Transition from informal economy to formality prerequisite of SDG8

29 / 08 / 2019

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The grey economy or informal economy is defined as the diversified set of economic activities, enterprises, jobs, and workers that are not regulated or protected by the state. The concept originally applied to self-employment in small unregistered enterprises. It has been expanded to include wage employment in unprotected jobs.

More than 61 percent of the world’s employed population – two billion people – earn their livelihoods in the informal sector, the United Nations labor agency said, stressing that a transition to the formal economy is critical to ensure rights’ protection and decent working conditions.

The two billion women and men who make their living in the informal economy are deprived of decent working conditions. Evidence shows that most people enter the informal economy not by choice, but as a consequence of a lack of opportunities in the formal economy and in the absence of other means of livelihood. The main challenge for the transition to the formal economy is finding the right policy mix that corresponds to the diversity of characteristics and drivers of informality. Reliable and relevant statistics are needed to better understand these complex aspects of informality and monitor progress towards formalization. In June 2015, the International Labor Conference adopted the Transition from the Informal to the Formal Economy Recommendation, the first international labor standard which focuses on the informal economy in its entirety. That same year, in September, the United Nations adopted the 2030 Agenda for Sustainable Development, which included the transition to formality in the targets for Sustainable Development Goal 8. These two instruments represent major milestones in the global approach to formalization, particularly by providing guidance on the process.

The International Labor Organization (ILO) has made the formalization of the informal economy one of its strategic outcomes and supports tripartite constituents in facilitating the transition to the formal economy at the national level.

Statistics on the informal sector and on informal employment need to be given high priority in national statistical policy, and the production of statistics on these topics should be integrated into the regular national statistical system. Strategies and programs for the regular collection of statistics on the informal sector and on informal employment should form an integral part of every national plan for statistical development. These programs should be based on surveys that measure informal employment directly, thus avoiding indirect estimation methods as much as possible as they are imprecise and too aggregated to provide relevant information for policy-making. In that context, the growing production of statistics on the informal sector and on informal employment marks an important step towards the overall improvement of labor statistics, economic statistics and national accounts. An increasing but still insufficient number of countries are applying an appropriate methodology for the statistical measurement of the informal sector and of informal employment. Those statistics are crucial for designing and evaluating public policies and programs that aimed at promoting and creating quality employment in the formal economy.

Statistics on the size of the informal economy are disaggregated by sex, age, level of education, workplace (rural and urban), status in employment and other specific socio-economic characteristics allowing for an analysis of the composition of the informal economy in line with the policy guidance on data collection and monitoring in the International Labor Conference recommendation.

Two billion of the world’s employed population aged 15 and over work informally, representing 61.2 percent of global employment. The proportion of informal employment varies in different regions. The vast majority of employment in Africa (85.8 percent) is informal. Asia and the Pacific (68.2 percent) and the Arab States (68.6 percent) have almost the same level of informality. In the Americas (40.0 percent) and Europe and Central Asia (25.1 percent), less than half of employment is informal.

Excluding agriculture, the global level of informal employment falls to 50.5 percent, but non-agricultural informal employment remains high in three regions; Africa, the Arab States, and Asia and the Pacific. The level of socio-economic development is positively correlated to formality. Developed countries are considered as high-income countries as defined by the World Bank; emerging countries as middle-income countries, and developing countries as low-income countries.

According to statistics of the International Labor Organization in 2018, emerging and developing countries have higher shares of informal employment than developed countries. Emerging and developing countries represent 82 percent of world employment, but 93 percent of the world’s informal employment is in these countries. More than two thirds of the employed population in emerging and developing countries are in informal employment (69.6 percent), while less than one-fifth of the employed population (18.3 percent) are in developed countries. Regions with countries at a higher level of socio-economic development, the Americas, Asia and the Pacific, and Europe and Central Asia have lower shares of informal employment.

Informal employment can be in the informal sector, in the formal sector or in the household sector. The 61.2 percent of global employment that is informal is comprised of 51.9 percent in the informal sector, 6.7 percent in the formal sector and 2.5 percent in households. In all regions employment in the informal sector is the largest of the three components of informal employment. Informal employment in the formal sector is a somewhat large proportion of informal employment in two regions: the Americas and Europe and Central Asia, where it represents 7.9 percent and 5.3 percent of total employment respectively. The share of informal employment in the formal sector concerns primarily employees and to some extent contributing family workers. The 39.7 percent of all employees in informal employment is comprised of 10.8 percent who are informally employed in the formal sector and 2.1 percent who are employed as domestic workers in households. The share of employees in informal employment in the formal sector represents 27.4 percent of total informal employment among employees worldwide and up to 42 percent in Latin America and the Caribbean and more than half in developed countries from Europe and Central Asia. Among the five regions, the level of informal employment in households in Africa is the highest at 4.3 percent and the global average rate is 2.5 percent.

The share of informal employment normally decreases when agriculture is excluded but the distribution of informal employment in different sectors does not necessarily follow the same pattern.

Globally, the vast majority of economic units13 are informal (80.9 percent). Informality is even higher in units in Africa (92.4 percent) and the Arab States (90.8 percent). The share of economic units in the informal sector for emerging and developing countries (82.5 percent) is quite similar to the global level while fewer economic units are informal in developed countries (55.7 percent) in relative terms.

The employment status category with the highest percentage of informality is own-account workers, both globally and regionally. Globally, 86.1 percent of own-account workers are informal. Only in Europe and Central Asia (60 percent) is the rate of informal employment among own-account workers lower than the global average. Informality among own-account workers is high in both emerging and developing countries (87 percent) and developed countries (68.8 percent).

Globally, own-account workers make up 45.0 percent of informal employment. Contributing family workers represent 16.1 percent and employers account for 2.7 percent of total informal employment. Africa and Asia and the Pacific share a similar composition of informal employment where own-account workers are the largest group and contributing family workers represent a significant proportion compared to other regions. The situation in emerging and developing countries and developed countries is different. While own-account workers and contributing family workers represent the largest group in developing and in emerging countries, employees represent the largest group (51.3 percent) in developed countries.

The level of informality is higher among young people and older persons. Worldwide three out of four young (77.1 percent) and older persons (77.9 percent) are in informal employment. Informal employment is more likely for young people in emerging and developing countries. The employment of older persons is more likely to be informal than that of young people whatever the socioeconomic development of a country and region.

The level of education is another key factor affecting the level of informality. Globally, when the level of education increases, the level of informality decreases. Those who have completed secondary and tertiary education are less likely to be in informal employment compared to workers who have either no education or completed primary education. This phenomenon is observed at the global and regional level and emerging and developing and developed countries share similar patterns.

At the global level, persons living in rural areas (80.0 percent) are twice as likely to be in informal employment as those in urban areas (43.7 percent). The largest differences are in the Americas, Asia and the Pacific, and Europe and Central Asia.

Agriculture is the industry sector with the highest level of informal employment (93.6 percent) around the world. The industry (57.2 percent) and service (47.2 percent) sectors are relatively less exposed to informality, especially the service sector in the Arab States and Asia and the Pacific. However, when informal employment is the main source of employment, especially in emerging and developing countries, a high level of informality is observed in all sectors.

Globally, informal employment is a greater source of employment for men (63.0 percent) than for women (58.1 percent). This is true for both the averages for emerging and developing countries and developed countries and for agricultural and non-agricultural informal employment. Out of the 2 billion workers in informal employment worldwide, just more than 740 million are women. In low and lower-middle income countries, a higher proportion of women are in informal employment than men. In Africa, 89.7 percent of employed women are in informal employment.

Informal employment is the main source of employment in Africa, accounting for 85.8 percent of all employment, or 71.9 percent, excluding agriculture. Africa is broadly divided into sub-Saharan Africa and Northern Africa, with each subregion having very different socio-economic development and different levels of informal employment: 67.3 percent in Northern Africa and 89.2 percent in sub-Saharan Africa. Excluding agriculture, informal employment accounts for 56.3 percent and 76.8 percent of total employment respectively. Within sub-Saharan Africa, informal employment is the main source of employment in Central Africa (91.0 percent), Eastern Africa (91.6 percent) and Western Africa (92.4 per cent). If agriculture is excluded, informal employment continues to dominate employment with a 78.8 percent share in Central Africa, 76.6 percent in Eastern Africa and 87.0 percent in Western Africa. Southern Africa is the only subregion with less than half of the employed population in informal employment at 40.2 percent and 36.1 percent excluding agriculture. In this subregion, employees represent 84.3 percent of total employment compared to 40.4 percent for Africa and 37.2 percent for sub-Saharan Africa.

There is a large variation in the share of informal employment among countries in sub-Saharan Africa. The share of informal employment reaches its highest rate in Burkina Faso (94.6 percent) and Benin (94.5 percent). South Africa (34.0 percent) and Cabo Verde (46.5 percent) are among the countries with the lowest share of informal employment. Based on the number of “entrepreneurs” (own-account workers and employers) owners of informal economic units, it is estimated that the vast majority – 92.4 percent – of all economic units in Africa are informal.

At the regional level, informal employment is a greater source of employment for women than for men: 89.7 percent for women in comparison to 82.7 percent for men, and for non-agricultural employment, 78.6 percent for women and 67.7 percent for men. In sub-Saharan Africa, except Southern Africa, more than 90 percent of women are in informal employment compared to 86.4 percent of men. Northern Africa shows an inverse situation with slightly more men (68.5 percent) than women (62.2 percent) in informal employment.

The young and old have especially high rates of informal employment: 94.9 percent of persons between ages 15 and 24 in employment and 96.0 percent of persons aged 65 and older. The figures reach as high as 97.9 percent of young people in Western Africa and 98.0 percent of older persons in Central Africa. The level of education is closely linked to informality in Africa. Those with no education tend be highly informal (94.0 per cent). The rate of informality reduces to 88.5 percent with primary education and further decreases to 68.1 percent for those with secondary education and to 27.0 per cent among those with tertiary education. The reduction of informality with increasing education is less obvious in Western Africa where almost half of the employed population with tertiary education (49.4 percent) are informal.

Informal employment dominates the labor market in both rural (88.3 percent) and urban (76.3 percent) areas, although informality is higher in rural areas . Almost all of the agricultural sector in Africa is informal (97.9 percent). The rate of informality is lower in the industry (77.4 percent) and the service (70.2 percent) sectors, but still is very high.

In the Americas, 40.0 percent of total employment is informal. In absolute numbers, 183 million people are in informal employment whether in formal or informal enterprises. Within Latin America and the Caribbean (LAC) countries, the highest shares of informal employment are in Central America (58.0 percent) and the Caribbean (57.6 percent). If agriculture is excluded from these calculations, non-agricultural informal employment rates are 36.1 percent for the Americas, 17.7 percent for Northern America and 49.0 percent for LAC.

Employment in the informal sector for own-account workers and employers can be a proxy for the number of informal economic units. An estimated 71.2 percent of all economic units in the Americas can thus be considered as informal, including 76.6 percent for LAC. Informal employment accounts for 40.0 percent of total employment, of which 29.3 percent is in the informal sector, 7.9 percent in the formal sector and 2.7 percent in households. Economic units in the informal sector provide the largest share of informal employment, but a significant proportion of employees in informal employment are also employed in the formal sector (42.6 percent of informally employed employees are in the formal sector and 15.2 percent in households as domestic workers). In LAC, especially Central America, the component related to informal employment in the formal sector is relatively high, reflecting the significant numbers of the wage employed who are either not protected or insufficiently protected within formal sector enterprises. This pattern is accentuated with non-agricultural informal employment. The share of informal employment is high among own-account workers (82.2 percent) and for contributing family workers who by definition are informal. Informal employment rates are lower for employers (31.3 percent) and employees (25.9 per cent). The share of informal employment among employees is higher in Latin America (37.2 percent) than in Northern America (12.7 percent). Within the LAC region, the highest proportion of informal employment among employees is in Central America (48.3 percent). In LAC, employees represent the largest share of informal employment (44.8 per cent of total informal employment), influenced by the situation in Central America, where employees account for 55.1 percent of total informal employment. In other subregions, the proportion of own-account workers exceeds that of employees.

In Northern America, employees represent 70.7 percent of total informal employment. Throughout the region, the proportion of employees is always lower among workers in informal employment compared to workers in formal employment.

The share of informal employment is higher among men than among women, mainly in Northern America where the rate is 18.9 percent for men and 17.3 for women. In LAC, the share of informal employment in total employment is higher for women (54.3 percent) than for men (52.3 percent), especially in Central America where informal employment rates for women are 61.8 percent compared to that of men, at 55.6 percent. The share of informal employment is also relatively high for the youth population: 46.2 percent in comparison to the adult’s rate of 40.4 percent. While the share of informal employment decreases to 37.6 percent when young people reach the 30-34 age group, informality increases from the age of 35 and above to reach 54.4 percent among workers aged 65 years old and above.

There is a clear inverse relation with the level of education. Informality decreases as education increases, from 81.0 percent among those with no education, to 71.3 percent for those with primary education, to 46.9 percent for those with secondary education and 22.7 percent with tertiary education. The inverse relation is clearly observed in LAC, with the even higher level of 33.5 per cent for those with tertiary education.

The place of residence also influences the share of informal employment in total employment. It is higher in rural areas at 52.6 percent, as compared to 35.8 percent in urban areas. This difference is particularly significant in LAC, where rural informality reaches 68.5 percent as compared to 47.0 percent for urban areas. Among the economic sectors, informality is highest in agriculture, where 77.5 percent of employment is informal. In industry 38.4 percent is informal and in services 35.5 percent. Informality is much lower in each of the sectors in Northern America which lowers the subregional averages. For example, in the Caribbean 86.9 percent of agriculture is informal.

In the Asia and Pacific region, more than half of the employed population engage in non-agricultural informal employment which stands at 59.2 percent (64.8 percent when excluding China). If agricultural employment is included, the share of informal employment reaches 68.2 percent (77.6 percent excluding China). Within the region, Southern Asia, South-Eastern Asia and the Pacific have higher shares of informal employment, both excluding and including agriculture, than the average.

The economic development of countries in the Asia and Pacific region varies considerably, and this is reflected in the proportions of informally employed. The share of informal employment ranges from the highest level of over 90 percent (94.3 percent in Nepal, 93.6 percent in Lao People’s Democratic Republic and 93.1 percent in Cambodia) to the lowest with proportions below 20 percent in Japan. The share of informal employment is on average 71.4 percent in developing and emerging Asian countries and 21.7 percent in developed Asian countries.

Focusing on economic units rather than employment, it is estimated that 81.4 percent of all economic units in Asia and the Pacific are informal. This proportion ranges from 64.8 percent in South-Eastern Asia and the Pacific to 91.9 percent in Southern Asia.

In Southern Asia, 77.4 percent of employment is in the informal sector, 6.9 percent is informal employment in the formal sector and 3.5 percent in the household sector.

In South-Eastern Asia, the share of informal employment in the formal sector and in households is relatively high at 9.7 percent and 6.9 percent respectively compared to other subregions. Excluding agriculture, the share of informal employment in the formal sector is almost 13 percent in Southern Asia.

In formal employment, employees form the overwhelming majority of the status groups across all subregions while in informal employment, own-account workers and contributing family workers are also significant components across all of the subregions. Apart from contributing family workers, the large majority of own-account workers are informal (86.2 percent) and in Southern Asia informality among own-account workers is even higher (94.0 percent).

At the regional level, men are more likely to be in informal employment than women (70.5 percent of all men in employment are in informal employment compared to 64.1 percent for women) and a similar pattern is found if agricultural employment is excluded (62.0 percent for men and 53.9 percent for women). Informality is prevalent among the young population with 86.3 percent in informal employment in the region compared with 67.1 percent of the adult population. With a large employed population in informal employment in South Asia, almost 96 percent of young people are informally employed. The share of informal employment decreases to 70.8 percent when young people enter into adulthood and starts increasing again from the 35–54 age group.

The level of education is observed to affect the share of informal employment significantly. The proportion of persons employed informally decreases with a higher level of education. While there is only a slight difference in informal employment rates between those with no education (94.9 percent) and primary education (89.7 percent), informal employment rates drop significantly from 89.7 percent for those with primary education to 58.9 percent for those with secondary education and to only 30.7 percent for those with tertiary education. These differences by educational level are greatest in Eastern Asia, where those with no education (89.2 percent) and primary education (84.8 percent) are overwhelmingly informal and informal employment rates reduce to half (52.1 percent) for those with secondary education and even to only 12.8 percent for those with tertiary education.

Informal employment is predominant in rural areas (85.2 percent of employment) and is almost half of the employment (47.4 percent) in urban areas. The largest urban–rural difference in informality is in Eastern Asia, where 80.4 percent of the rural population is in informal employment as compared with 32.9 percent in urban areas. Almost all of agricultural employment (94.7 percent) is informal in the region, and it reaches a high of 99.3 percent in Southern Asia. Informal employment represents a higher share in the industry sector (68.8 percent) than in the service sector (54.1 percent).

In Europe and Central Asia, a quarter (25.1 percent) of the employed population engages in informal employment and the share decreases to 20.9 percent if agriculture is excluded. The share in Eastern Europe (31.5 percent) and in Central and Western Asia (43.4 percent) is substantially above the regional average. The share of non-agricultural employment in these three subregions represents 13.2 percent, 28.3 percent and 31.2 percent, respectively. The share of informal employment in the emerging and developing subregion (36.8 percent) is twice as high as in the developed subregion (15.6 percent). The share of informal employment in Albania (61.0 percent) and Armenia (52.1 percent) is among the highest in the region and represents more than half of the employed population.

Based on the number of “entrepreneurs” (own-account workers and employers), it is estimated that 54.7 percent of all economic units in Europe and Central Asia are informal, 44.5 percent are formal and the remainder less than 1 percent are part of households. This estimated proportion of informal economic units is higher in Central and Western Asia (61.4 percent), following the overall higher incidence of informality in the region.

The share of informal employment in formal sector economic units is highest in Eastern Europe with 9.5 percent (representing one-third of total informal employment and 40 percent of informal employment among employees) in this subregion and up to 9.9 percent excluding agriculture. Employees represent the largest group among those in informal employment in the region and own-account workers follow. Employers and contributing family workers share more or less the same proportion. However, in Northern, Southern and Western Europe, own-account workers are the largest group in informal employment and the employers’ group is also larger than the regional average. In Central and Western Asia, even though employees and own-account workers are still the major groups within informal employment, contributing family workers represent a considerable share at 17. 5 percent, which is much higher than the 8.7 percent regional average. At the regional level, 60 percent of own-account workers own informal economic units as in other regions. They are the most exposed to informality before employers (39.9 percent) and employees (15.4 percent). Northern, Southern and Western Europe present the lowest share of informal employment among employees (6.5 percent). The difference between the proportion of employers (29.7 percent) and employees (25.2 percent) in informal employment is less in Central and Western Asia.

Informal employment represents a greater source of employment for men (26.4 percent) than for women (23.6 percent), and it is the same for non-agricultural informal employment, with 22.6 percent for men and 18.8 percent for women. In Central and Western Asia, the situation reverses when agriculture is included (47.3 percent of women are in informal employment as compared to 41.1 percent of men), but follows the regional pattern when excluding agriculture. Outside agriculture, the share of informal employment is higher for men (31.7 percent) than for women (30.1 percent).

More than one-third of young workers in employment (35.7 percent) are in informal employment compared to about only one-fifth (21.8 percent) for adults. The share of informal employment drops steadily from the 25–29 age group to the 35–54 age group and rises again from the 55–64 age group to reach 40.8 percent for the over 65.

Informality falls in proportion with the rise in the level of education. The highest share of informal employment is found among those without education at 77.1 percent, decreasing to 40.9 percent for those with primary education, to 23.3 percent for those with secondary education and to 15.2 percent for those with tertiary education.

Informality is more prevalent in rural (33.2 percent) than in urban (19.4 percent) areas. The largest difference can be found in Central and Western Asia, where almost three quarters of the rural employed population (73.9 percent) are in informal employment compared to 40.2 percent in urban areas. The incidence of informal employment is higher in the agricultural sector, with 71.6 percent of the employed population in informal jobs. The industry (21.9 percent) and service sectors (20.2 percent) share similar proportions of informality. Among the three subregions, only in Northern, Southern and Western Europe does the service sector (14.2 percent) have a higher level of informal employment than the industry sector (10.1 percent).

In terms of income levels, the previous chapter showed that informal employment rates among developed countries are below 40 percent, with an average of 18.3 percent, while the share of informal employment among developing and emerging countries is on average 69.6 percent.

There is also a negative relation between the level of GDP per capita and the share of informal employment in total employment. Both the level of GDP per capita and its growth are potentially important elements for reducing informality, influencing employment generation and the economic capacity of economic units and workers.

Countries with the lowest level of GDP per capita tend to have the highest level of informality. The gender gap in the share of informal employment is also more likely to be positive in countries with the lowest level of GDP per capita, which means that women are more likely to be in informal employment than men. The gender gap is actually positive in two out of three low- and lower-middle income countries.

The global and regional estimates clearly highlight the link between the increase in the level of education of workers and the decrease in the share of informal employment everywhere and for all statuses in employment. The majority of workers with no education (93.8 percent) are in informal employment. The share of informal employment decreases to 84.6 percent among workers with primary education, to 51.7 percent for those with secondary education and 23.8 percent for tertiary education. This pattern is largely influenced by developing and emerging countries where the largest share of workers in informal employment is concentrated. In developing and emerging countries, the share of informal employment in total employment drops from 93.9 percent among workers with no education to 32.0 percent among those with tertiary education. The fall in the share of informal employment as the level of education rises seems to be true in developed countries too. However, in developed countries, where the level of informal employment is much lower, the differences in rates of informal employment between those with higher and lower education are much smaller. In developed countries the share of informal employment ranges from 52.7 percent among those with no education (who represent a minority) to 16.1 percent among workers with tertiary education.

Another way to look at education and informality is to compare the distribution of workers in informal employment by level of education to the one observed among workers in formal employment. Half of the world population in informal employment has either no education or a primary level. By contrast, just above 7.0 percent of workers in informal employment worldwide have reached tertiary educational level. The corresponding proportions among workers in formal employment are 9.3 percent (with no education or primary education at best) and 24.4 percent with tertiary educational level respectively. The lack of education among workers in informal employment is critical in Africa and the developing Arab States. In Africa, more than three-quarters of the workers in informal employment have primary education as the highest educational level (44.5 percent have no education) and less than 2 percent of them have reached tertiary educational level. The situation in developed countries is slightly different. Secondary and tertiary levels of education are the norm in these countries, but tertiary education does not represent a protection against informal employment. There are differences in the distribution of workers by level of education depending on the formal or informal nature of the main job, but these are smaller and less linear than in developing and emerging countries. The proportion of workers with either no or primary education is higher among those in informal employment but the proportions are below 10 percent. In this group of countries, a significant proportion of workers in informal employment have a tertiary level of education: the share reaches 44.0 percent in all developed countries with proportions that range from 18.5 percent in Asia and the Pacific to 80.0 percent in the developed countries of the Americas.

The statistics show that informal employment plays a significant role in the global labor market. Two billion workers, representing 61.2 percent of the world’s employed population, are in informal employment. Half of the world’s employed population work informally in non-agricultural activities. The level of socio-economic development is positively related to formality. Emerging and developing countries have substantially higher rates of informality than developed countries. The informal sector comprises the largest component of informal employment in all regions. When the share of informal employment is disaggregated by sex, men (63.0 percent) have higher rates of informal employment than women (58.1 percent) around the world, but there are actually more countries (55.5 percent) where the share of women in informal employment exceeds the share of men. Women are more exposed to informal employment in sub-Saharan Africa, the Latin American countries and most low- and lower-middle income countries. They are more often found in the most vulnerable situations. Young people and older persons are found to be more affected by informality than persons aged between 25 and 64. The level of education is another key factor affecting the level of informality. Globally, increases in the level of education are related to decreases in the level of informality. People living in rural areas are almost twice as likely to be in informal employment (80.0 percent) as those living in urban areas (43.7 percent). The agricultural sector by nature is the sector with the highest level of informality (93.6 percent) around the world. The industry (57.2 percent) and service (47.2 percent) sectors have relatively less informality.

Globally, 15.7 percent of employees in permanent full-time employment hold informal jobs, i.e. having no employment related social and labor protections. The proportion of employees in informal employment increases significantly among part-time employees (44.0 percent), and among employees in temporary employment (59.6 percent) and is highest for employees in “temporary part-time jobs” (64.4 percent), especially among men (68.1 percent). Women part time employees are less likely than men to be informal. Just above one-third of women employees working less than 35 hours a week are in informal employment, as compared to 54.2 percent among men.

Worldwide, the share of informal employment varies significantly from 56.5 percent among workers in full-time employment to 75.1 percent for workers in part-time employment and 78.5 percent for marginal employment.

The world has to adopt more measures to amalgamate the informal economy into the formal economy in lien with the United Nations adopted the Sustainable Development Goal 8 which calls for transition to formality.