ECLAC reports labor informality and slow growth hinder Latin American development

The Economic Commission for Latin America and the Caribbean (ECLAC) reports that high levels of labor informality are acting as a structural barrier to productivity and economic growth in the region. Currently, nearly half of the region's workers are in the informal sector. While economic growth generates productivity gains in both formal and informal sectors, the effects are more intense and lasting within the formal economy.

Regional economic growth is projected at 2.2% for 2026 and 2.5% for 2027, following a 2.4% expansion in 2025. However, these rates are considered insufficient to increase per capita income or close development gaps. The region faces a “low capacity to grow trap” driven by low investment and difficulty generating formal employment.

Furthermore, progress toward the 2030 Sustainable Development Goals (SDGs) is stalling. Only 19% of the evaluated goals in Latin America and the Caribbean have been met or are on track to be achieved by 2030. Approximately 42% are moving in the right direction but too slowly, while 39% have stagnated or regressed. This decline is attributed to limited fiscal space, low growth, inequality, and institutional weaknesses.