Informality promotes low income and poverty

Among the great problems of the country are unemployment and labor informality. Many tend to forget it because every quarter most of the media are limited to disseminating the unemployment rate obtained by Inegi through its National Survey of Occupation and Employment, New Edition (ENOEN).

For example, it is very likely that these media today report that, according to the ENOEN released yesterday, “for the July-September 2021 quarter, the unemployed population stood at 2.5 million people and the corresponding unemployment rate was of 4.2% of the EAP (Economically Active Population), a rate lower than the 5.2% obtained in the same period one year before ”.

And until there the information will remain and many people will say that the country is doing well because only 4.2% of the EAP does not have a job.

But let’s not forget that the unemployment rate is not the same as the unemployment rate. The first tells us what percentage of the EAP does not have a job, be it inside or outside the formal economy; the second includes only those who do not have a job in the formal economy. Because being busy is not the same as being employed.

According to the ENOEN for the third quarter of the current year, 56.3% of the employed population worked in the informal sector, that is, without any benefits such as the IMSS or INFONAVIT.

If in itself it is serious that just over 56 out of every 100 workers are in the informal sector, it is even more serious that in several states of the Republic there are even more workers.

Informality is higher than the average of 56.3% in 14 states (the percentage in parentheses): Oaxaca (80.7), Guerrero (78.2), Chiapas (78.0), Hidalgo (73.4), Tlaxcala (71.8), Veracruz (71.5), Puebla (71.4), Morelos (67.2), Michoacán (64.3), Campeche (62.6), Tabasco (62.4), Zacatecas (62.0), Yucatán (61.0) and Nayarit (60.8).

The situation is less serious, but for that reason it is still very worrying in the rest of the states of the country, which in no case register informality rates lower than 36.0 percent. Thus they are in descending order: San Luis Potosí (57.5), State of Mexico (57.0), Guanajuato (56.6), Durango (51.9), CDMX (49.3), Colima (49.3), Sinaloa (48.2), Jalisco (47.0), Quintana Roo (46.5), Tamaulipas (45.9), Querétaro (43.8), Sonora (41.1), Aguascalientes (40.8), Baja California (37.7), Chihuahua (37.4), Nuevo León (37.1), Baja California Sur (36.7) and Coahuila (36.0).

Various scholars on the subject, including Rafael La Porta and Andrei Shleifer (Informality and Development, Journal of Economic Perspectives 28 (3): 109-26, 2014), argue that “informality condemns many workers to low and precarious incomes with minimal social security, prevents the poor from having access to much-needed loans and savings instruments, and diminishes the general prosperity of society as economic inefficiency proliferates ”.

I would add that informality also prevents workers from having access to higher levels of education that allow them to obtain the best paying jobs offered by the labor market. As there are not in many parts of the country the qualified personnel that companies require, they do not invest and informality and poverty are perpetuated.

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Eduardo Ruiz-Healy

Journalist and producer

Guest column

Opinioner, columnist, lecturer, media trainer, 35 years of experience in the media, micro-entrepreneur.

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