Learning from Innovation in LAC is a thematic knowledge brief series jointly developed by the UNDP Regional Bureau for Latin America and the Caribbean and the UNDP Accelerator Labs. It seeks to advance our understanding of key structural development challenges in LAC by capturing emerging lessons learned from the Accelerator Labs’ innovative approaches to tackling these issues in countries across the region.

Informality is a defining feature of the labor market in the Latin America and the Caribbean (LAC) region. Prior to the COVID-19 pandemic, more than half of workers in Latin America were in the informal sector—meaning that they were not covered by contributory social insurance schemes. In some countries in the region, the share of workers in the informal sector reaches as high as 70 or 80 percent.

Achieving the SDGs in LAC will require addressing this widespread challenge. As informality imposes a greater burden of risk on workers, it is an issue that can perpetuate existing development challenges in the region such as poverty, inequality, and low productivity. Moreover, as informality is both a complex and cross-cutting issue, successful solutions will ultimately require attention to deeper underlying challenges of governance.