EU-funded ILO project "Innovative solutions for formalization in Latin America and the Caribbean" presented at EU-Andean conference

BRUSSELS (ILO News) – The European Commission (Directorate General on Employment) organized a two day high-level conference with the Andean countries in Bogotá, Colombia, to advance the discussion on labour informality, freedom of association and the fight against child labour in Latin America and the Caribbean.

Informality is a persistent phenomenon in the region: on average one in every two workers is engaged in informal work, with intra-regional differences. In 2019, Uruguay and Chile had the lowest levels compared to Bolivia (80-90 per cent). Addressing informality depends not only on targeted interventions such as those implemented by the ILO, but also on external conditions, as the Covid-19 pandemic has shown.

The level of informality is closely linked to economic activity, productivity and urbanity, as well as the educational level, age and gender of the workers. Statistics from ILOSTAT and the World Bank identify as main factors encouraging informality the decrease in GDP per capita, a low presence of labour inspectorates tasked with enforcing labour standards and the persistence of underpaid precarious jobs.

The most vulnerable to informality are youth (aged 15-24), migrants, and rural people. Agriculture and construction are the most affected sectors, though household and care workers and the self-employed are the most exposed. Moreover, informal labour within the formal sector affects almost 10 per cent of all workers in the region.

ILO-EU innovative approach to transitioning to formality

To reach an effective transition to the formal economy, an integrated and comprehensive approach to the design and implementation of national policies is necessary. The ILO Recommendation No. 204 (2015) puts forward four priorities which must be collectively addressed: increase productivity; encourage enterprise, sectoral and human development; ensure compliance with labour standards and regulation; and provide incentives and oversight, through institutional capacity-building and the promotion of a compliance culture.

The participation of the ILO to the EU-Andean conference renews its longstanding partnership with the EU on the issue of the transition to the formal economy. Juan Manuel Garcia, National Coordinator at the ILO Regional Office for Latin America and the Caribbean, presented the first results of the EU-funded ILO project “Innovative solutions for formalization in Latin America and the Caribbean”.

This project will strengthen the constituents’ capabilities to achieve this transition in LAC countries. In its second year, the project contemplates specific activities in Colombia for the design and initial implementation of a formalization strategy in a priority economic sector, currently being identified based on relevance, opportunity, and feasibility of the transition.

The project activities include the co-creation of toolkits, guidelines and policies for formalization based on a tripartite social dialogue, as well as on accurate country-specific labour market and formality trends assessments. The project has already made tangible progress:

• two studies – one on the impact of the pandemic on informality and on the recent trends on the transition to formality in LAC countries, and the other on the role of innovative formalization government initiatives.
• ongoing delivery of technical support for the design of innovative formalization initiatives to align LAC countries policymaking with the ILO labour standards on formalization of work and the EU international policies and guidelines.