Social Protection, Informality, and Social Reproduction: A Schematic Analytical Framework for Latin America

Abstract

The lack of social protection coverage for informal workers is an enduring problem in Latin American countries, to which governments have responded by expanding different forms of social assistance. This solution has been insufficient, however, and it is also criticized for deepening the fragmentation of social protection systems. In this article, I adopt an alternative view to analyze such matters, based on the Theory of Social Reproduction and a schematic representation of National Systems of Social Protection from the French Regulation school. I adapt the schematic representation to portray a typology of systems of social reproduction with informality, which makes up an analytical framework to understand the interaction between informality and social protection. Based on it, I argue that social protection fragmentation and the pervasiveness of informality are both stabilizing social responses in the context of an increased commodification of social reproduction in Latin America. Therefore, these problems should be better addressed through institutional and structural transformations towards decommodification that push capital to internalize the costs of social reproduction.

KEYWORDS : :

• Informality social protection
• Theory of Social Reproduction National Systems of Social Protection Latin America

JEL CODES : :

• B55, J46, P16, Z13

Notes

1 The debates around informality in the neoclassical approach are certainly far more complex and nuanced than this short depiction here. For example Dell’Anno (2022), Fields (2019) and Perry et al. (2007) emphasize the other, structural, non-voluntary side of informality, which cannot be addressed through easy regulatory fixes. However, the neoclassical approach tends to agree that the policy choices are a mix of labor market flexibilization and structural macroeconomic reforms—in the Washington Consensus sense—and a change in labor, business, and social protection regulations for a better engineering of incentives away of informality. In terms of social protection policies, they call for better targeting and limited universalism, funded by consumption taxes (Levy & Cruces, 2021).

2 Informality is a heterogeneous phenomenon that may take different forms: trash-picking, street vending, domestic labor, self-employment, or wage labor without a contract or social security coverage. For these reasons, it is also hard to define and measure. Here I refer to the concept of informal employment that looks at the status and conditions of workers (ILO, 2018) and includes unpaid family workers, employers and own-account workers in informal productive units, and employees without contributions to social security by the employer nor paid leave. This definition refers mainly to legal but unregulated activities, although informality may also include criminal and illegal activities, which are widespread in some countries of the region and have far reaching consequences for social and political stability. However, such issues lie beyond the scope of this paper. See Dell’Anno (2022) for a discussion on the definitions of informal economy, and how it overlaps with other notions such as non-observed economy and illegal economy.

3 This figure comprises 13 countries of Latin America and the Caribbean with data available data for that year: Argentina, Brazil, Chile, Colombia, Costa rica, Dominican Republic, Ecuador, Mexico, Panama, Peru, Paraguay, El Salvador, and Saint Lucia. For 2019, when there is data also for Bolivia, Guatemala, Guyana, Jamaica, and Uruguay, the average rate of informality was 54,4%, ranging from 24,5% in Uruguay to 81,5% in Bolivia. The data are from the International Labor Organization, https://ilostat.ilo.org/topics/informality/.

4 Informality is also closely associated with international migration (Chen & Carré, 2020; Mezzadri, 2021). Migration is particularly high in Central American countries and Mexico (ECLAC, 2019), it affects informality dynamics in both source and recipient countries (Portes & Haller, 2005), and so it constitutes a transnational form of informal labor markets.

5 The rate of informal employment passed from 50,6% in 2019 to 50,7% in 2022. This value refers to eight countries: Brazil, Chile, Colombia, Costa Rica, Ecuador, Mexico, Panama, and Paraguay.

6 The historical evolution of social protection systems in the region has been extensively studied. See Barrientos (2019), Kaplan and Levy (2014) and Mesa-Lago (1985).

7 The comprehensive group includes Uruguay, Chile, Costa Rica, Argentina and Brazil; the intermediate group includes Venezuela, Colombia, Peru, Mexico, Dominican Republic and Panama; and the limited group includes El Salvador, Paraguay, Bolivia, Nicaragua, Guatemala and Honduras.

8 International migration is another important way by which the national capitalist class reduces and externalizes the costs of social reproduction. It absorbs a fraction of the surplus labor, shrinks the population, and creates external funds for provisioning through remittances.

9 It is worth mentioning that several authors who advanced the analysis of informality in terms of social reproduction, like Mezzadri (2021) and Harriss-White (2020), use the theoretical framework of Social Structures of Accumulation (SSA), which shares several elements with the French Regulation school (Boyer, 1990; Kotz, 1994), mainly their focus on long-term processes of accumulation as inextricably linked with a set of social institutions. However, the two approaches diverge regarding their understanding of accumulation, the concept of crises, and the role of social institutions, with the Regulation school giving more emphasis to accumulation regimes (Kotz, 1994). An analysis of the social structures of accumulation behind informality in Latin America, or of the implications of informality and social protection for accumulation regimes, are both beyond the scope of this paper. In this sense, my approach cannot be strictly situated in none of these traditions, but an extension along those lines is worth exploring in future research.

10 Esping-Andersen’s is a bottom-up approach, in which observed patterns and structures of countries are used to build a general typology on the basis of labor organization; varieties of capitalism, in turn, focuses on the organization of production and how it is regulated (Schröder, 2013).

11 This may correspond to what Mesa-Lago (1985) calls “countries with relatively unified [social protection] systems”, like Mexico, Costa Rica and Venezuela. These countries were relatively developed in the region at the time, and introduced centralized institutes to manage social protection. Coverage was limited, however, which helped to avoid the administrative and financial problems faced by more advanced countries.