One in two workers in Latin America and the Caribbean is informal, says the ILO

One in two people who work in Latin America and the Caribbean does it in the informalitya situation that exceeds 70% in most countries in the region, with Bolivia above 80%, and only has its lowest rates in Chili and Uruguay, where it reaches 24%, reported this Thursday the International Labour Organization (ILO).

In this context, the Regional Office for Latin America and the Caribbean of the organization launched this Thursday the Formalization Strategy for Latin America and the Caribbean 2024-2030 (FORLAC 2.0), which has been designed to facilitate the transition from the informal to the formal economy.

During the presentation, the regional director, Ana Virginia Moreira, pointed out that the initiative highlights that “the “The ‘informality trap’ is one of the major obstacles to achieving decent work and social justice in Latin America and the Caribbean.”

He added that, “To address it effectively, urgent, renewed and decisive action is required by governments and social partners.”

“It is imperative to bring a new direction to formalization policies; we cannot face them without political will at the highest level, but we cannot obtain results by doing more of the same”he emphasized.

The figures of informality

The ILO reported that three out of four informal workers in the region are self-employed and work in small businesses (SMEs), while two out of ten informal workers are in the non-informal sector, being mostly salaried, and the rest in the household sector.

In addition, there is a gap between the rate of rural informality, which reaches 7.4%and the urban one, which is from 44%and the branches of activity with the highest rate of informality are agriculture, which includes eight out of ten workers, and construction, where it affects seven out of ten workers.

The ILO warned that informal workers are three to four times more likely to be poor than formal workers.

For this reason, the organization emphasized that “Facing this challenge is an urgent priority”as it is a “structural, multidimensional and persistent” problem, which mainly affects women, young people, people belonging to certain ethnic groups, migrants and less educated people.

The FORLAC 2.0 initiative

The ILO has developed FORLAC 2.0 “as the new frame of reference for the design of integrated and innovative 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, such as low productivity or the disarticulation between employment policies and skills development and social protection.

Moreira added that the aim is to “transform the harsh reality of informality through an integrated framework of policies, which include innovative interventions” that have a gender equality approach among their components.

These aspects, he added, “They must be implemented simultaneously and jointly” and he added that “one of the major challenges (…) is to promote approaches that are not yet sufficiently exploited in the region.”

The implementation and operational plan for the 2024-2025 biennium of FORLAC 2.0 were discussed in a virtual presentation by representatives of the ILO, governments, employers, workers and special guests, including the Minister of Labor, Employment and Social Security of Paraguay, Mónica Recalde, the Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), José Manuel Salazar-Xirinachs, and the Deputy Director General for Employment, Skills and Social Policies of the European Commission, Stefan Olsson, among others.