Chile and Mexico confront high informal employment rates, deepening economic strain

A new Eurofirms Group study finds informal employment in Chile remains around 26% of the labour market through 2023‑2025, concentrated in services, commerce, agriculture and construction. Regional rates vary, with La Araucanía (34.7%), Maule (33.5%) and Arica y Parinacota (32.4%) above the national average, while Antofagasta and the Metropolitan Region are lower. Women experience a 3‑4 point higher informal rate than men, and 40.6% of respondents would accept an informal job for at least a 20% pay increase; 39% cite lack of alternatives, especially among young workers.

In Mexico, INEGI data show that 54.8% of the employed population – roughly 33 million people – worked informally in March 2026, contributing only 25.4% of GDP in 2024. Economist Santiago Levy argues that institutional design penalises formal employment and rewards informality, leading to a misallocation of labour and capital, stagnant productivity and low real wages. The highest informal rates (74‑81%) coincide with the poorest states such as Chiapas, Oaxaca and Guerrero, where informal workers earn about half the income of formal workers, pushing millions below the urban poverty line.