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In 2024, informal employment in Ecuador constituted 68.6 percent of total employment in the country. In this year, the share of the informally employed population increased by over five percentage points in comparison to the percent in 2019. Informal employment is defined as work that is not formally registered or regulated by existing legal frameworks. 

The informal sector in Ecuador

The COVID-19 pandemic has had a great impact on the Ecuadorian job market. It contributed to the raise of unemployment rates and worsening labor conditions, which pushed many workers towards the shadow economy sector. Although informal employment can be observed across the whole national territory, it is a particularly persistent problem in the countryside. In 2022, over 75 percent of the population in rural areas worked in the informal sector, nearly 40 percent more than in urban areas.

A common problem across Latin America

Economic growth and the increasing level of education in Latin America do not seem to have a positive impact on the problem of informal employment. In almost every Latin American country, the share of the workforce employed in the informal sector  exceeded half of the total working population in 2024. In Bolivia, the informal employment  exceeded 84 percent. In economies such as Guatemala, Peru, El Salvador, and Paraguay, more than two thirds of the employment force was working in the grey sector. Hindering tax revenues, data collection, or access to social benefits (such as unemployment payments or pensions) are only some of the challenges that both Latin American governments and residents have to face.