Transition from the informal to the formal economy

The magnitude and persistence of the informal economy in Latin America and the Caribbean is a matter of concern for governments, workers and employers of the region.

47.7 per cent of the urban labour force, representing 130 million workers in Latin America and the Caribbean, are in informal employment

In June 2013 the ILO started its support to governments and social partners to facilitate the transition from the informal to the formal economy. In the first six months the ILO enhanced the knowledge base on formalization with ten papers on recent policies implemented in various countries, a specific study on SMEs, and a comparative analysis of labour inspection, legislation and taxation systems. The programme also provided technical assistance to policy makers in Argentina, Colombia, Dominican Republic, Mexico and Peru. Workers’ and employers’ organizations were strengthened to enable them to play a key role in formalization trends in the region.

In Honduras the tripartite Social and Economic Council entered into a national dialogue on transition to the formal economy, centred on small and medium enterprises and the extension of social protection schemes. In Honduras and El Salvador there are proposals to reform the legal framework for self-employed workers.