Volume 1 Cedric - revised luca Final - RUIG-GIAN

moving down the pyramid. In agriculture, much of the labour force gave up working asfarmers and became taxi or pick-up drivers, or sold vegetables with less employmentgeneration, also stepping down the pyramid.The pyramid's base has increased since 2003, as many persons were drawndownwards to lower levels of economic activity. This indicates the response of the privatesector to crisis.More specifically, data indicated that transport and auto services have attracted alarger number of small projects and self-employed businesses since 2003, amountingcurrently to 536,000 taxpayers.The significant increase in self-employment incomes reflects both the strategicimportance of micro and small enterprises as a source of income in the new Iraqi marketeconomy, as well as the severe lack of wage employment opportunities and the tendency toresort to any profitable activity for the purpose, sometimes, of mere subsistence.4.2.2. Informal and formal employment estimates in theSME sectorThree options are proposed below to calculate total formal sector employment in Iraq,on the basis of conservative, medium and maximum assumptions on the number ofemployees likely to be employed in the three categories described above.Table 7: Estimates of formal private sector employmentLow employment-intensivesectorMedium employment-intensivesectorHigh employment-intensivesectorMaximum Medium estimate MinimumestimateestimateTaxpayers 719.8 719.8 719.8Workers - - -Taxpayers 526.3 526.3 526.3Workers 1578.9 1052.6 526.3Taxpayers 95.7 95.7 95.7Workers 669.9 574.2 478.5Total private sector SMEs 3590.0 2968.6 2346.6A conservative estimate of 2.3 million people can be drawn for formal private sectoremployment if one considers that average enterprises in the second hire one employee andthose in the third category five. A more optimistic estimate, considering that enterprises inthe second category hire three employees and those in the third category seven, wouldarrive at a number of 3.6 million persons working in the formal sector.On the basis of the medium assumption of formal employment holding that areemployees are likely to be hired fpr each enterprise in the intermediate employmentintensivesector and six in the more intensive sector, the authors derive a total informalemployment estimate, based on a simple assumtion.This study makes an assumption that in the micro and smaller businesses the informalsector is likely to represent the same size as the formal sector in the individual businesses:50 per cent in the medium ranges and not more than 20 per cent in the larger businesses. 8383 Based on discussions with GTC and other experts.67