Strategy for the Promotion of Formalization in Latin America and the Caribbean (2024-2030)

Half of all working people in Latin America and the Caribbean work in the informal economy. The problem is structural, multidimensional and persistent. It mainly affects certain population groups, such as women, youth, people belonging to certain ethnic groups and migrants. It also affects more the less educated, those working in low value-added agricultural activities, the working poor, smaller enterprises, the self-employed, people in new forms of employment, both in rural and urban areas. As the latest figures show, informality increased during the recovery from the pandemic.

As the ILO Recommendation on the transition from the informal to the formal economy (No. 204) recognises, the high incidence of informality is an obstacle not only to guaranteeing the rights of working people but also to the development of sustainable enterprises, and the financial sustainability of the State. According to this Recommendation, the causes of the phenomenon are multiple, "including structural and governance issues" (ILO 2015).

To address this challenge, the ILO Regional Office for Latin America and the Caribbean launched the Programme for the Formalization of Informality in Latin America and the Caribbean (FORLAC) in 2013. This was articulated with a series of projects and interventions at country and sub-regional levels. The initiative offered the following services to the organisation's constituents: knowledge generation; management of information systems (surveys, administrative records); advice and technical assistance in the design of comprehensive strategies; training for representatives of governments, employers and workers; institutional capacity building; exchange of successful experiences; and sensitisation of economic and social actors.

FORLAC was implemented in the period 2013-2017. The programme's achievements include: its contribution to the design of the ILO's global formalisation strategy; the strengthening of the Office's technical teams; the promotion of social dialogue and public policy advocacy; and the increase in the exchange of experiences and mutual learning between countries and ILO offices.

Considering the recovery of the informal employment rate after the pandemic and the growing trend observed in some countries over the last year, as well as the increasing demand for support from constituents, the ILO Regional Office for Latin America and the Caribbean decided to take up the initiative and relaunch a regional formalisation strategy called FORLAC 2.0, which is proposed to be implemented in the period 2024-2030, considering three and a half two-year cycles (2024-2025, 2026-2027, 2028-2029 and 2030) of ILO planning and budgeting.

This document begins with a review of conceptual issues and the regional context. It then describes the strategy, its objectives and premises; the theory of change; the integrated policy framework for formalisation; a portfolio of ILO services and technical cooperation; as well as social dialogue and co-creation. It also has a roadmap for implementation and guidelines for monitoring and evaluation, as well as a management model for the strategy, and guidance on programming, budgeting and fund mobilisation and communication.