Connect to share and comment

From May Day to Labor Day, GlobalPost explores the human cost of what's been called a "race to the bottom." The hyper-accelerated movement of capital, jobs and resources from the world's corporations — manufacturing, agriculture and service — to the lowest bidder. In an era of diminished expectations, broken promises and sleight of hand, these are labor stories of governments, employers, unions and workers. 

Informal economy swallows Latin American workers

Seventy-five percent of Guatemalans are underemployed, working off-the-books jobs without labor protections.

However, labor rights advocates argue that the difficulties in bringing more people into formal employment in developing countries hardly justify throwing in the towel. They claim that improved tax collection can lead to better government services and convince people of the benefits of formality.

In the United States, tax revenues represent about 25 percent of gross domestic product. That helps underwrite decent public services and social security. But in Guatemala, where the informal economy reigns, tax receipts make up just 11 percent of GDP, which helps explain the dismal state of public hospitals and schools and tiny pension payments, according to Carlos Gonzalez, a former director of the country’s central bank.

Rather than reforming their tax codes and social security systems, however, many countries — including Brazil, Mexico and Guatemala — sometimes encourage informality.

More from GlobalPost: American unions stand up for Latin American workers

This can happen through the use of so-called conditional cash transfers to poor people who agree to keep their kids in school and provide them with regular medical checkups.

These programs have helped reduce poverty and inequality, but they have not led to more formal employment, according to Carola Pessino, a visiting fellow at the Center for Global Development in Washington.

“Cash transfers subsidize informality,” Pessino said, “which means there’s less incentive for these workers to become formal.”

Fighting back

Although some workers prefer the freedom of self-employment, critics contend that it’s misleading to describe the masses of informal laborers as glorious manifestations of the free market.

“Construction workers, housekeepers, and market venders are not talking about how great it is to be liberated from the pressures of taxation,” said Alexis de Simone of the AFL-CIO’s Solidarity Center which works to improve labor conditions overseas. “They want the protections that formal workers count on, like health insurance”

Take Jorge Peralta, 39, who sells homemade jewelry on the streets of Guatemala City and earns about $10 a day. He’s been struggling to pay off stacks of medical bills following his father’s lengthy illness and death in February. Neither Peralta nor his father, a street vender who retired with no savings, was affiliated with the social security system.

“My father died without health care or a pension, and I’m going down that very same path,” Peralta lamented as he sat in a park where fellow venders sold candy and pastries and a wild-eyed man performed magic tricks before passing the hat.

Street venders, at least, can set their own hours. That’s not the case for domestic workers who as full-time employees within households should be entitled to social security and other benefits. But in Guatemala, their working conditions are horrendous. Many earn $30 for a 70-hour work week.

The domestic worker Ojer recalled working in houses where she had to take cold showers and fend off sexual attacks by her male bosses. Her friend and fellow domestic worker, Ana Jiménez, said the families she worked for fed her scraps like chicken necks.   

Part of the problem is that there’s no respect for the job within society.

Household work was historically performed by slaves while today it is often handled by impoverished women and migrants. Labor inspections within private homes rarely happen, so employers have wide leeway in setting hours and wages, de Simone said.

But domestic workers are fighting back. Ojer and Jiménez have joined Atrahdom, one of several organizations that have sprung up across Latin America to lobby for better working conditions for domestic employees.

These groups were a driving force behind the approval last year of a landmark convention on behalf of domestic workers by the International Labor Organization, a UN agency based in Geneva. It calls on governments around the world to provide domestic workers with the right to at least one full day of rest per week, limit working hours for underage workers, and offer collective bargaining rights.

But the ILO has no enforcement power. Indeed, Guatemalan lawmakers — nearly all of whom employ their own domestic workers — have refused to consider legislation that would turn the ILO principles into law.

“Guatemala has ratified a lot of international conventions,” Carlos Ulban, the country’s deputy labor minister, told GlobalPost. But over the years, he admitted, successive governments “have ignored labor issues.”

A voluntary program to register 10,000 domestic workers for social security was set up two years ago in Guatemala City. But only 326 people have signed up because many potential beneficiaries either don’t know about the program or fear they will be fired if they join, according Maritza Velásquez, the director of Atrahdom.

Even so, Atrahdom members like Ojer and Jiménez take to the streets several times a week to track down domestic workers and tell them about the program.

“This won’t make much difference for me,” said Jiménez, who is in her 50s. “But I’m doing this for future generations.” 

http://www.globalpost.com/dispatch/news/regions/americas/120702/informal-economy-swallows-latin-american-workers