Nearly half of Latin America hit by informality, ILO warns
Friday, December 12th 2025 – 09:24 UTC
The sustained reduction of informality requires active and coordinated policies, the ILO underscored
The International Labour Organization (ILO) warned Thursday that informality continues to affect almost one out of every two workers in Latin America and the Caribbean, reporting a regional average of 47% in 2025.
According to the organization’s Labor Overview 2025 Latin America and the Caribbean report, the situation is critical in several Andean nations, with rates surpassing 70% in countries like Peru, Bolivia, and Ecuador.
While the ILO noted a slight reduction in informality during the first half of 2025 (a decrease of 0.7 percentage points compared to 2024), progress was deemed minimal and insufficient to tackle the issue’s structural nature.
Although the trend has been consistently decreasing since 2021, the observed reduction is still insufficient to modify the structural characteristics of the labor market and is one of the central challenges for labor development in the region. On average, it affects almost half of employed people, the ILO stated.
The ILO highlighted the serious consequences of labor informality, which affect the fiscal stability of national economies and reduce overall national productivity, in addition to increasing worker precariousness due to a lack of essential protections like health insurance and labor regulations. In this scenario, young people and women are the groups most severely affected.
The report also pointed to vast differences within the region. While the informality rate hovers around 25% in countries like Chile and Uruguay, it approaches 70% in Peru and Ecuador, and exceeds 80% in Bolivia.
This heterogeneity implies that policies to reduce informality must adapt to specific national contexts, the UN agency advised, noting the need to consider factors like productive structure and institutional capacity.
ILO Regional Director for Latin America and the Caribbean Ana Virginia Moreira acknowledged that countries have made efforts to adapt labor legislation following the significant spike in informality during the Covid-19 pandemic. However, she warned that tackling the root problem requires a higher level of political commitment.
The region cannot be satisfied with figures that look positive on average. We need active policies that promote decent work, with equality and protection, Moreira urged. The ILO remains committed to accompanying countries on this path, in a rapidly changing world of work.
The ILO maintains that the sustained reduction of informality requires active and coordinated policies that drive deeper transformations in the labor and productive structure, alongside robust economic growth.
