROSTAT, “European System of Accounts ESA”, Luxembourg, 1996.12 In order to obtain a quantification of the illegal economy, it is necessary to trace its boundaries in relation to the

behaviours of the single operators, the nature and object of the operations, and the type of relationships existing between the agents involved. All illegal activities that function as mere redistributors of income ( for example, extorsion, theft, robbery, fraud, etc) are taken to be out of the boundaries of production of the system of national accounts. For further reading refer to G.M.Rey “Analisi economica ed evidenza empirica dell’attività illegale in Italia” (Economic analysis and empirical evidence of illegal activity in Italy) dated 1993.

13 These productive activities consist in the infringement of administrative norms that are underground with the sole aim of escaping the obligation to respect tax regulations and the like, or regulations in favour of labour or the environment ( for instance, tax evasion, evasion of welfare contributions, non observation of minimum salary, number of working hours, security standards obligations). These activities are not therefore included in the definition of illegal economy.

14 The informal sector consists in all those production activities in which the owner is the sole responsible for financial and non financial obbligations connected to production. These activities are often non registered activities since they generally operate with a low level of organisation, with little or no separation of production

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At the moment, the estimation of illegal activities is not included in the accounts of the European Union, whilst the informal activities have a small weight in Italy and, in the national economic accounts, the ones taken into consideration are those related to the agricultural and constructions sectors.

According to the outlines of the national accounts, the overall outputs of production activities can be properly compared with employment only when the working activities taken into account are those carried out by regular and non regular workers, both national and foreign, resident and non resident, if produced within the economic territory of the country considered and on account of production units (enterprises, households, institutions) residing in the country. To summarise, in measuring the input of labour underlying production, what is relevant is where the production unit resides and not the status of the individual who is carrying out the working activity; if this working activity is legal or not, or elements such as the age and nationality of the worker, in principle, irrelevant.

The Italian approach to estimation of input of labour therefore enables calculation of the level of employment for different working positions or jobs that can be identified by integrating and comparing different statistical sources and by using methods of indirect estimation. The basic assumption underlying this aggregation of sources and their comparison is that each source, if respondent to an appropriate standardization (in terms of time period of observation, classification of sectors, population of reference) can communicate with other sources and enable the emergence of statistical differences that can gain meaning in economic terms.

The jobs that are defined as regular are those that are registered in the pay rolls of enterprises and/or can be observed both by tax-collecting institutions and statistical or administrative sources of information.

The following types of jobs are defined as non regular:

a) permanent carried out without complying to current legislation;

b) occasional, carried out by people who declare to be unemployed being students, housewives or retired people;

c) non regular and non resident foreign workers;15

d) multiple jobs not declared to tax-collecting institutions.

The category of non regular and non resident foreign workers, which this paper focuses on, represents an ever-increasing share in the overall number of non regular jobs held both by citizens and foreigners. This share does not in fact include those foreign workers that have regular permits and reside in the country, who are in fact present in the country but are not specifically identified in the estimates relating to regular employment16.

In order to obtain an estimate of the non regular component of foreign workers, the universe to be estimated has been subdivided into different sub-categories of employed workers based on the regulations

factors, such as work and capital, and are small scale. The dimension of the informal sector is therefore closely connected to the productive structure of each country and to the characteristics of each juridical-fiscal system, according to which these production units are not obliged to register as active enterprises neither in front of the fiscal authorities, nor in the institues for social security. For further information refer to the “Resolution on the fifteenth International Conference of Labour Statisticians, January 1993, concerning statistics on employment in the informal sector” (United Nations, Eurostat, IMF, OECD, Word Bank, 1993)

15 Formerly, before the last revision, in the system of national accounts they were defined as “non resident foreigners”.

16 Proceedings of the Seminar “La nuova contabilità nazionale” (The new national account system ESA 95), held at the National Statistical Office (ISTAT) , Rome 12-13 January 2000.

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that govern the entry and residence of foreigners on the domestic territory, on the definitions given in the national accounts, and on the elements that make the foreigner visible in the administrative and statistical sources available.

The main administrative sources related to the population and to the potential foreign labour force are represented by the population register (administrative register) and by the archive of residence permits provided by the Ministry of Internal Affairs. The population register indicates the number of people who are residents without giving any indications regarding their working situation; the archive of the Ministry for Internal Affairs registers instead, the number of foreigners who are in Italy legally, with a valid residence permit, and the motivation of their stay, for example work, study, family, etc.

In Italy, as far as working activities are concerned, the possession of a residence permit is the only binding element required by the governing and tax-collecting institutions. On the other hand, enrolment in the general population registrer is not compulsory. Therefore, generally a foreign resident ought to have a valid residence permit in order to work, unless he/she has already obtained Italian citizenship. Nevertheless, though, considering the actual reality of the Italian labour market, not all foreign workers are regular according to the legislative provisions governing labour, and often they are not even as far as the regulations relating to entry and residence requirements are concerned.

According to the regulations governing labour, foreign workers enrolled in the population registrer (that is with the certificate of residence), and thus classified as permanent residents, can be either regular or non regular respect to the resident permit that is temporary and necessary for working. They can be distinguished in the following categories:

a) employed people with a valid residence permit;

b) employed people with an expired residence permit;

c) unemployed people with a valid or expired residence permit.

Simultaneously, employed foreigners who have only a temporary residence permit (not the certificate of residence) and are staying in the country, can be sub-divided into the following categories:

a) employed people with a valid residence permit obtained for work;

b) employed people with a valid residence permit obtained for other motives;

c) employed people with an expired residence permit;

d) employed people without any permit;

e) unemployed people with a residence permit for working reasons enrolled in the employment lists.

In Table 1 the above-mentioned typologies of employed foreigners, resident and non resident in the country, have been crossed with jobs that are regular or non regular according to the provisions governing labour. The squares in grey indicate the categories of foreign workers that are included in the employment estimates of the national accounts.

According to the Italian law, there are specific types of employment that need to be considered differently. This is the case of the employed people who are residents, since they are enrolled in the population register, and for whom the following comments should be made: a) to be considered regular, they need to have a residence permit; b) if they are employed but do not have a residence permit, then they are working in a non regular situation.

In the typology of employed people working regularly but with a residence permit other than that for work reasons, the following categories of people can be included with full right: a) students; b) people who

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have been in the country for at least a year due to family reunification; c) foreigners who have been recognised as political refugees; d) foreigners who are residing in the country for humanitarian motives.

Table 1 – Breakdown of regular and non regular employed foreigners according to current provisions relating to entry and residence in the country and according to legislation governing labour.

Typology of employment according to provisions governing entry and residence

Typology of employment according to legislation governing labour

Regular Non regular

Employed residents enrolled in the population registrer (i.e. certificate of residence)

Employed people with valid residence permit

Employed people with expired residence permit

Unemployed with valid or expired residence permit

Employed people staying with or without residence permit

Employed with valid residence permit for work

Employed with residence permit valid for reasons other than work

Employed with expired work permit

Employed with no work permit

Unemployed with residence permit for work reasons and enrolled in the employment lists

Note: the grey squares indicate that those typologies of employment are encompassed in the national accounts estimates for regular and non regular foreign workers.

4. Sources of data on regular and non regular employed foreigners

The main sources of data on regular and non-regular foreign workers, used for the purpose of the employment estimation in the national accounts framework are the following:

a) Resident Permits for Labour Reasons . These data are collected by the Ministry of Internal Affaires and should provide the right measure of valid resident permits granted to foreigner citizens. The reliability of such information source is based on the statement that the foreigner with an expired resident permit left the country or at least stopped working. For the purpose of the estimation we anyway used resident permits netted to duplications and expired permits processed direcly by the National Statistical Office (ISTAT).

b) Number of Regular Workers collected using Enterprises sources of information . The Social Security Institute (INPS) provides data referring to the forms of paying contributions by the enterprises. Data on the agricultural employment are provided by Istituto Nazionale di Economia Agraria (INEA) – National Institute of Agricultural Economics, which carried out its statistic survey in the agricultural units of production in order to estimate the number of non-community employees every year.

c) Number of Regular Workers collected using Households sources of information. The Population Census that provides data of demo-social nature is one of the most important sources on the foreign population with registered residence or temporarily present. The last Population Census is dated 1991. That was the first time that a census survey was oriented to collect residence and non residence foreigners.

d) Data on Inspections by the Labour Ministry in the Enterprises. In its local offices, the Ministry takes the number of non-community workers enrolled as unemployed on 31st December every year.

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Another important source of information for the estimation of non-regular employees results from inspections made every year by Labour Inspectors in a certain number of companies for the purpose of assessing possible contribution, insurance and tax irregularities.

e) Data on regularizations of clandestine foreigners. Information periodically available in periods following the enforcement of specific statutory ratification; they represents the indicators on the flow of foreigners that from the irregular or clandestine condition move to the regular one.

f) Employment Cards . These are flow data collected every year by the Local Employment Offices of the Ministry of Labour. The card is a personal document required both to start labour in any company and be enrolled in the employment lists.

g) Labour Permits. Data are collected by the Labour Ministry and may give some information on how the foreign regular employment is growing.

5. Methodology for estimating regular and non regular foreign workers

The approach used to estimate foreigners employed is based on a simultaneous quantification of non regular and regular employment. This last estimate in fact represents a useful and necessary reference element for the estimation of the non regular component of the phenomenon, which presents varying trends based on the economic cycle and/or in connection to the provisions governing the entry and residence of foreign citizens.

In addition, the definition of the overall universe of regular and non regular employed foreigners enables further comparisons to be carried out between the economically active population and people resident and physically present in the domestic territory. This enables moreover the calculation of important indicators such as the rates of activity, employment and unemployment of the foreign labour force in Italy.

In the Italian national accounts the procedure for estimating the series on foreigners workers can be summarised as follows: a) collection for a certain number of years of various statistics related to employed and unemployed foreign labour force and reconstruction of the time series using different information sources; b) estimation of regular employment; c) estimation of the series of non regular foreign employees, which exploits a specific conceptual grid deriving from currently available data and from an analysis of the capacity of information typical of each single source; d) construction of a structure of weights for the redistribution according to sector of the estimates calculated at the level of the overall economy.

5.1. The estimation of regular foreign workers

Foreign workers considered regular are those who are regularly registered in the pay rolls of an enterprise, if they are employees, and those who are registered in the business register or professional registers, if they are self-employed workers. In order to achieve an estimation of this component of foreign workers, it is therefore possible to use the sources of information on resident foreign workers or those who have a valid residence permit for work reasons.

The suggestion that the estimation of regular foreign workers should be carried out starting from the census year as base year, came mainly from the fact that so much data deriving from the Population Census, which provided indications as to resident foreigners and, for the first time, also for non resident

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foreigners17, was available for that year 1991. Other data available were the statistics relating to employees provided by the Social Security Institute (INPS) and the National Statistical Institute (ISTAT) data on the residence permits issued for work reasons, with further corrections to eliminate duplications.

The procedure followed for the estimation was that of assigning a different valence to the various sources available and then to proceed with the comparison of data at a regional level with the aim of validating all the information collected. In general, the census data was retained the most reliable respect to the administrative information, and only in those cases where the census data did not appear to represent the population under examination, was an administrative source to substitute the statistical one.

The approach used for the estimates was different for each of the two employment categories, namely employees and self-employed18. Employees data were obtained by comparing the census data with other specific sources at regional level. In particular, what was done was to build two series related to employees starting from sources of information which were independent and yet harmonised from the point of view of the sector of observation: the first one of a statistical nature represented by the Population Census, not including civil service employees and people employed in international organisations; the second being of an administrative nature and represented by the INPS data relating to sectors that were other than agriculture and to household work integrated with data on farm workers.

The comparison at regional level between these two different estimates on foreign employees revealed positive and negative discrepancies between the integrated INPS data and the census data. Nevertheless, there was an overall basic homogeneousness which did not reveal any substantial change in the level of employment surveyed by the census, which had been considered a little underestimated by certain researchers19. The comparative analysis therefore suggested to take the regular employed residents that had been counted in the census, as reference population for 1991, integrated with a number of regular non residents equal to the positive regional gaps between the INPS data of administrative origin, and the census data.

The number of employees registered at the date of 1991 has been subsequently updated taking into account the dynamic of the INPS data and of data related to residence permits, considered the most suitable to represent resident and non residents employed foreigners in the country. Conversely, the data previous to 1991 were reconstructed by taking into account the old series of residence permits of the Ministry of Internal Affairs.

The level of self-employment in 1991, registered by the census, was slightly higher than that of the ISTAT residence permits. In order to reconstruct the time series, the census data was updated taking account of the dynamic of the residence permits for self-employment work reasons reconstructed by ISTAT.

17 The 1991 Population Census also noted the presence of a share of newly arrived foreigners staying in Italy for reasons other than tourism, business or other occasional reasons, which were defined as non rooted. The non rooted include: foreigners who have been inserted in the population register, have a valid residence permit and have left the municipality in which they were resident; foreigners who are not inserted in the population register but have a valid or expired residence permit; foreigners who are not enrolled in the public register and do not have a residence permit. Some of these foreigners are regular workers, since they have a regular residence permit, but are not resident in that they are present only occasionally or are seasonal; to calculate the level of regular workers at the time of the census, the census data, on resident foreigners employed were integrated with the share of non rooted foreign workers without a residence permit.

18 Baldassarini A. and Freguja C. " Il lavoro degli stranieri presenti in Italia: fonti, metodi e stime per l'anno 1992" (The labour of immigrants in Italy: sources, methods and estimates for 1992), in Quaderni di Ricerca, ISTAT, Roma, 1996.

19 See note n. 3.

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5.2. The estimation of non regular employed foreigners

The procedure for the creation of series may be summarised as follows: a) collection for several years of different statistics on the employed an unemployed foreign population and reconstruction of historical series using different information sources; b) estimation of the series of non-regular employed foreigners that exploits a specific conceptual framework resulting from the regulations in force and an analysis of the information capacity typical for each source; c) creation of a weight structure for the sectoral redistribution of the estimation produced.

Three big categories of employment have been individualised, which, from a classification standpoint, match the requirements of non-regularity in the national accounting and which, from the empirical standpoint, allow using most of the available sources of information:

a) Non-regular Employees from the point of view of labour, but not with respect to the access to the country and permanence. This typology is not observable using enterprise sources, but is like a subgroup of data on residence permits referring to employed, self-employed and unemployed individuals included in the employment lists;

b) Non-regular Employees both from the point of view of labour and administration, since they have expired residence permits or have no residence permit. The dimension of such component arises on the occasion of the periodical regularisation of foreigners present in the territory set forth by specific laws. In such a case, the conditions of irregularity, in labour and administratively, maintain up to the moment of the ratification;

c) Clandestine Workers. This typology is not observable from the statistics since it refers to workers with no visa to access the country and accordingly no residence permit and no regular employment agreement. In this event, the difficulty in the regularisation are linked to the typology of the productive sector where the immigrant offers his labour activity that favours the concealment.

Procedures used for the purpose of the estimation of the aforesaid categories of non-regular employment are those of integration and the subsequent comparison among sources of information referring to the same phenomenon, as well as the use of indirect estimation methods and indicators.

In such a way, it is deemed possible the measurement of two important factors of non-observation of non-regular foreign employment: a) the one leading to the difficulty in reporting by the authorised bodies for the entry of presence and the control of accesses; b) the one due to the presence of workers that hide from governmental institutions, but also from the tax-contribution-related ones.

Non-regular employees from the standpoint of labour, but who are regular in terms of access and permanence, represent that component of employees that arises from the conflict of official sources as to individuals belonging to the same whole or labour status (employee, self-employee or looking for an employment).20 This group is obtained as follows:

1. Such difference among residence permits for employees processed by ISTAT (such permits should represent the whole of the employed resident and present foreign population) and the series of foreign regular employees, the methods of estimation of which has been just described in the previous paragraph;

2. The difference among data on residence permits granted for reasons linked to the research of and employment and people enrolled in the employment lists of the local offices of the Labour Ministry;

20 uch conflict may be due to the difficulty on the part of the institutions in charge to monitor labour performances that may result casual and temporary even if irregular

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3. From the definition of a set of people enrolled in the employment lists performing not-declared jobs, as it arose from some territorial surveys on the presence of foreigners in Italy, made by an inter-university research team mainly constituted by demographers21.

Non-regular employees both from the standpoint of labour and administration, since they have expired residence permits or have no residence permit, represent the irregular component in the strict sense of the whole of foreign workers. This group is made up of those immigrants that entered into Italy with the required documentation and with a valid residence permit for labour reasons remain in the country without renewing the permit once its validity expires.

In the approach to the estimation here proposed, consider two possible transitions: from irregular situations towards regular conditions, as it arises after the ratification law; from regular situations towards irregular situations, represented by annual irregular flows.

This group of irregular employed foreigners was estimated as follows:

a) As a stock of irregular individuals in the years prior to the last ratifications (in Italy dated 1990, 1995 and 1998) that move to the regular condition when the application for regularisation is accepted;

b) As a flow of workers that every year move from a labour and administrative regular status (they have a residence permit for labour reasons) and a labour and administrative irregular status (expired residence permit for labour reasons);

c) As a set of irregular individuals that were not able to make their conditions regular because they do not have any requirement requested by the first ratification (in our case the 1990 one) and that increase the stock of irregular individuals up to the moment of the subsequent ratification (1995 and 1998), period of transition to regular conditions.

The stock of irregular individuals in the year prior to the first ratification in 1990 was calculated considering data of the Ministry of Internal Affaires on the number of regularisation applications accepted after the statutory ratification. The basis of the approach is the consideration that foreigners who were granted the residence permit are irregular in the years prior to the ratification and regular after the regularisation application is accepted. Therefore, in the year prior to the statutory ratification, the number of non-regular employees both from a labour and administrative standpoint, since they have expired residence permits or have no residence permits, is given by the sum of those that reach a regular condition, those that are not capable of reaching a regular position and the annual flow of new irregular workers.

The above-mentioned typology of employees in the years included between the two statutory ratification are on the contrary made up of the stock of those that are not regularised by the 1990 law, fed by the flow of irregular individuals that every year move from the regular status in respect to access and permanence to the non-regular one. Most of this stock concerns workers that are supposed to be regularised at the moment of the subsequent 1995 ratification.

The stock of foreign workers that we supposed was unable to regularise the corresponding labour position because they do have the requirements set by law or because they accessed the country after the statutory

21 he research team carried out some sample surveys in territorial areas and specific communities with a single questionnaire aiming at having a minimum base of common information. The filed surveys have been performed in 11 Italian regions especially sensitive to the phenomenon of immigration starting from 1986 until the end of the 90’s. (cfr. Blangiardo G.C. and Papavero G., “Consistenza e struttura degli stranieri provenienti da Paesi in via di sviluppo o dall’est europeo attraverso l’integrazione tra fonti ufficiale e indagini campionarie” (Consistency and structure of foreigners from under-developing countries or from the Est Europe by means of the integration amonf official sources of information and the sample inquieres), «Rivista Italiana di economia, demografia, statistica», L, 2, aprile-giugno 1996. pp. 395-410.

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terms, in the year prior to the ratification was estimated as percentage share of valid permits on such date. This group was updated, for the years included between 1990 and 1995, using data processed by ISTAT on the applications of regularisation of 1995 differentiated on the basis of the year of access to Italy. The series of data was then updated using, as an indicator, the dynamic of expired residence permits.

The dynamic of valid residence permits following the statutory ratification allows anyway hypothesising a flow of irregular individuals that every year remain in Italy even if with an expired residence permit, since they do not have the requirement set by the law for access and permanence any longer. The flow of irregular individuals in the year prior to the first ratification, having an expired residence permit, was calculated a percentage share of the total residence permits, using as indirect indicator the irregularity rate, which is calculated relating the number of regularised people in the year considered here if the first ratification (1990) to the stock of residence permits of the year prior to such statutory measure (1989). The series of data is updated every year as percentage share of the stock of valid residence permits in the year prior to the estimation.

Clandestine workers are foreigners that it is difficult to find since they do not have any administrative papers neither for the access to the country or for the permanence. In the estimation procedure proposed here, such category includes those workers that are hardly able to be visible because they are employed in business particularly exposed to the concealment of labour positions, such as: a) sector of street vendors, building activities, hotels and premises; b) the agricultural sector that offers daily and/or seasonal employment; c) domestic work since the family often allows foreigners to be irregular. For each one of the aforesaid employment typologies we applied a non-regularity rate resulted from data of the Labour Ministry on the supervision activities in the enterprises, mainòy for taxes and social contributions audits.

The following table (Table 2) describes the process of estimation of non regular employment of foreigners in the national accounts.

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Table 2 – Summary of the statistical sources and methodology of estimationof non regular foreign workers used in the system of national accounts.

Typologies Sources Methods of estimationNon regulars according to work permits but regulars according to entry or residence permits

Ministry of Labour, Ministry of Internal Affairs, National Statistical Institute (ISTAT), Social Security Institute (INPS)

a) Comparison of statistics on employment with data on residence permits for work reasons.

b) Comparison of data relating to people enrolled in the employment lists and data on residence permits for work

c) Student workers and people who are allowed to work by law even though they have a residence permit for reasons other than work

Non regulars both from a working and administrative point of view

Ministry of Internal Affairs a) Data on the people regularized with the permit amnesty laws of 1990,1995 and 1998

b) Estimates on the cases left out of the amnesty c) Estimates on the flows of new non regulars

Clandestine workers Ministry of Labour, Survey of the National Institute of Agricultural Economics (INEA) relating to farm workers and other indirect indicators

a) Street vendors and self-employed in commerce and construction

b) Estimates of hidden employment in the agricultural sector

c) c) Estimates of hidden employment as household workers

6. The results achieved

The definitions of employment used in national accounts correspond to those adopted at an international level and reproduced at European level in the System of National Economic Accounts (ESA95). ESA is fully compliant with the concepts put forward in the world directives relating to national account system (SNA93) and with the definitions and nomenclatures used in many other social-economic statistics relating to employment.

In the context of the national accounts, employment can be specifically measured by using different concepts such as: a) the people employed, that is the actual people working; b) the jobs, or the number of working activities, main ones and secondary, carried out by every employee; c) the full-time equivalent employment, by transforming part-time jobs into full-time units of labour.

In order to estimate the volume of work as production factor, the System suggests nevertheless to use full-time equivalent emplyment (FTE) as unit of measurement. The latter are obtained in particular, from the sum of the full-time working activities and the part-time jobs (main and secondary) transformed in full-time equivalence22.

In the last few years, the time series of the FTE have been revised, starting from 1992. The revision work has had the effect of improving the information content of the estimates on non regular workers, which currently consists only in forms of employment that do not comply with social security and tax obligations23. The current time series of non regular FTE, contains, in addition, the results of the new estimating procedure on the FTE of non regular foreign workers.

22 The part-time jobs are transformed in units of labour by means of coefficients obtained from the ratio between the number of hours actually worked in a non full-time job position and the hours worked in the same branch of economic activity in a full-time job position.

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In reality, the estimate of the employment of non regular foreigners in terms of physical people employed, is conventionally equal to the total number of FTE, given the hypothesis that the foreigners have all full-time jobs. The lack of reliable information on the number of hours worked by this typology of employed workers, led in fact to retain more convenient to assume the hypothesis that all estimated employed foreigners were engaged in a full-time working activity.

The new series of data on non regular units of labour (Table 3) reveals a strong growth in the foreign component of non regular employment, which passes from 395 thousand units in 1991 to 569 thousand units in 1999. In the same period, there is an increase in the weight of the FTE of non regular foreigners compared to the overall total of non regular FTE. It goes from 12.6% in 1992 to 16.3 in 1999.

The growth of the demand of enterprises for non regular employment of foreigners is all the more evident for the importance that this type of employment has come to assume in the overall total of FTE, regular and non regular. The percentage share of the non regular foreign component has an average yearly increase that goes from 1.7% in 1992 to 2.5% in 1999.

Table 3: Non regular foreign workers, percentage share over non regular full-timeequivalent employment (FTE) and overall full-time equivalent units.

Years Non regular foreigners (a)

Non regular foreigners/ non regular FTEs *100

Non regular foreigners/ total FTEs *100

1992 395 12.6 1.71993 463 14.7 2.01994 523 16.5 2.31995 598 18.3 2.71996 536 16.2 2.41997 552 16.4 2.41998 578 16.7 2.51999 569 16.3 2.5

(a) thousands.Source: ISTAT, Contabilità nazionale (National Accounts)

The above results are obtained from the method of elaboration described earlier (paragraph 5.2). According to this approach, the overall number of non regular foreigners employed is fed by three categories of employment: 1) employed people who are non regular as far as their work is concerned, but not in terms of entry and residence in the country; 2) non regular employed people both from a working and administrative point of view, in possession of expired residence permits or not having one at all; 3) illegal workers. The first two categories represent the most substantial component of non regular foreigners employed, estimated according to the approach of the national accounts, whereas the category of illegal workers appears to be less consistent (Tab. 4). It is in fact believed that the analysis of the different forms and modes of employment of foreigners both from a juridical and job point of view, together with the currently available statistical material, allows one today to diversify and better qualify non regular employment of foreigners.

In general, even though it is difficult to estimate the amount of non regular and illegal foreigners employed, by using the classification approach proposed in the above paragraphs it is possible to achieve estimates (ref. tab.4) that carry to the following conclusions: 1) the non regular foreigners proper are the most substantial component of the estimate in that they represent the set of those people who experience various changes of regulatory status (valid residence permit, expired residence permit, regularization)

23 n the former series the units of labour considered non regular were also the units of labour that were not registered or could not be registered with statistical tools and methods.

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during their stay in the hosting country; 2) clandestine foreign workers, thus with no documents, appear to be a modest component of workers in that as the duration of their stay increases, it becomes difficult to keep the status of illegality, which means of being non regular according to the provisions governing entry and from the point of view of the provisions governing residence.

Table 4: Percentage weight of the different categories of foreign employmentthat contribute to the estimation of the full-time equivalent units (FTE) of non regular foreign workers

ULA (*) 1992 1993 1994 1995 1996 1997 1998 1999Non regular foreign orkers 88.5 90.1 89.9 89.8 89.7 87.5 86.4 85.3

Clandestine foreign workers 11.5 9.9 10.1 10.2 10.3 12.5 13.6 14.7

Total number of non regular foreign workers

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

(*) Non-published data.

The estimates elaborated per sector of economic activity (Table 5) show an elevated presence of non regular foreigners employed in the services sector rather than in agriculture and industry. In 1999, 69.3% of the FTE of non regular foreigners are registered as employed in the tertiary sector, while 14.4% are in agriculture and 16.3% in the industrial sector. The sector distribution does not present significant changes in time, if not for a modest growth of this component in the agricultural sector, against the overall trend that was registered in employment in agriculture.

As described in preceding paragraphs, regular foreign workers are being estimated for the national accounts only as an element of comparison for the definition of the stock of the units of labour of the non regular foreign workers. Regular foreign workers are in fact already part of the estimates of statistical and administrative sources used to estimate the overall total of regular employment, even if the foreign workers are not distinguishable separately. In this paper the aim has therefore been to present the estimate of regular workers carried out according to the concepts and definitions contained in the national accounts, even though this estimate is not considered official by the National Statistical Institute. In Table 6 the simultaneous reading of the two information elements, the non official one of regular foreigners and the official one of non regular foreigners, brings to an estimate of an overall number of foreigners employed in Italy equal to about 579 thousand FTE in 1992 and about 933 thousand units in 1999. The two aggregates together present a growing trend in time, which differs from the dynamic of the overall total of FTE.

In the period of time considered, what can be noted in particular is the growing importance of regular and non regular foreigners, on the overall total of FTE. In 1992, the foreigners were 2.5% of the FTE, whereas at the end of the period, they represented about 4% of the total.

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Table 5: Distribution of non regular full-time equivalent foreigners (FTE)by sector of economic activity (absolute data in thousands).

Sectors of activity FTE (in thousands) Comp. %1997 1998 1999 1997 1998 1999

Agriculture 77 81 82 13.9 14.0 14.4Industry 86 95 93 15.6 16.4 16.3- Industry proper 37 40 39 6.7 6.9 6.8- Construction 49 55 54 8.9 9.5 9.5- Services 389 402 394 70.5 69.6 69.3- Comm. Hotels 191 205 199 34.6 35.5 35.0- Other services 198 197 195 35.9 34.1 34.3Total economy 552 578 569 100.0 100.0 100.0

Table 6: Estimates of full-time equivalent units (FTE) of regular and on regular foreignersand of their weight in percentage compared to domestic units of labour. Years 1992-1999.

ULA (*) 1992 1993 1994 1995 1996 1997 1998 1999Regular foreigners (**)

184 189 190 205 306 337 341 364

Regular and non regular foreigners

579 652 713 803 842 889 919 933

Total FTEs 23457.2 22749.8 22529.2 22528.3 22600.2 22691.5 22925.7 23111.5Foreigners /total FTEs * 100

2.5 2.9 3.2 3.6 3.7 3.9 4.0 4.0

(*) bsolute figures, in thousands.(**) on official etimates.

7. Conclusions

The construction of an information system on the number of foreigners presence is very complex and requires the hard programming work and organisation of various government and statistical institutions. The process of producing reliable and timely estimates relating to the universe of immigrant workers becomes even more difficult due to the presence in Italy of a substantial number of non regular and illegal foreign workers.

Currently there are therefore various official sources of information capable of measuring and classifying the regular component of foreigners employed and few statistics on the non regular component. The factors determining this situation are to be connected to the non-completeness of the sources of information, which are incapable of measuring the phenomenon in its entirety.

In this context, there is a growing need to refer to concepts and classifications derived from administrative spheres (provisions governing entry and residence in the territory) or statistical ones (national system of accounts, for instance) in order to: a) identify the labour categories of interest; b) select sources of information that can be useful to the direct and indirect measurement of these categories.

Some of the quantitative information on non regular foreigners employed is currently supplied by the National Statistical Office (ISTAT), which, for an exhaustive measurement of the economic aggregates, also produces data on non regular employment, of which the foreign component covers a significant share.

The approach adopted in the national accounts is aimed at obtaining a quantification of the non regular foreign workers, after having estimated the stock of the regular workers. The visible component of the

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migratory phenomenon must in fact represent a reference parameter for the quantification of the non-observable component.

In order to achieve the estimation of regular workers, the method chosen was that of the superposition and comparison of sources of information in order to construct the data of the base year 1991, a year in which the availability of the Italian sources of information on the phenomenon is the highest. The update of the regular component in time is carried out on an annual basis by exploiting the information currently available, in particular the Social Security Institute (INPS) data on employed labour and the residence permits elaborated by ISTAT.

The quantitative measurement of non regular workers seems to be more complicated. The data referring to the latest amnesties, as well as studies on the phenomenon of hidden employment and immigration, on a territorial level, have enabled the quantification of various components of non regular labour: the component that is regular with respect to the provisions governing entry and residence in the country but non regular with reference to provisions governing labour; the one of the non regular people who enter the country with a regular entry permit, who work with a valid work permit and become non regular when the permits expire; the one of illegal workers who are completely hidden to the government institutions and who, according to the estimation procedure here proposed, are employed in sectors of activity that facilitate their remaining hidden. The overall universe of the three typologies of non regular foreigners employed mentioned, enables the measurement of non regular employment of foreigners quantified annually in the employment estimates in the national accounts.

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