Employers, employees and workers of companies with less than 6 people; self-employed or self-employed workers, excluding professionals and technicians; All unpaid family members employed in domestic service are usually the ones who make up the informal economic sector of Guatemala.
This is expressed by the National Institute of Statistics (INE) in its latest National Employment and Income Survey (ENEI) 2022, which details that in the country the 71.1% of the population is employed informally and only the 28.9% work in the formal sector.
In the informal sector, the population over 24 years of age predominates, distributed as follows: 10.7% in the metropolitan urban area, 20.6% in the rest of the urban area and 45.4% in the rural area.
The three predominant activities at the national level in the informal sector are: agriculture with 34.2%, followed by commerce with 28.2%, and manufacturing industries with 12.9%.
On the contrary, the economic activity with the least impact on the distribution of employed persons at the national level in informality is communications with 0.1%.
Meanwhile, the Bank of Guatemala (Banguat) records until 2021 as the gross added value of the informal sector by economic activity the amount of Q138 million 445.70; gross added value being understood as the sum of the monetary values of the final goods and services produced by an economy in a certain period.
Informality = Lack of enough good jobs
Abelardo Medina Bermejo, coordinator of macro fiscal analysis of the Central American Institute of Fiscal Studies (Icefi), explained that the key is not to combat informality but to create conditions for companies to generate more employment, promoting diversification, competition and competitiveness so that they have more and better paid jobs.
“People are not informal because they want to be informal, they are informal because they don’t get a good job. “When a person loses their job and finds it very difficult to get a good job in the formal sector, they have no other path but to embark on the informal sector.”
Abelardo Medina Bermejo, coordinator of macro fiscal analysis of Icefi
Meanwhile, informality is a consequence of the lack of enough good jobs.
Medina added that the fact that there are not enough good jobs causes migration, bringing up a study by the International Organization for Migration (IOM) that makes it clear that the main reason for migration is because in Guatemala there are not enough jobs or well-paid jobs, and if work is found it is in the informal sector where there is little payment.
This low payment is related to migration, because people have little consumption capacity, which generates a vicious circle.
“The existence of informality and the creation of few jobs has paradoxically become the promotion of migration, because this is the country’s greatest stabilizer. The vast amount of migration results in remittances and these become the country’s main financing tool.”
“The lack of investment/production leads to bad salaries and little employment, this little employment produces informality and migration, this produces remittances and these make the stabilization process continue, so there is no reason to change things,” added the interviewed.
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