63.4% of young people work in the informal economy of LA: OECD

Mexico City. In Latin America and the Caribbean (LAC), 63.4 percent of workers between 15 and 24 years of age are employed in the economy that does not pay taxes and lacks social security, according to the study Informality and vulnerabilities of households in Latin America, published today by the Organization for Economic Cooperation and Development (OECD).

In Barbados, Bolivia, El Salvador, Honduras, Nicaragua, Paraguay, Peru and Trinidad and Tobago, 70 percent or more of young people are employed informally.

In general, in the region, the informality rate decreases significantly in the group of workers aged 25 to 35 years and begins to increase again at age 35 and older, until rising in the segment of workers aged 65 years and older, where 75.9 percent is employed in the informal market.

In Barbados, Chile, Trinidad and Tobago and Uruguay, the informality rate at the age of 65 years or older exceeds 60 percent.

“This suggests that most young people and the elderly have limited access to insurance, savings and credit,” the study mentions.

People employed informally work an average of 38.2 hours per week in their main job, while employees of formal companies work 44 hours per week.

Around 50 percent of informal workers have primary education or lower levels of preparation, a level that contrasts with 21 percent of formal business employees.

Almost four in 10 formal workers (38 percent) have tertiary education, while the level among the informal group is only 1 in ten (12.1 percent).

“The low level of education could reflect the subsistence nature of informal employment. Workers who would prefer to work in a formal job but cannot access it are trapped in a segmented labor market due to their low labor productivity, since their combination of education, experience and location makes them structurally different from formal workers. highlighted the OECD in its document.

Completely informal households house 44.8 percent of children under 5 years of age, 45 percent of children between 5 and 14 years of age, and 49 percent of older adults. On average, more than four in ten people (42.5 percent) live in a household that depends solely on the informal sector.

To carry out the study, the OECD uses the database of individuals and households from 19 LAC countries, which represent about 85 percent of the region’s population.