Outside rich countries, widespread informal work means unemployment rates are low

Last year, three-quarters of the world’s countries had unemployment rates below 10%, according to data from the International Labour Organization. Colombia, where I come from, is in that group.

I initially found Colombia’s relatively low unemployment rate surprising, because it didn’t match what I could see around me: many people doing extremely precarious work.

This chart offers an explanation. It shows, for a selection of countries of different income levels, what share of workers hold informal jobs, meaning work that lacks social protection and basic employment rights (no guaranteed benefits, no formal safety net).

As the chart shows, in Colombia, that share is almost 57%. In many lower-income countries, the share is far higher.

The reality is that low unemployment and widespread informal work can, and often do, happen at the same time. The reason this isn't paradoxical comes down to how these statistics are defined.

To count as employed in labor statistics, a person only needs to have worked for at least one hour during the survey’s reference period, often the past week. The definition is broad and includes self-employment, selling things on the street, and unpaid work in a family farm or family business. Both formal and informal jobs are included.

This means the unemployment rate can remain relatively low in poor countries, not because most workers have found stable, protected jobs, but because many have been absorbed into informal employment.

Where this page came from

This page was imported from Our World in Data. “Outside rich countries, widespread informal work means unemployment rates are low” by Esteban Ortiz-Ospina, published by Our World in Data under CC BY 4.0. Changed here: set as a page, its interactive charts shown as pictures. Data from third parties keeps its own licence.

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