In Argentina, almost one in three workers is poor. In recent years, the labour market has responded to crises with a deterioration in job quality, increased informality and loss of income. For many people, having a job is not enough to avoid poverty. This is especially true for those who find informal, low-productivity jobs with little protection and low pay. An analysis of informal self-employment and a proposal to improve its future.
A policy for a diverse group
When we talk about the “popular economy,” we are talking about a universe of almost 4.3 million workers. It represents one-fifth of the Argentine labour market and is the type of occupation that has grown the most in the last decade. In sociodemographic and socioproductive terms, the segment presents very different realities.
This heterogeneity requires a broad perspective when designing policies. A detailed analysis allowed us to come up with a series of characterisations that serve to give substance to this heterogeneous group and to think of solutions to the problems as a whole.
On the one hand, we see that it is mostly composed of men and people over 45 years of age. This latter feature highlights that, frequently, self-employment is an alternative for generating income in the absence of salaried employment opportunities. Those who engage in this type of activity have been doing so for several years.
In terms of educational and productive attributes, low-skilled self-employed workers predominantly have a low level of formal education. Almost half have not completed secondary education. In productive terms, eight out of ten do not use any type of technology in their work. nbsp;Seventy-seven per cent are concentrated in five main occupations: direct sales (30.1 per cent), construction (18 per cent), industry (13.6 per cent), caregiving (8.2 per cent) and repairs (7.1 per cent).
Where is self-employment headed?
Based on dynamic data, transitions from low-skilled self-employment to other job positions were studied. Between one year and the next, 5 out of 10 workers remain in the same type of occupation, and between 3 and 4 out of 10 become unemployed, inactive, or move to informal salaried positions. Only 4.4% move to formal salaried positions.
Labour transitions among low-skilled self-employed workers are not only limited, but also generally occur between neighbouring categories with common productive attributes. This result serves as a warning about the complexity of retraining (reskilling) proposals for this sector.
The data also reveals two distinct groups of workers: a “persistent” group, which remains in the same type of occupation over time, and an “unstable” group, which enters and exits the labour market. The latter comprises 41.4% of low-skilled self-employed workers and is a highly vulnerable segment. They have the lowest wages and work the fewest hours, and women and young people are overrepresented in this group.
The segment of low-skilled self-employed workers is the most exposed to poverty: almost one in two (46.5%) are working poor.
28.6% live in households that receive cash transfers such as the Universal Child Allowance (AUH) or the Food Allowance. These benefits represent only 3.6% of average household income. Once again, it is confirmed that the main source of income for these workers’ households comes from the labour market. Hence the importance of improving these incomes.
Recommendations for public policy
Macroeconomic stability and sustained development are key to improving living conditions, especially for low-productivity self-employed workers. However, even with growth, their incorporation into formal employment is unlikely in the medium term. Therefore, active policies are needed to improve incomes, promote formalisation and guarantee social protection.
Ensuring educational completion and continuity of training
El abandono de los estudios y la incorporación temprana al mercado laboral por parte de los jóvenes refleja frecuentemente las necesidades económicas de sus familias. Por eso, es imprescindible fortalecer y ampliar programas de apoyo económico que, como PROGRESAR, han sufrido un fuerte deterioro en el último año.
Training and certification of skills and competencies
La mayoría de los trabajadores analizados son adultos que llevan años en actividades de baja productividad. Mejorar y certificar lo que ya saben les permite profesionalizarse y aumentar sus ingresos. Es clave a la hora de dimensionar la complejidad de los procesos de re-entrenamiento (reskilling). Para que estos procesos sean exitosos, deben garantizar recorridos que combinen experiencia previa con nuevas habilidades productivas.
Promote the formalisation of workers and productive units
It is proposed to incorporate informal self-employed workers into the general single tax regime with subsidies for the lowest category. This process can also be leveraged with technology aimed at simplifying registration and offering innovative business management and invoicing tools. Furthermore, given that those who manage to scale up their activity as micro-enterprises are able to improve their income, it is necessary to evaluate alternatives to promote the formalisation of small economic units.
Transforming subsistence units into sustainable projects with financing, infrastructure, and productive policy
The priority is to improve production processes and expand marketing channels so that these units can consolidate their scale and improve their productivity. To sustain this growth, it is essential to guarantee public and private financing alternatives adapted to their reality. At the same time, it is necessary to promote their integration into the formal value chains of the regional ecosystem to which they belong. This involves providing support through productive policy actions and the promotion of territorial productive hubs. In low-income neighbourhoods, where a large proportion of the workers analysed reside, we propose that the socio-productive integration agenda be coordinated with investment in infrastructure and connectivity.
Income floor
Firstly, it is essential to strengthen policies aimed at improving labour income through the minimum wage and general wage policies that ensure that no worker falls below a basic threshold linked to the cost of living. Secondly, it is essential to promote instruments that support productive processes, such as credit, incentives for formalisation, and support for productive units and cooperatives. Finally, this scheme must be complemented by specific social policies, such as food transfers and improvements in the retirement and pension system, which guarantee protection for those who are unable to fully enter the labour market.
