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.

Introduction

Informality is pervasive in Latin American labor markets. Currently, 53% of workers in the region depend on the informal economy for their subsistence and do not have access to social protection (ILO, 2018). The available literature establishes that, in the region, informality operates in a countercyclical fashion such that, during economic crises and recessions, the informal sector tends to expand, while the formal sector shrinks. In this sense, the informal sector absorbs the unemployed, thus operating as a safety net for those workers who are laid off from their formal jobs or whose income is considerably reduced. In short, the informal sector operates as a subsistence mechanism during economic crises.

The outbreak of the new coronavirus pandemic (COVID-19) has paralyzed societies around the world, and generated an economic recession. However, unlike past economic crises, the current one is mainly health related. The primary measures to fight the pandemic require practicing social distance and, for those infected, isolation from the population. In this context, we explore in this article how the particularities of the COVID-19 crisis limit the capacity of the informal sector to operate as a safety net.

Specifically, we argue that, instead of operating as a safety net, informal work constitutes a trap during the coronavirus pandemic. In the first place, work activities in the informal sector are less likely to be able to be performed remotely. Thus, confinement measures exacerbate the social and economic vulnerability of informal workers who lack social protections and need daily work for subsistence. On the other hand, even in cases where informal workers can in principle perform their jobs remotely, their home conditions often preclude their practical ability to do so. In short, the safety net traditionally provided by the informal economy during economic downturns is not available in COVID times.

To assess an individual’s potential to telework, we must incorporate variables that are sensitive to home conditions, in addition to considering the characteristics of work activities and context. Thus, we propose a conceptualization of the potential to telework that builds on—but departs from—existing approaches that only consider the theoretical possibility of teleworking based on occupational type. Specifically, potential to telework requires both an occupation that can be performed remotely and minimum home conditions that support teleworking, such as internet access in the household. To empirically assess our argument, we conduct a quantitative cross-country analysis of seven Latin American countries (Bolivia, Chile, Ecuador, El Salvador, Mexico, Peru, and Uruguay). The main sources of information are national household surveys for each country, in combination with O*NET data that we use to classify occupations in terms of their theoretical potential to be performed remotely, that is, via telework. The empirical analysis consists of a descriptive assessment of the potential to telework corresponding to informal workers.

This article proceeds in eight parts. The first three parts lay out the main theoretical background regarding both the context of state-labor relations in Latin America, the characteristics of the informal sector in the region, and the main debates concerning the relation between the informal sector and economic cycles. The fourth part introduces the central argument, followed by a Section “Informality During the COVID-19 Pandemic: From a Safety Net to a Safety Trap” that details our proposed conceptualization of potential to telework. In the sixth part, we describe the main sources of data used for the empirical analysis, which is presented in the Section “Data and Methods”. Finally, in the eighth part, we conclude and summarize the paper’s main contributions.

State-Labor Relations in Latin America and the Informal Sector

In Latin America, the working class was first incorporated into the political and legal system between the 1920s and the 1950s. This incorporation is conceptualized as “the first sustained and at least partially successful attempt by the state to legitimate and shape an institutionalized labor movement” (Collier & Collier, 1991, p. 783). The change in state-labor relations occurred amid a larger set of political reforms and expansion of the role of the state that began in the early 20th century, aimed at challenging the oligarchic state (Haggard & Kaufman, 2008). In particular, the state assumed a role as a mediator of class conflict and established a regularized system of labor relations. Corporatism was introduced as a mechanism to vertically integrate society by institutionalizing an organized labor movement, ensuring labor rights and social protection to organized workers (Collier & Collier, 1991). The political incorporation of the working class took different forms in different Latin American countries. Still, in all cases, the incorporated workers were urban and organized, excluding the urban informal sector, peasants, and domestic and rural workers (Garay, 2017; Haggard & Kaufman, 2008; Pribble, 2013).

The region’s neoliberal era—which unfolded during the 1980s and the 1990s—was marked by a process of “disincorporating” the popular sectors, as market reforms weakened unions and labor-based parties that had emerged during the first incorporation (Portes & Hoffman, 2003; Tokman & O’Donnell, 1998). This led to the emergence of new political actors—those historically excluded by the corporatist models (i.e., indigenous and unemployed persons, informal workers, peasants, and shantytown citizens)—who, beginning in the 1990s, joined disincorporated organized workers to resist exclusion, mobilize, and demand (re)incorporation (Silva, 2009).

Consequently, Latin American countries experienced a second wave of incorporation (Roberts, 2008; Rossi, 2015; Silva, 2009; Silva & Rossi, 2018). In this case, the leading players were not the traditional unions—as in the first incorporation process—but territorially based “reincorporation movements” (Rossi, 2015; Silva & Rossi, 2018). In this context, the beginning of the 21st century was marked by mobilized popular sectors that contributed to the resurgence of the leftist parties and eventually led to a left turn among Latin American countries (Levitsky & Roberts, 2011). The emergence of reincorporation movements reshaped the political arena (Silva & Rossi, 2018), paving the way for the political competition that largely accounts for the expansion of social policy toward historically excluded sectors or outsiders (De la O, 2015; Garay, 2017; Pribble, 2013).

Despite the trend toward universalism regarding incorporation of outsiders (Pribble, 2013), Latin American countries continue to institutionalize dual models in terms of social protection. Even when the state has effectively reached sectors of the population that were historically marginalized, social policies specifically targeted to outsiders have been implemented parallel to the traditional corporatist structure. Thus, while there has been an expansion in the coverage and scope of the state as a welfare provider, there has been no substantive modification in the design of the original social protection scheme (Filgueira, 2013). In sum, informal workers continue to be socially vulnerable and to lack access to social protection.

The informal Sector in Latin America

In terms of conceptualizing informality, we adopt a broad definition of the informal sector. Informal workers encompass all workers who are self-employed (excluding professionals and technicians), work in or own microenterprises (five workers or fewer), or work as unpaid family workers or domestic workers. In this vein, the concept of “informal sector” differs slightly from the notion of informal employment, which entails all work that is not registered, regulated, or protected by existing legal or regulatory frameworks (ILO, 2004). Notwithstanding, there is a notable overlap between working in the informal sector and being in informal employment, as informal sector production units are characterized by low levels of organization and registration (ILO, 2018).

This structural conceptualization of informality, which focuses on production units rather than individuals, is particularly applicable in a context of highly heterogeneous economic structures in Latin American countries. In this region, the informal sector, comprising low-productivity enterprises that produce for the domestic market, coexists with a high-productivity export-oriented sector (ECLAC, 2011). When the high-productivity (formal) sector fails to provide employment for all workers, the informal sector provides income and safety for the poor, especially during times of crisis (Tokman, 1978; see next section). Although the informal sector is not exclusive to any industry, varying from country to country, most informal sector workers in Latin America can be found in commerce, services, agriculture, and domestic work (ECLAC, 2011). In general, Latin American labor markets are characterized by a high prevalence of informal work. Table 1 shows the percentage of workers in the informal sector, using this broad definition. Bolivia stands out with 73% of its workers in this sector, whereas Chile and Uruguay have the lowest figures (32% and 37%, respectively).

Table 1.

Percentage of Workers in the Informal Sector (Broad Definition).

Country	%
Bolivia	73.2
Chile	32.2
Ecuador	63.5
El Salvador	58.6
Mexico	53.3
Peru	63.2
Uruguay	37.0

Source. Elaborated by the authors based on national household surveys.

Economic Cycles and the Informal Sector

Scholars have long debated between structural and institutionalist theories to explain the origins of informal work. According to the structuralist approach, informality is a byproduct of the excessive supply of workers who are excluded from the formal market and must accept lower-quality jobs (Tokman, 1978) in a context of highly heterogeneous production structures. Institutionalist theorists, on the other hand, assume entrepreneurs will seek cost-reducing strategies to maximize their revenue, which gives rise to poor-quality, informal jobs. In their view, informal economic activity is functional to the modern capitalist economy because it reduces labor-class power in the political arena (Portes et al., 1989). Within the institutionalist approach, different perspectives coexist. For instance, the legalist perspective posits that entrepreneurs tend to operate informally due to excessive labor market regulations, which create a hostile environment for the private sector (De Soto, 1987). These differing theoretical strands offer conflicting hypotheses regarding the relationship between informality and economic activity. The institutionalist perspective proposes a hypothesis of integrated markets, where the pattern of both formal and informal employment is procyclical, as the demand for goods and services that are produced by workers in the informal sector largely originates in the formal sector. In other words, the number of workers in both sectors increases in times of economic growth and decreases during recessions.

Alternatively, the structural-dualist conception supports a claim of segmented labor markets. According to this view, the formal and the informal sectors are fundamentally different. The formal sector, comprising modern, highly productive firms that offer high salaries and demand qualified workers, expands with economic development and modernization, undermining the informal sector. In the face of recessions or economic crises, this sector contracts and the barriers to entry harden, which leads a large contingent of the workforce to migrate to the informal sector, where they can find jobs that offer poorer wages and labor conditions than in the formal sector. Hence, while the formal sector behaves in a procyclical fashion, the informal employment pattern is countercyclical.

In general, the literature finds greater support for the dualist hypothesis for Latin American countries: the evidence points to market segmentation, where the informal sector increases in times of economic crisis (Amarante & Gómez, 2016; Fiess et al., 2010; Fernández & Meza, 2015; Loayza & Rigolini, 2006; Loria & Aupart, 2016). Thus, during economic recessions, the informal sector operates as a safety net for those workers who are laid off from their formal sector jobs or whose income is considerably reduced (Tokman, 2001, 2010). Informality plays this safety net role by absorbing unemployed workers and providing income-earning opportunities. To put it simply, during economic crises, the informal sector operates as a subsistence mechanism for the poor (Tokman, 1978).

Informality During the COVID-19 Pandemic: From a Safety Net to a Safety Trap

The 2020 economic crisis unleashed by the new coronavirus pandemic highlights structural inequalities in Latin American societies (ECLAC, 2020a, 2020b, 2020c, 2020d; Weller, 2020). After two decades during which inequality levels in the region diminished (Lustig et al., 2013), the pandemic threatens to reverse this progress (Turkewitz & Villamil, 2020). According to ECLAC (2021) projections, the region’s gross domestic product dropped by around 7.7% in 2020. Moreover, United Nations Development Program (UNDP) predicts that, for the first time since the measurement began, the Human Development Index will show negative growth during 2020 (UNDP, 2020).

In contrast to previous economic recessions, the current crisis is not only economic but has resulted from a health emergency that requires social distance and isolation. The peculiarities of this crisis limit the possibilities for informal work activities, thus exacerbating informal workers’ social and economic vulnerability.

In this article we argue that, in the context of social distancing and confinement measures, informality constitutes a safety trap instead of operating as a safety net (as it did during past economic crises). First, the potential of informality as an economic subsistence mechanism is limited, given that working activities in the informal sector are less prone to be able to be performed remotely. Second, even when telework may be a viable option, the home conditions of informal workers often hinder the potential to perform telework. Thus, the current crisis particularly threatens workers from the informal sector who (a) do not have access to social protection and need daily work for subsistence; and (b) have fewer opportunities to telework because of their typical occupations and their home conditions.

Conceptualizing the Potential to Telework

Before delving into the empirical analysis, we discuss our operationalization of “potential to telework.” In the context of the pandemic, being able to work remotely is key in order to subsist amid the economic crisis. Thus, we must clearly define what we mean when we state that an individual has the potential to telework. Specifically, we aim to show that informal sector workers are in greater jeopardy than formal workers given their limited opportunities to telework.

Approaches to telework, and its feasibility, have tended to foreground properties of the work itself, like the necessity of face-to-face contact. However, studies have sidelined what we argue are equally important household-level variables, such as the presence or absence of a reliable internet connection. Numerous papers have already been published regarding the asymmetric effects of COVID-19 containment measures (social distancing, quarantines) on employment. Dingel and Neiman (2020), for example, compute the feasibility of working from home for all occupations and merge this classification with occupational employment counts. In order to do this, they use the O*NET database and develop a methodology that is one of the main antecedents of our work.

Mongey and Weinberg (2020) use similar data sources but construct two separate measures—one that captures the likelihood of a job being performed from home and a second that measures jobs that do not require high levels of personal proximity in the workplace—and then observe the characteristics of workers in these different occupations. Leibovici et al. (2020) classify occupations as whether they are contact-intensive or not, computing a contact-intensity index with O*NET data. More ambitious papers try to calculate both supply and demand effects of the COVID-19 crisis on different occupations and industries (Maria del Rio-Chanona et al., 2020). Moreover, an incipient literature considers measures of inequality when computing effects on employment (Brunori et al., 2020) and “teleworkable” occupations (Bonavida Foschiatti & Gasparini, 2020; Irlacher & Koch, 2020; Palomino et al., 2020).

Many of these studies rely on cross-country comparisons, focusing on the potential of different occupations to accommodate teleworking. However, most measures do not consider any contextual variables at the household level that might be just as important as the theoretical capacity to telework, such as internet access. In regions of the developing world, such as Latin America, with its deep-seated inequality, large informal sectors in the labor market, and high levels of multidimensional poverty, we argue that assessing the potential of telework must take into account household-level variables.

Access to the internet at the household level seems crucial when assessing the feasibility of teleworking in a context of confinement measures. In this respect, Latin America is characterized by significant cross-national variation in the adoption of information and communications technology (ICT). In Latin America, the adoption of and adaptation to new technologies occurs in a highly stratified social context, where the early adopters typically originate in strata with higher socioeconomic status (Rogers, 1995). Thus, the adoption of new technologies often reinforces the economic advantages of the privileged and exacerbates inequality patterns (Norris, 2001). Forestier et al. (2002) argue that the spread of the internet in developing countries follows a pattern similar to that experienced by the development of telecommunications. While the privileged sectors enjoy increasing access to ICTs, the poor and informal sectors have been largely excluded from the information revolution. In this way, the diffusion process of the new ICT tends to replicate the characteristic duality of Latin America economies (Cecchini, 2005). The COVID-19 pandemic forces dependence on the internet and digital technologies, thus amplifying the digital gap across the region (Robinson, Schulz, Dodel, et al., 2020; Robinson, Schulz, Khilnani, et al., 2020).

Taking these aspects into consideration, we build on the methodology proposed by Dingel and Neiman (2020) to evaluate “teleworkable” occupations, but we also include a second, equally weighted dimension to assess the feasibility of telework in practice, that is, whether an individual’s household conditions allow telework. Following Goertz (2006), we thus conceptualize the potential to telework as a concept comprising two necessary and jointly sufficient dimensions: the potential for a type of occupation to be done remotely (i.e., teleworkable occupations) and the degree to which home conditions allow one to realize that potential. This means that, in order to consider that a person has the potential to telework, the person must have both an occupation that can theoretically be performed remotely and home conditions that allow that occupation to be performed.

Additionally, the dimension of “teleworkable occupations” comprises two necessary and jointly sufficient subdimensions: one that captures the characteristics of the work context and another that concentrates on work activities. Both dimensions must support the theoretical possibility of remote work in order to consider that an occupation can be done remotely (see details of operationalization in the following section and Supplemental Appendices B and C). Figure 1 summarizes how the concept of potential to telework is constructed—including both basic and secondary dimensions—for the purposes of this article.

Figure 1.

Potential to telework: concept structure.

Data and Methods

The empirical section of this paper aims to estimate the number of jobs that can be performed digitally from home in seven Latin American countries—Bolivia, Chile, Ecuador, El Salvador, Mexico, Peru, and Uruguay—based on whether the jobs are in the formal or informal sector. For this purpose, we rely mainly on national household surveys (see Supplemental Appendix A) in combination with O*NET data.

The operationalization of potential to telework follows the concept’s logical structure. Supplemental Figure C1 summarizes the indicators for each dimension and the logic of aggregation. To measure whether an occupation can be considered “teleworkable” we rely on Dingel and Neiman’s (2020) operationalization that considers indicators for both work context and work activities. We add two more variables to their construct: one variable that measures physical proximity in the workplace and another variable that identifies occupations that involve assisting and caring for others. The aggregation of the indicators follows a necessary and sufficient logic. If any of the criteria is absent, then the value of the case as an instantiation of telework will be zero (i.e., the occupation cannot be performed remotely). In other words, if any of these elements are missing, there is no potential to telework.

In more specific terms, the dimension of teleworkable occupations is measured by assigning to each occupation the re-coded values of a set of selected variables from the O*NET database (Supplemental Table B1). These are then merged with the national household surveys using a crosswalk table between SOC 2010 and the occupational classification system applied in each country. The assumption behind this exercise is that the characteristics of the occupations gathered by O*NET are similar for each of the selected Latin American countries. The next step of the process consists of computing a summary dummy variable that assumes the value of one when all the selected variables indicate that the occupation is teleworkable.

The second dimension to measure potential to telework is related to the worker’s home conditions, and the indicator selected is home internet access, which is evaluated through household surveys. Compatibility of the occupation with telework and home access to the internet are considered necessary and jointly sufficient conditions to establish whether a person has the potential to work from home. This means that if a person does not have access to the internet in the home, we will conclude that this person cannot telework—even if her occupation is one that in theoretical terms can be performed remotely.

Results

When conceiving the potential to telework as a unidimensional concept based only on whether occupations are teleworkable, Latin American countries show similar results. The proportion of the working population that perform teleworkable occupations varies from 33.9% in Ecuador to 41% in Peru and Uruguay (see Figure 2). Parallel trends also emerge when assessing teleworkable occupations by gender. Between 26% and 34% of men in the analyzed countries work in teleworkable occupations, whereas for women that range increases to 45% to 57%. These results highlight some structural similarities among the workforce of various countries in the region.

Figure 2.

Percentage of workers with teleworkable occupations, by country and gender.

Source. Elaborated by the authors based on national household surveys.

As mentioned before, the informal sector is pervasive in the Latin American labor markets. While the size of the informal sector varies among countries (Table 1), the pattern of association between sector (formal vs. informal) and teleworkable occupations remains similar. In other words, with the exception of Chile, informal workers lag behind formally employed workers in the proportion that work in occupations that can be performed remotely. Between 27% and 40% of informal workers in the region work in teleworkable occupations, against 41% to 61% of formal workers (Figure 3).

Figure 3.

Percentage of workers with teleworkable occupations, by country and sector.

Source. Elaborated by the authors based on national household surveys.

The evidence presented so far underscores 2 points that are central for our argument. First, that informal workers are more vulnerable to loss of income amid the current context where confinement measures force work to be done remotely. In this sense, the informal sector’s capacity to absorb unemployment during the economic crisis is limited. Second, the one-dimensional conceptualization of potential to telework is inadequate to assess the effective capacity of workers to carry out their work activities remotely. As mentioned above, this traditional operationalization only considers the theoretical capacity for teleworking (i.e., teleworkable occupations) and is not sensitive to household variables that are critical when evaluating the possibility of working from home.

When incorporating the dimension that assesses home conditions for telework, variation among countries increases (Figure 4). While around 40% of workers work in teleworkable occupations in Peru, Chile, and Uruguay, only 19.3%, 30%, and 35.4%, respectively, have the minimum household conditions to support telework (i.e., they have internet access from home). This gap is greater in countries such as Bolivia and El Salvador, where the share of workers with telework potential shrinks from 37.5% to 11.2% and from 39% to 14.4%, correspondingly. In Ecuador and Mexico, the share declines from 33.9% to 19.7% and from 36.3% to 21.1%, respectively. In short, accounting for home conditions reduces the aggregate potential to telework in the considered countries.

Figure 4.

Percentage of workers with potential to telework, by country.

Source. Elaborated by the authors based on national household surveys.

In addition to underscoring the importance of including a dimension sensitive to home conditions necessary for telework, these results highlight that politics matter. In particular, for any given worker, the level of digital inclusion prior to the arrival of the pandemic has an impact on the feasibility of teleworking. Consider, for example, Peru and Uruguay, which have the same proportion of workers performing teleworkable occupations but diverge significantly in the potential to telework when introducing household conditions. Whereas in Uruguay only 5% of those who theoretically can telework do not have home internet access, in Peru that figure is 22%. These variations reinforce the necessity of considering household variables when assessing the potential to telework.

This variability is not distributed randomly. Figure 5 shows that the proportion of workers who perform teleworkable occupations has no noticeable relationship with the size of the informal sector of the selected countries. However, the measure that combines teleworkability of occupations with home conditions does appear to show a pattern. In countries with larger informal sectors, the proportion of workers who can actually perform their jobs remotely decreases. That relationship speaks to the precarious home conditions that informal workers face in the region.

Figure 5.

Potential to telework by country and sector: comparing assessments.

Source. Elaborated by the authors based on national household surveys.

Interestingly, the gender gap that favors women in the potential to telework tends to close when home conditions for telework are considered. Table 2 shows the percentage of men and women with potential to telework, by country. Figure 6, on the other hand, summarizes the gender gap analysis for both theoretical and actual capacity to telework.

Table 2.

Percentage of Workers With the Potential to Telework (Teleworkable Occupations + Adequate Home Conditions), by Country and Gender.

Country	Men	Women	Total
Bolivia	10.0	12.9	11.2
Chile	25.9	35.2	30.0
Ecuador	15.3	25.9	19.7
El Salvador	11.1	19.0	14.4
Mexico	17.8	25.8	21.1
Peru	17.3	21.5	19.3
Uruguay	28.7	43.4	35.4

Source. Elaborated by the authors based on national household surveys.

Figure 6.

Size of the gender gap in the potential to telework, by country.

Source. Elaborated by the authors based on national household surveys.

Gender-based occupational segregation causes men (especially those less-qualified and those in the informal sector) to have a lower theoretical telework potential. The concentration of men in manual occupations means that their jobs are often non-teleworkable. On average, women enjoy a 19% advantage over men when it comes to the theoretical telework potential of their jobs. However, when internet access is considered as a key aspect of the construct, that gender gap narrows by half. The most dramatic case is that of El Salvador, where the gap closes by 22 percentage points. These changes in the gender gap reflect the underrepresentation of women in households with internet access in Latin America, which relates to phenomena such as the feminization of poverty (Berrío-Zapata et al., 2018).

Structural Barriers for Teleworkers: Care Responsibilities and Housing Conditions

The COVID-19 pandemic entails not only a health and socioeconomic crisis but has also exacerbated the already-present care crisis in the region (ECLAC, 2020d). School closures, in addition to social distancing measures that prevent household members from maintaining contact with outsiders, translate to an increase in care-related burdens for families, and specifically for women. In this sense, it is important to point out that, in most countries, nearly half of the workers who, according to our measurement, could telework live with at least one child (12 years old or younger) in the household (Table 3). This figure is always slightly higher for women workers, because they are overrepresented in single-parent households.

Table 3.

Percentage of Workers With the Potential to Telework Living With Atleast One Child (12 Years Old or Less), by Country and Gender.

Country	Men	Women	Total
Bolivia	43.4	46.8	45.0
Chile	40.5	48.3	44.5
Ecuador	51.4	54.4	53.1
El Salvador	40.2	41.8	41.0
Mexico	41.1	44.7	42.9
Peru	45.8	49.4	47.7
Uruguay	31.3	35.8	33.8

Source. Elaborated by the authors based on national household surveys.

Furthermore, a higher proportion of workers in the informal sector tend to live with small children than do workers in the formal sector (Figure 7). In countries such as Peru and Bolivia, that difference between formal and informal workers is very large.

Figure 7.

Percentage of workers with the potential to telework living with at least one child (12 years old or less), by country and sector.

Source. Elaborated by the authors based on national household surveys.

In addition to the barriers to telework presented by the presence of school-age children in the household, there are also barriers relating to the physical features of workers’ housing. Workers who live in overcrowded or substandard housing encounter particular challenges to telework. For instance, an average of 5% of the workers who have both a teleworkable occupation and internet access live in overcrowded households. In the Bolivian case, that figure rises to 9% of workers (see Figure 8).

Figure 8.

Percentage of workers with potential to telework living in overcrowded households, by country.

Source. Elaborated by the authors based on national household surveys.

In terms of overcrowding, the gap between formal and informal workers is very large. On average, for every formal worker who can telework but lives in an overcrowded household, there are 1.8 informal workers in the same condition. In the case of Mexico and Bolivia, that ratio is more than 2:1 (Figure 9). For the latter, 13.9% of the already small proportion of workers who could telework live in overcrowded households.

Figure 9.

Percentage of workers with potential to telework living in overcrowded households by country and sector.

Source. Elaborated by the authors based on national household surveys.

Conclusions

This article has examined the impact of the coronavirus pandemic on Latin American labor markets. In particular, we stressed that the peculiarities of the health emergency limit the informal sector’s capacity to function, as it has in the past, as a safety net, that is, to absorb unemployment during the current economic recession. On one hand, the typical work activities performed in the informal sector are less likely to be able to be performed remotely, thus jeopardizing informal workers who lack social protection and who need daily work for subsistence. In addition, workers from the informal sector, who could in theory perform their jobs remotely, often have home conditions that hinder their chances of doing so.

In our empirical analysis we showed that Latin American workers in the informal sector encounter more difficulties performing telework than their peers employed in the formal sector. This gap is due not only to the nature of their occupations, but also because they are less likely to have internet access and are more likely to have care responsibilities and housing conditions that prevent them from performing their usual work activities. In this context, the traditional “safety net” associated with informality fails to materialize, leaving informal workers adrift, depending on support from the state, from the community, or having to work outside of the home despite the associated health risks or, in some cases, even legal risks. It is in this sense that we argue that, given the particularities of the current crisis, informality operates as a safety trap rather than as a safety net.

Furthermore, this paper also highlights that, given Latin America’s particularities, related to poverty and economic inequality, demographics, informality, gender inequalities, and the digital divide, any effort undertaken to measure teleworking possibilities should adopt a multidimensional approach. In this vein, we proposed a new conceptual approach to assess the telework potential by incorporating a novel dimension tracking the workers’ digital access. Thus, our conceptualization considers the ability to telework as a function both of occupation type (i.e., having a job that can be performed remotely) and home conditions (i.e., having home conditions that allow teleworking).

When only the teleworkable occupations are considered, the selected Latin American countries show similar results: on average, 4 out of 10 workers have jobs that are, in theory, compatible with telework. This figure is always higher for women and for formal workers. As a matter of fact, only one-third of informal workers have teleworkable occupations, compared with nearly half of formal workers who do. However, when we incorporate in our measure a dimension that considers home conditions necessary for telework (internet access), variation among countries arises. According to this new measure, those countries with larger informal sectors have a smaller proportion of workers with the potential to telework. This is a function of the more precarious home conditions that informal workers experience and of the digital divide within countries.

Furthermore, the gender-related digital divide in the region is also apparent in our analysis, because the gender gap that favors women in the potential to telework lessens when considering access to the internet as a key variable in the construct. Thus, the level of digital inclusion prior to the arrival of the pandemic, which is tied to public policies pursued by these countries, is a fundamental aspect in determining workers’ actual potential to telework.

In addition to the above factors, Latin American workers, and specifically informal workers, face other structural barriers that may further hinder them from teleworking. For example, their care responsibilities, which increase during the pandemic due to the closure of schools and care centers, must be accounted for in this assessment. Workers in the informal sector are more likely to live with small children than workers in the formal sector. In fact, almost half of all informal workers who could potentially telework have a child younger than 12 years old in their care. Physical housing conditions also can pose a barrier to remote work. Overcrowded households are a structural problem in Latin America, and informal workers are more likely than formal sector workers to inhabit them. Of those informal workers who could telework according to our measurements, around 8% live in an overcrowded household, which would make teleworking efforts very difficult in practice. In sum, this article contributes to the literature on the social and economic effects of the coronavirus pandemic in Latin America in at least two ways. First, we contribute to the debate regarding the relationship between informality and economic cycles by analyzing the limitations of the informal sector to absorb unemployment and to operate as a subsistence mechanism for the poor. Second, we extend and refine existing assessments of potential to telework by including a dimension sensitive to domestic characteristics.

Author Biographies

Daniela de los Santos is a Sociologist. She works as a researcher at the Interdisciplinary Center for Development Studies-Uruguay (CIEDUR) and at the Gender Cluster of the United Nations Development Program (UNDP) Regional Hub for Latin America and The Caribbean.

Inés Fynn is a PhD Candidate in Political Science by the Pontificia Universidad Católica de Chile, an ANID PhD scholar, and a PhD student at Instituto Milenio Fundamentos de los Datos.