School dropouts, new jobs and post-pandemic recovery: the hidden reasons for labor informality

Around half of those employed in Argentina are in precarious jobs. And the post-pandemic employment recovery is being driven by informal jobs, analysts say, who warn that the growth of the informal economy is having a strong impact on the labor market.

“Argentina lived for many years with a high rate of informality or undeclared employment, which is a direct derivation of the high rates of informal economy that the country has,” said Randstad Argentina’s Director of Public Affairs and Sustainability, Jorge Figueroa

The level of labor informality, according to the specialist, It has a greater incidence among small employers, in general businesses, businesses and micro-SMEs.who, because they have an important part of their commercial activity in the informal circuit, find it necessary to also have working relationships outside the formality.

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“Added to this is a phenomenon that has to do with a not insignificant share of unemployment in Argentina, which although it is currently at a relatively low rate, a large part of this unemployed population is in long-term structural unemployment Data: these are people who cannot access formal employment because require skills development to improve their employability and state support to be able to access quality jobs,” said Figueroa, speaking to TN. According to him, the alternative that is offered today to these people to reintegrate the labor market is access informal and poor quality jobs, where changas abound.

According to the latest statistics published by INDEC on the labor market, in the second quarter of 2022, 73.5% of the employed population were employees, including 37.8% have no retirement discount. In contrast, 22.3% are self-employed, 3.6% are employers and 0.5% are unpaid family workers.

Among the salaried population, 62.2% benefit from a pension discount, i.e. almost 2% less than in the first quarter, so that all employees without a pension discount fell from 35.9% to 37, 8% over the same period.

In the interannual comparison, we observe an increase in the proportion of those who do not have a pension discount, which goes from 31.5% to 37.8%. On the other hand, the proportion of employees benefiting from a pension discount fell from 68.5% to 62.2%.

The reasons for informality

Figueroa pointed out that in Argentina there is full employment in most professional and technical segments. And he assured that in a large part of medium and large companies, informality “is not a problem, since, in general, they have very high hiring standards”.

“For it, the higher incidence of unemployment is associated with both the persistence of the informal economy as well as the need for State intervention or public-private partnerships to develop the necessary skills in the event of long-term structural unemployment and provide adequate support so that this reintegration is possible and sustainable”, he added. he adds.

In search of a basic solution, Figueroa proposed adapt education systemsbecause according to him, “it also affects the possibility of young people finding employment in formal and decent employment in secondary education, where there is a high incidence of school dropouts”.

He also said that another factor that affects the labor informality rate is the job growth platformwhich is causing great debate around the world because of the need to create a social protection system with a minimum set of social security rights, regardless of the format of employment or the work regime under which the person is find.

In this sense, he explained that the regulatory and labor registration systems “are mainly associated with the traditional hiring format in a dependent relationship and today, due to the advancement of technology and social changes -strongly reinforced by the passage of the pandemic-, see us more than ever than There are multiple and diverse forms of contracting which differ from the traditional one and which require supervision and new social protection systems.”.

Informality, driving the recovery of employment

44% of those employed in Argentina are in precarious jobs (26% are informal employees and 18% are self-employed precarious or subsistence workers), according to a recent report by the Center for Metropolitan Studies (CEM) a cooperative consortium made up of the Metropolitan University for Education and Labour, the Arturo Jauretche National University and the National University of Hurlingham

According to this work, entitled “Informality and precariousness in Argentina”, the resumption of employment it is driven by informal and precarious jobs.

“As part of the post-pandemic economic recovery, the labor market shows growth in participation and employment rates, which is mainly explained by the growth of precarious self-employment during 2021, and by an increase significant increase in informal wage labor during 2022 Although there is evidence of growth in formal labor, this is more slow and gradual,” the CEM pointed out.

At the same time, he detailed that between the first quarters of 2021 and 2022, the number of formal workers increased by 2%, while the number of informal employees increased by 18% (from 4.4 million to 5 .2 million employees).

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Although the unemployment rate is around 7%, the biggest problem currently affecting workers is linked to falling incomes and their low wages: the inflationary spiral is acting as a brake on the recovery of incomes, the report warns. And he added that this situation mainly affects precarious workers, who, not being covered by labor legislation, and not having union coverage and joint bargaining bodies, are not able to maintain their real income levels.

The segments most affected by precariousness and low income are women, young people aged 18 to 24 and those employed in the construction, domestic service, trade and accommodation and catering sectors.

“The difficulties of the current Argentine productive matrix in generating quality jobs, with its correlate of inequality and concentration of wealth, are evident in the trend that has been confirmed as we emerge from the pandemic in 2021: that of a growth in informal jobs and precarious work,” warned the CEM.

By Gerardo Choren, special for TN


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