Brandon Hernandez is an Internationalist from the Universidad del Norte (Colombia). He holds a Master's degree in International Cooperation and Project Management from the same university and a Master's degree in Political Communication and Marketing from the Universidad de La Rioja (Spain). Currently, he is pursuing an MPA in Social and Public Policy at the University of York. He has over six years of experience in youth issues, civic participation, education, and youth employment. My research interests lie in the study of inequalities in the Global South. Currently Brandon works in the third sector in Colombia.
Informal labor is a persistent issue worldwide, starkly contrasting the International Labour Organization's (ILO) ideal of "decent work," which includes opportunities for productive work that deliver fair income, workplace security, and social protection. In Latin America, informal labor is a profound and complex issue involving a significant portion of the workforce. Many individuals work in small, unregistered businesses or self-employment without formal labor contracts, social security, or legal protections. This informal sector, involving around 53% of Latin America's labor force, contributes to economic survival but also perpetuates poverty and inequality by limiting access to social services and stable income opportunities. The persistence of informality is particularly critical among young people. Work is not only a means of earning a livelihood but also plays a critical role in personal development, social integration, and economic growth.
Countries like Mexico, Brazil, and Colombia are the most affected, reflecting structural challenges such as insufficient job creation in the formal sector, economic volatility, and inadequate enforcement of labor regulations. In Colombia, approximately 47% of the employed population worked in the informal sector as of 2022. The landscape of informal labor in this country varies across regions, with urban areas like Bogotá having lower informal employment rates compared to rural regions where informal work is often the norm. The labor market is characterized by a significant mismatch between the skills required by employers and those possessed by the workforce. Additionally, regulatory challenges, including insufficient enforcement of labor laws and high costs associated with formal employment, discourage workers and employers from entering the formal sector. When young people are confined to the informal sector, their opportunities for personal and professional growth are limited, which affects their ability to contribute productively to society and the economy.
A country with such high levels of informality is deeply vulnerable to external shocks, and the Covid-19 pandemic proved it. In 2020, the informal employment rate spiked, reaching approximately 51.3% as many formal sector jobs were lost due to lockdowns and economic disruptions. Moreover, young people (ages 15-28) in Colombia face significant barriers to entering the formal labor market, including a lack of work experience, limited access to education and training, and economic pressures that push them into informal employment. Approximately 44.7% of young workers are employed informally, a situation exacerbated by disparities in education and regional economic development. The prevalence of informal employment among youth in Colombia is not evenly distributed. Rural areas and regions with less economic development show higher rates of informality. For instance, while Bogotá has a youth unemployment rate of 14.9%, Quibdó’s rate is a staggering 30.9%.
Early experiences in the labor market can have long-lasting effects on their career trajectories, income potential, and overall well-being. Informal work often does not provide the necessary skills development, career progression opportunities, or income stability that young workers need to transition into more secure and productive employment. Addressing the challenge of youth informal labor in Colombia should be a high priority on the government’s policy agenda to battle the broader challenge of informality in the world of work.
The economic impact of youth informality is profound. The World Bank estimates that informality in Colombia reduces the country's GDP by approximately 10% annually. Given that young people constitute a significant portion of informal workers, a considerable part of this economic loss can be attributed to their lack of formal employment. Informal employment limits young workers' productivity and reduces their contributions to tax revenues and social security, which are critical for funding public services and social programs.
This issue exacerbates existing social inequalities, particularly along lines of gender and regional development. Young women are disproportionately affected by informal labor, with a higher percentage engaged in informal work compared to their male counterparts. In 2023, for every young man not in education, employment, or training (NEET), there were 1.9 young women in the same situation. This gender disparity reflects broader issues of gender inequality in the labor market.
Even when Colombia has implemented various policies aimed at reducing youth unemployment and informal employment, yet significant gaps remain. The "Jóvenes en Acción" program, for instance, provides cash transfers to young people in exchange for their participation in educational or training activities. While this initiative has had some success in encouraging educational attainment, it does not directly address the creation of formal job opportunities. The country's labor market policies also include efforts to formalize employment through tax incentives for businesses that hire young workers formally. However, these policies have been limited in scope and effectiveness. The lack of comprehensive enforcement mechanisms and the persistence of economic informality undermine these efforts. Furthermore, regional economic disparities require more localized policy responses. Policies that work in urban centers like Bogotá may not be as effective in rural areas or less developed regions.
In Barranquilla, informal labor among youth is a persistent issue that severely impacts the local economy. As of 2022, approximately 109,166 young people were engaged in informal employment in Barranquilla and its metropolitan area. Despite the overall city informal employment rate being 54.3% in July 2023, significantly higher than the national average of 43% across 23 capital cities, the youth segment faces some particularities that exacerbate their vulnerability.
A significant factor contributing to high informal employment rates is the predominance of self-employment. In the last quarter, 55.3% of those employed in Barranquilla were self-employed, reflecting a broader trend of low compliance with labor formalities due to inadequate health and pension contributions. Moreover, educational attainment plays a crucial role in the dynamics of informal employment. Youths with lower educational levels are more likely to end up in informal jobs, whereas those with higher education tend to secure formal employment. Data shows that in 2022, the median salary for youth in informal employment was $600,000 COP, approximately 60% of the legal minimum wage for that year. This significant income disparity underscores the economic vulnerability faced by young informal workers, who not only earn less but also lack job stability and social security benefits.
According to the GOYN Barranquilla’s report, the sectors most attractive to young informal workers include prepared food services, passenger transportation, and residential construction. These sectors are appealing due to their accessibility, flexibility, and immediate income generation potential. However, they also tend to have higher levels of informality, contributing to the broader issue of economic instability and limited upward mobility for young workers. The educational profile of these young informal workers is also telling. The majority, 54.9%, have only a high school diploma, while 16.6% have education levels between sixth and ninth grade. Only a small fraction possess post-secondary education, with 12.1% having university degrees and 7.5% holding technical qualifications. This educational gap reflects the disconnection between the local education system and the labor market, where many young people are unprepared for formal employment opportunities that require higher skills and qualifications.
To address the pervasive issue of informal youth labor in Barranquilla, a comprehensive policy proposal centered around a "Youth Employment and Training Initiative" (YETI) is essential. A policy that integrates education, vocational training, and economic incentives to transition young workers from informal to formal employment. Key components of an eventual response should include developing industry-specific vocational training programs, offering tax breaks and subsidies for businesses that hire young workers formally, and providing support services for young entrepreneurs. Additionally, targeted gender interventions and improved access to education are crucial, along with expanding social protection systems to cover young informal workers. Establishing a monitoring and evaluation framework assess the policy's effectiveness in creating a more inclusive and equitable labor market for young people. Addressing this issue is not just an economic necessity but a social imperative. Barranquilla's situation reflects the broader challenges faced by many cities in the global south, where economic instability, educational disparities, and insufficient labor market policies hinder young people's potential. There is still a lot to do, so young people in Barranquilla and similar cities achieve their full potential.
All articles posted on this blog give the views of the author(s), and not the position of the IPR, nor of the University of Bath.
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