Formalization in Latin America and the Caribbean

The ILO Regional Office began publishing a series of "Notes on Formalization" about the situation and the experience dealing with informal economy employment in several countries in the region.

Press release | 05 June 2014
LIMA - The ILO Office for Latin America and the Caribbean released the first series of his "Notes on Formalization" that include best experiences devloped in several countries to reduce the informal employment that affects 130 million workers people in the region.

The notes include an overview of what has been done in the region, as well as specific reports on Argentina, Brazil, Colombia, Ecuador, Jamaica, Mexico, Paraguay, Peru, Dominican Republic and Uruguay.

The following text by ILO Regional Director for Latin America and the Caribbean, Elizabeth Tinoco, introduces the series of Notes:

Notes on Formalization

By Elizabeth Tinoco
Regional Director of the ILO for Latin America and the Caribbean

Informal employment is a persistent problem in Latin America and the Caribbean. Following a decade of economic growth and decline in unemployment rates, there are still 130 million workers holding informal jobs, deprived of social protection and labour rights.

This does not mean, however, that there has not been any progress made on the issue of formalization.

Formal employment, wage labour and social protection coverage have increased in Latin America and the Caribbean. Now, it is important to speed up this process to confront the long-time growth and consolidation of informality in the region.

We cannot forget that the reduction of informality is a key component of the efforts to reduce inequality and social exclusion.

The experience of the last few years confirms that economic growth is essential for the generation of more and better jobs, but it is not enough. To reduce informality, it is necessary to implement deliberate and integrated economic, social and labour policies and actions that complement economic growth, in the framework of sustainable development.

In fact, the policies implemented in several countries were key components of the progress achieved on the subject of formalization. This formalization process has not been uniform. In some countries, processes were faster and took a relatively short time. In others, progress has been slower.

In 2013, the ILO Regional Office for Latin America and the Caribbean launched the Programme for the Promotion of Formalization in Latin America and the Caribbean, FORLAC. The programme has three components: a) generation and dissemination of knowledge on formalization policies, b) technical assistance to specific countries, and c) capacity-building of workers’ and employers’ organizations in formalization issues.

The ILO FORLAC Notes presented here are part of the first component. We analyze public policy experiences trying to identify the most remarkable ones according to the academic or political discussion.

Formalization strategies require a favourable economic context, as well as articulated policies that allow us to address a multidimensional and highly heterogeneous phenomenon.

The persistence of high levels of informality is a major challenge requiring the implementation of measures that produce sustainable results. The ILO expects that the dissemination of these experiences will help promote broader discussion on the strategies that countries may use to facilitate the transition to formality in the region.