Why We Need to Embrace the Informal Sector in South America

Mark Beckmann/Ostkreuz

In South American cities, you will notice a lot of people working on the streets. People who polish your shoes. People who sit on blankets and sell fruit. People who help you find a parking lot. They all make their living in a very informal way. Gonzalo Muñoz makes the case for embracing the informal economy.

Technology and globalization have been enormous drivers of development. We know that, on average, people are living better than ever. At the same time, these same tools have been very effective in concentrating power and resources in the hands of a few, making it harder for average citizens to have access to the wheel of the vehicle of society. 

Anhangabaù park in the old center of São Paulo, Brazil. Ostkreuz

Truth be told, there is a tremendous gap between those people that are visible for the system and those that are not. In Chile, for example, almost half of the adult population has never finished high school, while we know that 9 out of 10 jobs require high school as a minimum. There is a huge part of the population that simply has no other option than making their living in a very informal way. It’s simply a matter of survival.

Kids preparing food.
Almost half of all children in Chile never finish high school. Ostkreuz

It is perfectly fine and ethical to establish ways for people to move towards formality. Finishing one’s studies, paying taxes, following rules, competing fairly, having a permanent address, and being employed on a contract are some clear examples of mechanisms that help us coexist with mutual respect. Having said that, we need to understand that millions of people are extremely far from understanding those ideas and even from knowing they exist.

Inclusion is not about pushing the informal sector to adapt to the current norms.

What are we going to do about this? And how are we going to accept that there is an informal sector that generates benefits in many ways, including cultural ones. In South America, as in other regions, business and politics have failed to include these people. Maybe that is why we are now hearing about inclusion as a new trend. Inclusion does not mean modern society should push marginalized people to adapt to the current norms. It means everybody needs to accept everybody else as a legitimate other.

Mexico City, United Mexican States, October 2008
A shoe polisher on the streets of Mexico City. Ostkreuz

It implies that we have to design new paths in order to integrate those who have been excluded in the current development model, but it may also mean that those excluded may want to include us in their model. It is not a one-way street. It is only when inclusion happens in both directions that it happens with real respect and enables innovation.

We need inclusive innovation

So in order to imagine an informal sector to be part of the global economic model, we definitely have to do some inclusive innovation. We have to not just think out of the box, but empathize with and respect others beyond our limitations.

If we understand that actual concentration is immoral and is becoming a threat to our peaceful coexistence on this unique planet, then I do not see any other way than sitting together as equals: accepting each other’s origin, culture, habits and limitations, and designing new ways to evolve. This is the only way to reduce inequalities, create decent work, and economic growth for all – and ultimately achieve the Sustainable Development Goals. 

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