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Inequality and Informality in Colombia: A Perpetual Continuation
Veronica Uribe-Kessler
High levels of inequality, informality, and gender gaps are rampant in Colombia. In the country of almost 52 million people, women who are half of the total population(50.9%) are the most vulnerable and face higher levels of unemployment and labor exploitation.
Colombia’s inequality has been increasing since 2018. The increasing inequalities, the perceived lack of opportunities, and the discontent with the presidency of Ivan Duque since his first year in office drove protests in Colombia, first in November 2019 and then more intensely in April 2021 with the introduction of unpopular tax reform. The anti-government demonstrations and the unpopularity of Duque’s policies motivated many Colombians to demand change. Many Colombians, particularly the youth and women have been hoping for new horizons and winds since a long time ago.
When you ask Colombians how they are doing their answer is "Aqui en lucha” - “here in the struggle". In Colombia, 12.1 percent of the population are jobless, according to the national statistical agency (DANE) March 2022 data. Meanwhile, among the labor force, 40 percent have formal employment. The other 60 percent earn their livelihoods in the informal economy, a sector that is characterized by the lack of access to employment benefits and almost non-existent labor rights.
Near Medellin, a city in Colombia, Maryori's struggles exemplify best the current situation in the second most unequal country in Latin America. In her late thirties, she is "madre cabeza de familia'' - head of household - with a 4-year-old son. Given her child-rearing responsibility, she, as most Colombians do, found in entrepreneurship a way of sustenance. For most of her adult life, she sold second-hand American clothes. But right before the pandemic, she started having problems supplying her store and eventually had to give it up. She had to downsize significantly and almost overnight her sources of livelihood and stability went down the road. She had to move to a small apartment with her little son and was on the verge of overcrowding.
When she found herself unemployed in 2020, struggling to maintain food on her table, with financial debts accumulating and low prospects of finding a job, she met Don Manuel- not his real name-, a wealthy man with an ostentatious and fancy "casa campestre” – country house - near Medellin. According to the World Bank, in 2020 the richest 10 percent earned 11 times more than the bottom 10 percent and between 18.9 million and 23.9 million Colombians lived on less than $91 a month- Don Manuel offered Maryori to be an in-house domestic worker. A job she never thought of doing. He offered her to pay slightly more than the minimum monthly wage of $262.70, but with no rights to legal benefits like health, social security, or pension. She could have her son living with her while she worked, but she had to be available 24/7. She would neither have a day off nor additional compensation for working hours extra. She knew this arrangement was labor exploitation, and she was aware that Don Manuel was taking advantage of her precarious situation. Sadly, as a single mother with limited resources to hold onto, she was trapped and had to take the job.
Cases like Maryori’s are very common in Colombia and women are especially vulnerable and more prone to be exploited in the labor market and in the informal economy because the rich can get away with it. Everyone should be able to report cases like this to the Ministerio de Trabajo - Ministry of Labor- of Colombia, but victims refrain from doing it for several reasons. Firstly, the fear of retaliation and losing the only tangible source of income they have. Secondly, the process is long and bureaucratic; victims must gather proof or witnesses which is extenuating and would not immediately solve the person's needs since they urgently need a source of income and cannot wait around. Unfortunately, issues like this do not have the same speed and accountability found in developed countries. In Colombia, there are more than 23 million women of whom 53% are madres cabeza de familia who suffer from unemployment, gender-based violence, and labor exploitation.
The Government of Colombia does provide subsidies for female household heads who by meeting certain requirements are eligible for a small subsidy. The requirements include i) being registered in one of the databases of low-income families, displaced populations, or victims, ii) proving that they are the breadwinners of the house, iii) having children younger than 18 years old, and iv) collecting paperwork according to their status. However, fulfilling these requirements is time-consuming and not all mothers can gather all the documents on time. Sometimes, they also must wait for the availability of new slots and wait for national convocation. The waiting period makes women back out from the process and instead accept disadvantageous deals of precarious jobs.
The 2021 Regional Human Development Report by the UNDP states that indeed many Latin American countries have high informality and inequality. In the same report, scholars argued that rising income inequality drives higher levels of informality. Accordingly, they argue that this positive correlation between income inequality and informality also means the non-contribution to social security, which not only is a loss of income and productivity in the present but also creates medium- and long-term consequences because it means that a large proportion of the population would not have access to pensions and retirement benefits when they leave the labor market. As a result, many Colombians fear that, if the country continues in the current direction, many more including their parents will be plunged into poverty.
Precarious jobs in the informal economy and the unequal income distribution among the top and the bottom are what create the biggest challenges to reducing inequality in Colombia, and only well-structured and targeted policies that expand non-contributory social protection systems will be able to mitigate this problem.
Veronica Uribe-Kessler holds a B.A in Government and International relations with a solid background in economics from Smith College, MA, USA. She is currently interning in the Labour Mobility and Social Inclusion (LMSI) division at the International Organization for Migration (UN-IOM) in Geneva, Switzerland. Her research interest includes migration and climate change; migration and inequality; and migration and gender.
This article is featured in JUSTIN Development Review (JDR) Vol. 02 Issue 02 — June 2022