In a significant economic revelation for 2022, a country’s informal economy soared to 24.4% of the Gross Domestic Product (GDP) in current values. This figure denotes an uptick of 0.4 percentage points, marking the highest since records began in 2003. The informal sector, chiefly composed of microbusinesses without basic legal registries, contributed 13.3% to the GDP, while other forms of informality added another 11.1%.

The Implications of an Informal Economy

Informal labour is defined by the lack of an official work connection, absence of labour rights guarantees such as pensions, health services, regulated workdays, and vacations. This condition is tied to jobs with lower incomes, and it correlates with levels of labour poverty in different regions. States with high levels of labour poverty such as Oaxaca and Guerrero also present high rates of labour informality. Conversely, regions with lower labour poverty like Baja California Sur and Nuevo León, the rates of informality are lower.

Sectorial Participation in the Informal GDP

The participation of different sectors in the informal GDP has undergone changes, with decreases in retail trade and construction, while agriculture and manufacturing have increased their involvement. The informal and formal economy represent, respectively, 24 and 76% of the GDP generated by those employed in the country. This economic structure poses a significant challenge to the overall economic development and social security of the workforce.

Mapping the Future of Informality

While the informal economy’s growth may be seen as a sign of resilience, it also highlights the difficulties faced by many workers who lack the benefits and protections of formal employment. The informal sector’s growth underscores the need for comprehensive policies that promote formalisation, enhance labour rights and protections, and create more and better jobs.

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