Report: 27 Million Youths Work in Latin America’s Informal Economy

The International Labour Organization (ILO) has expressed concern at Latin America’s huge informal labor force, urging the region’s governments to act quickly to move workers into the formal economy.

According to the ILO’s estimation, nearly 27 million of Latin America’s youths work in the informal economy.

“Youth unemployment is very high in the region, but it’s just the tip of the iceberg that hides the wider problem of a lack of opportunities for those who are just starting their productive lives,” said Elizabeth Tinoco, ILO Regional Director for Latin America and the Caribbean.

The ILO warned in its report that six out of ten jobs available to young people are in the informal economy. In general, these jobs are of poor quality, low productivity and offer low wages. This means that youths are lacking stability and career prospects, social protection and access to basic labor rights.

“We face a major political challenge, as high unemployment and informality create a scenario which leads to high levels of discouragement and frustration generated by the lack of opportunities,” Tinoco said. She added that when young people can only access poor quality jobs, it jeopardizes their future career path.

Nearly 56 million of the region’s 108 million young people, aged 15 to 24, are either holding a job or actively seeking one.

Among these youths, 13% are unemployed, three times the rate of adults. It is estimated that over 7 million young people fail to find a job – a number that is equivalent to 40% of total unemployment in the region.

Most jobs for youths are generated in the informal economy, very often in small and micro informal enterprises. But informal conditions also affect 32% of young workers employed by formal enterprises.

According to the report, more than 20 million young people in the region are not in education, employment, or training.

The informal economy, according to ILO, is the byproduct of laws that discourage compliance because they are inappropriate, burdensome or impose excessive costs.