The New Faces of Informality in Central America

Abstract

The current productive restructuring in Central America is creating significant changes in the region's labour markets. New sectors of tradeables are emerging which, from the point of view of labour, cannot be characterised as formal. Indeed, formal employment is currently in a state of decline while the informal sector is redefining its internal heterogeneity. This article focuses on the new expressions of informality. Three scenarios are identified: the economy of poverty, subcontracting, and the agglomeration of small dynamic enterprises. Various analytical aspects are considered in each of these three scenarios: the context of the globalisation process; the type of informality; the resources which are mobilised; the challenges faced; and the identities generated. The analysis is based on the evidence supplied by three case studies. The first refers to the former public employees of Managua (Nicaragua) who, in the aftermath of state reforms, presently pursue informal activities. The second example concerns a group of women in the community of Puente Alto (Honduras) who work as subcontracted producers for an industrial export firm. Sarchí, Costa Rica's principal artisan centre, illustrates the third scenario.

Value of Formalization for Women Entrepreneurs in Developing Contexts: A Review and Research Agenda

“…In the literature, women's identities are described as centred on their productive, reproductive and child‐rearing work (Jung and Dalton ), and often in conflict with one another (Heemskerk ). Pérez Sáinz () suggests that decisions to operate in IE are not motivated by the desire to be self‐employed, as this is not how women see themselves; informality is chosen for lack of other options because of domestic roles. Similarly, in a longitudinal study in South Africa, Neves and Du Toit () describe women's involvement in business enterprises as motivated by reproductive objectives (sustaining the household, educating children) rather than business development or formalization.…”

Informal Work in Latin America: Competing Perspectives and Recent Debates

“…The dualist perspective, associated with the seminal work of Hart (1973) in West Africa and the ILO, emerged as cities throughout the developing world were experiencing unprecedented rates of population growth and large‐scale rural‐to‐urban migration. In the context of rapid demographic change and structural poverty, job creation in the formal economy is unable to keep pace with population growth and the informal economy serves as a safety net, absorbing those who lack opportunities in the formal sector (Pérez Sáinz 1998). As a result, the dualist conceptualization of informality views informal work solely as a subsistence activity, a sector of last resort with low barriers to entry in terms of skills, capital, and technology (Portes and Schauffler 1993).…”

“…Although informal work remained an important source of employment and income during the ISI period due to rapid demographic change, the growth of manufacturing and public sector employment diminished the relative importance of informal and self‐employment (Roberts 2005). A number of scholars have employed neo‐Marxist approaches to demonstrate how these processes of economic restructuring, concentrated primarily in urban areas of Latin America (where more than 75% of the population resides), have brought about the reorganization of work and polarization in occupational structure and income (Aguilar 1997), reduction in public sector employment (Cross 1998), outsourcing, and subcontracting accompanied by loss of job security and social protections (Klein and Tokman 2000; Pérez Sáinz 1998), greater part‐time work and underemployment, and higher rates of unemployment (Aguilar 1997; Roberts 2005).…”

Place-Based (In)formalization: A Bolivian Marketplace for Consumer Electronics and Global Brands

“…The physical proximity of traders enables the exchange of tacit information and practical knowledge, and low entry and transaction costs apply to small-scale production and informal trade in the global South just as to migrants' businesses and trade diasporas worldwide. Minority businesses often organize territorially in the outskirts of cities and certain workingclass neighborhoods, where they build a dense network of social interactions, which has the potential to create solidarity, trust, and cooperation (Pérez Sáinz 1998;Itzigsohn 2008;Colloredo-Mansfeld 2011). Selfemployment is an option for rural indigenous and international migrants and their offspring, who suffer from structural disadvantages and ethnic discrimination in society and national labor markets (Zhou 2004;Portes, Haller, and Guarnizo 2002).…”