The CAF calls to reduce informality to improve productivity

Ecuadornews:

Theeconomic lag in Latin America is mainly due to a very low productivity, ratherthan a strong concentration of resources in particularly low-yield sectors. Itis one of the findings of the diagnosis made in the Report of Economy andDevelopment (RED 2018), presented yesterday by the Development Bank of LatinAmerica (CAF), in Bogota, in a conference chaired by the director of theagency, Luis Carranza, with the presence of the president of Colombia, IvánDuque.

What are the causes? The complex process of entry and exit of companies, low innovation or productivity growth of those who survive and an inefficient distribution of employment and capital are some of the factors that affect.

“It is due, in part, to a significant degree of productive informality present in most sectors. But also, to problems of productivity within the formal segment, “said Pablo Sanguinetti, vice president of knowledge of CAF in 9 of the 10 sectors studied the product per average worker in the region was below 50% compared to the United States, he pointed.

The allocation of the labor force in Latin America shows an important gender gap, a mismatch between the skills of workers and their tasks and, especially, a huge concentration of the work force in informal jobs and low productivity.

The salary difference of 20% and 30% between formal and informal jobs for workers with similar characteristics is indicative that the assignment of workers to informal jobs reduces productivity.

Sanguinettiadded that public policy should be directed decisively to reduce informality.To achieve this, it is essential to strengthen the state’s capacity to monitorcompliance with standards associated with formality and sanctionnon-compliance; manage and design more transparent tax, tribute and registrysystems, among others. (I)

Source: https://www.eltelegrafo.com.ec/noticias/economia/4/reduccion-informalidad-caf-productividad