Government reports rise in informal labor but experts say the real number is much higher

Ecuador’s National Institute of Statistics and Census reported Tuesday that labor informality continues to grow in the country. INEC claims that 54.4% of Ecuadorians work in the informal sector, which means they do not contribute to the Social Security system or pay income taxes.

Informal vendors crowd the sidewalk outside the 9 of Octubre market in the historic district.

The figure is a 2.3% rise from the same period of 2022.

INEC also reported that the country’s unemployment rate was 3.7% in September, a 0.4% improvement over 2022. The underemployment stood at 20.2%, 0.1% lower than in 2022.

The official employment figures show that 36.4% of Ecuadorian workers are legally employed.

INEC’s numbers are disputed by some independent researchers, including University of Guayaquil social scientist Martin Iglesias. “Because of inadequate reporting methods, we have known for years that these numbers are suspect,” he says. “Even other official sources, such as the United Nations, believes that informal labor amounts to more than 60% of the market and I think it is several points higher than that.”

Among labor “accounting problems,” says Iglesias, is the fact that INEC does not account for non-resident Venezuelans working in the country. “There are 450,000 to 500,000 refugees and many of them work informally while thousands of others beg on the streets, which is also informal work.”

In addition, Iglesias says that that criminal gangs in port cities hire tens-of-thousands of workers. “In Guayaquil, Esmeraldas and Manta, there are 50,000 to 75,000 people who work for the gangs, mostly in the drug transport business, and some of them are paid killers,” he says. “This is an inconvenient fact for the government but it should not be ignored.”