Recommendations to end Labour informality, according to the World Bank
The World Bank published a document in which it argues that labor informality in countries with emerging economies is around 70% and almost a third of those Nations' gross domestic product.
En México, el 56.6% de los trabajadores, que son informales, producen 23 de cada 100 pesos del PIB. Este nivel de participación de la informalidad en la economía mexicana repuntó de manera significativa pasando del 22.4% en el 2018 a 23.0% en el 2019, según cifras del Instituto Nacional de Estadística y Geografía (INEGI).
"the magnitude of this situation reduces the ability of these countries to mobilize the fiscal resources needed to underpin the economy during a crisis, to carry out effective macroeconomic policies and to generate human capital for long-term development," says the World Bank.
The main problem of high levels of informality, according to the World Bank, is that economic recovery is going to decline.
"the magnitude of this situation reduces the ability of these countries to mobilize the fiscal resources needed to underpin the economy during a crisis, to carry out effective macroeconomic policies and to generate human capital for long-term development," the entity said.
Según el estudio del Banco Mundial, en las economías que registran un alto grado de informalidad, los recursos públicos para combatir las recesiones profundas y apoyar la recuperación posterior son más limitados que en otras economías."Informal workers are predominantly low-skilled women and young people. In the midst of the covid-19 crisis, they often lag behind and have limited access to social safety nets when they lose their jobs or suffer severe income losses, "said Mari Pangestu, Managing Director of Development Policy and Partnerships at the World Bank.
In addition, another problem of informality is that these workers do not have the same social protection as formal employees, making them more vulnerable in times of crisis or market volatility.
"because of limitations on access to social safety nets, many people working in the informal sector have not been able to stay at home or meet social distancing requirements. In emerging economies, informal enterprises account for 72% of service sector companies, "said the multilateral entity.
The analysis adds that countries with larger informal sectors have lower per capita income, more poverty, more income inequality, less developed financial markets, lower levels of investment and are further away from achieving sustainable development goals.
"in Europe and Central Asia, Latin America and the Caribbean, and the Middle East and North Africa, the heavy regulatory and fiscal burdens and weak institutions have been important factors that have contributed to informality," the bank said.
To combat labour informality, the World Bank highlighted measures that have worked such as reducing labour costs and the benefits of promoting formality.
"over the past three decades, many Governments have implemented political reforms to increase the benefits of working in the formal sector or to reduce the costs of such activities. These are fiscal reforms, reforms to increase access to financing, and initiatives to strengthen governance, "the entity said.
The World Bank's recommendations to combat informality are as follows:
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