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Informal Workers Need More than Legal Recognition

During the COVID-19 pandemic, many Latin American countries created emergency relief programs that formally recognized workers in the informal economy. So, why has much of the region’s newly eligible labor force still been unable to access benefits?

BRASÍLIA – During the COVID-19 pandemic, Latin American governments took the unprecedented step of including informal workers in emergency relief legislation. Informal workers comprise a significant share of Latin American countries’ economically active population, ranging from 23.9% in Uruguay to 82.6% in Honduras, and they have been among those hardest hit by the pandemic. Their inclusion in the pandemic response thus seemed like a harbinger of progress. But, on closer inspection, the move highlighted the unintended consequences of failing to consult with those most affected by legislation before it is enacted.

Legal recognition of informal workers is not only symbolically important. It has significant material implications. Historically, informal workers’ status rendered them invisible to the state in Latin America. Because they were not defined as employees under labor laws, they were not eligible for employment-based social protection. And they are not poor enough to qualify for social assistance.

The pandemic relief measures that many Latin American countries adopted eliminated this “missing middle” position. Research released this summer by the law program of Women in Informal Employment: Globalizing and Organizing (WIEGO) showed that out of 16 Latin American countries, ten expressly recognized informal workers as entitled legal subjects in emergency relief laws instituting cash-transfer programs.

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