1. Informality & informal employment - Who are the informal workers?
Informality has been the center of debates from both economists and governments across the world.
While the International Monetary Fund (IMF) defines the informal economy as “comprising activities that have market value and would add to tax revenue and GDP if they were recorded” (Delechat e Medina 2020), the ILO defines it as “all economic activities, excluding illicit activities, by workers and economic units that are, in law or practice, not covered or insufficiently covered by formal arrangements” (OCDE/ILO 2019). We use the former definition to slowly try to build an understanding of the informal employment.
Considering that this analysis focuses on Brazil and Colombia, we have taken into account the
definitions provided by the statistical agencies of these two countries – the National Administrative Department for Statistics of Colombia (DANE) and the Brazilian Institute of Geography and Statistics (IBGE), which we explain in the following sections below.
Figure 1 - The Informal Economy
Source: (Chen 2012)
According to Chen (2012) 61% of employed individuals worldwide are informal workers. This brings forth the magnitude of the potential vulnerability of certain groups of society that fall under informal employment – as presented in Figure 1. Unpaid family workers, homeworkers, and informal wage workers tend to be predominantly women, have lower earnings, and higher poverty risk.
At the global level, 80% of informal workers live in rural areas (Chen, 2012) – this does not mean, however, that they are not all covered by the social protection system, as generally, rural informal workers tend to receive specific protection. This is not usually the case with informal workers in urban areas, which tend not to receive such protection.
Finally, the majority of informal workers are currently living in the developing & emerging world, and addressing the issue of informality remains one of their main developmental challenges. As per the ILO, in
2018 the highest level of informality was in Sub-Saharan Africa at 92%, while in Latin America and the Caribbean it currently is 54% (Chen 2012). While the characteristics of informal workers might be challenging 6
