Background on the Situation
In May, informal employment reached its highest level in 18 months, with 54.9% of the employed population engaged in informal work, according to the National Occupation and Employment Survey (ENOE). This figure is the highest since October 2023, when it stood at 55.4%. The absolute number of informal jobs has been increasing throughout 2024.
Key Changes in Employment
- Informal employment growth: The informal labor rate increased by 0.2 percentage points, with 188,702 people joining informal occupations while formal employment saw a decline of 117,038 positions.
- Formal vs. Informal Sectors: The rise in informal employment was not linked to a strengthening of informal economic units; instead, occupation in such units decreased.
- Formal companies and government dependencies: The increase in informal employment was concentrated in formally constituted companies and government dependencies, where 308,000 people were hired over the past two months.
- Overall employment creation: While job creation continued in May, it occurred at a slower pace, with only 71,664 people joining the employed population – the lowest figure for job creation this year.
- Unemployment rate increase: The unemployed population grew by 132,962 people, leading to a rise in the unemployment rate from 2.5% to 2.7%. This is the same level observed at the beginning of the year, though still lower than its historical trend.
Who is Affected and Why It Matters
The recent surge in informal employment has significant implications for both workers and the broader economy. Informal jobs often lack job security, benefits, and regulatory protections that formal employment provides. This situation can lead to increased vulnerability for workers, making it difficult for them to plan their financial futures or access essential social services.
Moreover, the rise in informal employment within formally constituted companies and government dependencies highlights potential issues with labor regulations, enforcement, or economic pressures driving businesses to adopt informal hiring practices. This trend can also affect the government’s tax revenue, as informal employment typically results in lower tax contributions.
Who is Involved
The National Occupation and Employment Survey (ENOE) is the primary source of data on employment trends in the country. It provides monthly updates on the labor market, including formal and informal employment figures.
Key Questions and Answers
- What is the current state of informal employment? Informal employment has reached its highest 18-month level, accounting for 54.9% of the employed population in May.
- How many people joined informal work in May? 188,702 people joined informal employment in May.
- How did formal employment fare in May? Formal employment experienced a decline of 117,000 positions in May.
- What caused the rise in informal employment? The increase was primarily due to workers being hired in an informal manner within formally constituted companies and government dependencies.
- What impact does this trend have on workers? Workers in informal jobs often lack job security, benefits, and regulatory protections, increasing their vulnerability.
- How does this trend affect the economy? Informal employment can lead to lower tax contributions and may indicate issues with labor regulations or economic pressures on businesses.
