In Latin America, millions of people work in the informal economy. How can they survive and continue after the emergency? One word: digitization.
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The informal economy It makes up a large part in different parts of the world, especially in developing countries. In relation to Latin AmericaThese activities make up a large part of the region’s economy. According to the International Labor Organization (ILO), there are at least some in Latin America and the Caribbean 140 million people work under informal conditionsThis corresponds to around 50% of the employees. For example, around 31 million Mexicans work in Mexico.
The informal economy is defined as the segment of the workforce that is unstable. Because of the Covid-19 coronavirus pandemic, many parts of the world are distancing themselves socially. Latin America has various levels of restricted movement in public, and many countries such as Colombia, Peru, Argentina, Mexico and Chile have restricted mobility, among other things. Although many people still work from home, many people in the informal economy do not have this luxury.
The most important thing at the moment is to take care of yourself, but also the finances, because at the end of the day we have to eat. In various parts of the world, such as the UK, the US and Spain, its rescue packages include help for people working in the gig economy, freelancers and freelancers. In Latin America, there are also plans to help informal workers given the huge impact of the informal economy. In Guatemala, for example, the person has to contact the city administration. The government verifies your information and sends a code to your cell phone, where the person can go to an ATM and withdraw from Q50 (USD 383.50) to Q1 thousand (USD $ 7,670). This financial support from the Guatemalan government will take three months.
In Mexico, President Andrés Manuel López Obrador announced a 25,000 Mexican peso ($ 1,010) loan relief plan that would allow small and medium-sized businesses (SMEs) and informal trade to run for three years and three years, months of grace. The government recently took out a million loans for 25,000 Mexican pesos. The prerequisite is that companies that keep their employees and have not lowered wages.
Although there are several initiatives with post-pandemic Latino governments, how can the informal economy survive? Worldwide, we have done almost everything online and digitally, if we can. From the point of sale to the upbringing of our children, various aspects of our lives have become digital, and many aspects of them may represent permanent changes in society.
For example, the contactless point of sale (POS) had grown before Covid-19, but today its importance is evident in the global world. The less we can touch, the better we can protect our health. For example, MasterCard announced in March that it would promote contactless POS in Latin America and the Caribbean. Currently, 75% of the POS are ready to accept contactless payments. In fact, they would not only eliminate the use of cash, but also the way the card is delivered to the seller.
77% of Brazilians, 68% of Costa Ricans, 61% of Colombians and 58% of Dominicans today said they use less cash. In addition, 84% of Latin Americans consider contactless payment to be more hygienic. We’ll see how it can be integrated into the entire informal economy in Latin America, but with private-sector initiatives like MasterCard and government support, the tools for contactless payment companies can help many entrepreneurs and freelancers. .
The most important thing to help the informal economy is to eliminate many aspects of physical transactions: from digitization to regularization. In other words, moving from informal to formal as soon as possible would promote growth in many countries in the region. This could be done through a combination of government initiatives, private sector involvement (e.g. increased foreign direct investment), educating the population and strengthening their power to implement and innovate.
The Covid-19 coronavirus has affected the world, and 2020 has effectively stopped. The consequences of the pandemic have been identified in Latin America, particularly in the informal economy. Hopefully after the health crisis, the region will continue its economic growth and digital transition to drive its economic development.