ILO warns that labor informality affects one in two people in Latin America

Lima.– The International Labour Organization (ILO) warned this Thursday that informality in the labor market continues to affect almost one in two people in Latin America, as the regional average in 2025 is 47% and there are countries, such as Peru, Bolivia and Ecuador, where this rate exceeds 70%. In its latest report ‘Labor Outlook 2025 Latin America and the Caribbean’, the ILO stated that although labor informality has decreased in the first half of 2025 slightly compared to 2024 (0.7 percentage points), the progress is insufficient. “Although the trend has been consistently decreasing since 2021, the observed reduction is still insufficient to modify the structural feature of the labor market and is one of the central challenges for labor development in the region. On average, it affects almost half of the employed people,” indicated the report presented this Thursday virtually. The ILO highlighted the difference in this indicator in Latin American countries, because while the rate is close to 25% in Chile and Uruguay, in Peru and Ecuador labor informality is around 70% and in Bolivia it exceeds 80%. “This heterogeneity implies that policies to reduce informality must be adapted to specific national contexts, taking into account factors such as the productive structure, institutional capacity and labor market characteristics,” added the document.

Young people and women, the most affected by labor informality

Labor informality affects the fiscal stability of economies, reduces the country’s productivity, and increases the precariousness of workers, who are not covered by health insurance or regulation, commented the ILO experts.

According to the report, this problem affects young people more and is also higher among women. To sustainably reduce informality, the ILO points out that active and coordinated policies are required to drive deeper transformations in the labor and productive structure, while also supporting more intense economic growth. The ILO Regional Director for Latin America and the Caribbean, Ana Virginia Moreira, indicated that after the covid-19 pandemic, when informality increased significantly, countries have made efforts to change labor legislation and adapt to a new context, but a higher-level will is required to combat the problem. “The region cannot be satisfied with figures that seem positive on average. We need active policies that promote decent work, with equality and protection. The ILO remains committed to accompanying the countries on this path, in a labor world that is changing rapidly,” said Moreira.