Informal employment in Latin America exceeds 70%

• The International Labour Organization designed a strategy to encourage and ensure labor rights

The International Labour Organization (ILO) reported on July 18 that 1 in 2 people working in Latin American and Caribbean countries works in the informal sector.

According to the ILO report, the situation exceeds 70% in most countries in the region, with Bolivia above 80% and only Chile and Uruguay with rates close to 24%.

With the aim of improving the outlook for informal workers, the Regional Office of the organization launched the Formalization Strategy for Latin America and the Caribbean 2024-2030 (Forlac 2.0), which was designed to facilitate the transition from the informal to the formal economy.

ILO Regional Director Ana Virginia Moreira said that this initiative highlights that the “informalism trap” is one of the major obstacles to achieving decent work and social justice in Latin America and the Caribbean.

“To effectively address the situation, urgent action is required by governments and social partners. It is imperative to give a new direction to formalization policies; we cannot address them without political will at the highest level,” Moreira said.

Photo: EFE/ Welcome Velasco

Figures on informal employment

The ILO reported that three out of four informal workers in the region are self-employed or work in small businesses, while two out of 10 employees are in the formal sector and the rest work in the home sector.

The institution’s report also highlighted that there is a gap between the rural informality rate, which reaches 75.4%, and the urban rate, which is 44%. The branches of activity with the highest informality rate are agriculture, which includes eight out of ten workers, and construction, where it reaches 7 out of 10.

In addition, the ILO warned that informal workers are three to four times more likely to be poor than formal employees.

“Addressing this challenge is an urgent priority, as it is a structural, multidimensional and persistent problem, which primarily affects women, young people, people belonging to certain ethnic groups, migrants and less educated people,” the ILO report said.

Photo: EFE/ Miguel Gutierrez

ILO Strategy

The ILO developed Forlac 2.0 as a reference framework for the design of policies and strategies that promote decent work and social justice in Latin America and the Caribbean.

The strategy addresses policies for the recognition and enforcement of labour rights, and sanctions and incentives for formalisation, as well as structural causes, among which it noted:

– Low productivity.

– Disarticulation between employment policies and skills development.

– Failures in social protection.

Moreira explained that the ILO’s aim with this project is to transform the reality of informality through an integrated set of policies that include innovative interventions with a focus on gender equality.

“These aspects must be implemented simultaneously and jointly. One of the major challenges is to promote approaches that are not yet sufficiently exploited in the region,” said the ILO regional director.

With information from EFE.

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