The informal economy, insecurity and social cohesion in Latin America


  • Víctor E. TOKMAN

    1. Consultant, United Nations Economic Commission for Latin America and the Caribbean (ECLAC), and former Regional Director of the ILO Office for Latin America and the Caribbean. This article is based on research (Tokman, 2007) undertaken in connection with a joint ECLAC-EUROSOCIAL project which is a technical cooperation initiative of the European Commission. Comments from A. Uthoff and help from R. Heresi and O. Ramos are gratefully acknowledged.
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Most Latin American countries adopted the welfare state as a model, though developing it in very different ways and, often, imperfectly because of structural differences between them and the industrialized countries. Social protection coverage is still patchy, with many informal-sector workers not covered and widespread public feelings of insecurity. The author examines the complicated structural and labour situation and the latest ideas in Latin America and the European Union to strengthen social cohesion. He analyses approaches to incorporating the informal sector into the modern sector, addressing social exclusion, combining flexibility for employers with security for workers, and achieving near-universal social protection.