Key Takeaways
- • According to International Labour Organization data, 51.7% of employment in Latin America is informal, affecting approximately 92 million people.
- • A FIAP study, "From Informal Longevity to Effective Contributions," covering eight Latin American countries (Chile, Colombia, Costa Rica, El Salvador, Mexico, Peru, Dominican Republic and Uruguay) identifies supply- and demand-side barriers keeping workers aged 50 to 75 out of formal employment.
- • The study warns that low statutory retirement ages, non-contributory pensions available from age 60 to 65, and rules that reduce pensions for continued work encourage early labour market exits.
- • Women are disproportionately affected, with fewer years of pension contributions and higher risk of inadequate retirement income.
- • Contributory pension receipt rates range from above 80% in Brazil, Uruguay and Chile to below 20% in El Salvador and the Dominican Republic.
Summary
Older workers across Latin America are continuing to work but increasingly outside the formal economy, widening the gap between employment and pension contributions. According to data from the International Labour Organization (ILO), 51.7% of employment in the region is informal, affecting approximately 92 million people, as cited in a WageIndicator article on the topic.
A study by FIAP, entitled "From Informal Longevity to Effective Contributions," examined eight countries: Chile, Colombia, Costa Rica, El Salvador, Mexico, Peru, the Dominican Republic and Uruguay. The report identifies challenges on both sides of the labour market. On the supply side, relatively low statutory retirement ages and the availability of non-contributory pensions from age 60 to 65 may encourage early exits from the workforce. Some regulations may also discourage continued work and contributions after retirement, for example when a pension is reduced or lost if the person remains employed. On the demand side, the report warns that age discrimination, employers' perception of higher costs for workers aged 50 and over, and skills obsolescence hinder the hiring and retention of this group.
The barriers weigh more heavily on women. They tend to accumulate fewer years of pension contributions than men because they spend more time in informal employment and devote more hours to caring for children and relatives and to unpaid household work. As a result, women are more likely to reach old age with inadequate pensions or insufficient income.
Access to contributory pensions varies widely across the region. Brazil, Uruguay and Chile have rates above 80%, while El Salvador and the Dominican Republic have rates below 20%. Informal employment means lower social security coverage and less accumulation of pension savings, making economic vulnerabilities more severe in retirement.
WageIndicator noted that it launched its WUNDERWORK project for European countries this year, aimed at understanding and finding solutions for undeclared or under-declared work.
A study by FIAP, entitled "From Informal Longevity to Effective Contributions," examined eight countries: Chile, Colombia, Costa Rica, El Salvador, Mexico, Peru, the Dominican Republic and Uruguay. The report identifies challenges on both sides of the labour market. On the supply side, relatively low statutory retirement ages and the availability of non-contributory pensions from age 60 to 65 may encourage early exits from the workforce. Some regulations may also discourage continued work and contributions after retirement, for example when a pension is reduced or lost if the person remains employed. On the demand side, the report warns that age discrimination, employers' perception of higher costs for workers aged 50 and over, and skills obsolescence hinder the hiring and retention of this group.
The barriers weigh more heavily on women. They tend to accumulate fewer years of pension contributions than men because they spend more time in informal employment and devote more hours to caring for children and relatives and to unpaid household work. As a result, women are more likely to reach old age with inadequate pensions or insufficient income.
Access to contributory pensions varies widely across the region. Brazil, Uruguay and Chile have rates above 80%, while El Salvador and the Dominican Republic have rates below 20%. Informal employment means lower social security coverage and less accumulation of pension savings, making economic vulnerabilities more severe in retirement.
WageIndicator noted that it launched its WUNDERWORK project for European countries this year, aimed at understanding and finding solutions for undeclared or under-declared work.
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