From Safety Net to Safety Trap: Informality and Telework During the Coronavirus Pandemic in Latin America

Abstract

In Latin America, informality has historically operated as a safety net during economic crises, by absorbing unemployed workers and providing income. However, unlike past economic crises, the 2020 crisis unleashed by the outbreak of the new coronavirus pandemic (COVID-19) is not only economic but has resulted from a health emergency that requires social distance and isolation. In this article we argue that, in the context of social distancing and confinement measures, informal work constitutes a safety trap instead of operating as a safety net. First, informality as an economic subsistence mechanism is limited given that working activities in the informal sector are less convertible to remote jobs. Second, even when telework may be a viable option, the home conditions of informal workers often hinder the feasibility of telework. In making this argument, we bring to bear a conceptualization of potential to telework which includes both occupational and household components, the latter an often-neglected piece of the telework puzzle. To evaluate our argument, we conduct a quantitative cross-country analysis of seven Latin American countries (Bolivia, Chile, Ecuador, El Salvador, Mexico, Peru, and Uruguay). The empirical analysis consists of a descriptive assessment of the potential to telework of informal workers.

The Diversity of Informal Employment: a survey of drivers, outcomes, and policies

“…In addition, these losses have not been recovered in many developing countries even though economies are fully open and functioning (ibid.). The lack of teleworking opportunities and infrastructure needed for remote work hindered informal economic activities' capacity to serve as a buffer for income stability (de los Santos and Fynn, 2023). Furthermore, sectors characterized by substantial informality, such as agriculture, retail, and trade, were also some of the most severely impacted by these measures (OECD, 2021).…”