'I Can't Stop': In Vast Informal Economy, Pandemic Adds to Pressures - Press "Enter" to skip to content

‘I Can’t Stop’: In Vast Informal Economy, Pandemic Adds to Pressures

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MEXICO CITY — His clientele had all but disappeared since the Mexican government told people to stay home. And he knew he was running the risk of contracting the coronavirus himself.

Yet Leonardo Meneses Prado was still tending his hamburger cart at his usual sidewalk spot in Mexico City.

“I can’t stop,” he said late last week, an edge of desperation in his voice. “If I don’t sell, I don’t eat. It’s as simple as that.”

Latin America’s economies were fragile even before the advent of the coronavirus. But now the outlook is far worse as government efforts to confront the pandemic paralyze economic activity.

And no sector of Latin American society may be as vulnerable to the economic and health impacts of the pandemic than the workers — a majority in Latin America — who toil in the region’s vast informal economy, mostly beyond government oversight, without labor protections or formal contracts.

Many of these workers — such as street vendors in Asunción, Paraguay, delivery men crisscrossing Lima, Peru, and trash recyclers in Tegucigalpa, Honduras — live hand-to-mouth, with meager or no savings and a limited social safety net.

As the pandemic has spread, many have been at a greater risk of contracting the virus as they work jobs that put them in contact with strangers, and retire at day’s end to overcrowded homes.

The precarious state of public health care in many countries in the region has left these workers further vulnerable to the worst ravages of the pandemic.

“They are going to be very badly hurt,” said Santiago Levy, a Mexican economist and senior fellow at the Brookings Institution in Washington, D.C.

The impacts could be particularly brutal and far-reaching in Mexico, where informal workers generate nearly a quarter of the economic output, according to the Mexican government.

And compared with some other nations in the region, the Mexican government has taken a far more restrained approach to the pandemic, a tone set by President Andrés Manuel López Obrador, whose attitude, at times, has been lackadaisical and even dismissive.

Mr. López Obrador, who won office in 2018 as a populist defender of the downtrodden, said that he has waited to impose stricter public health measures in order not to disrupt the economy prematurely. His greatest concern, he said, has been the country’s poor, his political base.

Some critics have contended that by delaying the inevitable, Mr. López Obrador may have given the virus a greater opportunity to infect a larger percentage of Mexico’s impoverished population.

“One thing is to continue to have tons of people living day-by-day, and another is to have thousands dying of this every day,” said Jesús Silva Herzog, a professor in government at the Tecnológico de Monterrey, a university in Mexico.

On Tuesday, Mexican officials, citing a shift in the behavior of the contagion, announced a stricter set of protocols, canceling events numbering more than 100 people and calling for the suspension of employment requiring workers to commute to an office.

And over the weekend, the López Obrador administration began urging Mexicans to stay home. But the measure was not mandatory. And not everyone can work from home, or forgo work for weeks.

Mr. Meneses, 43, who has sold hamburgers and hot dogs from his cart for 19 years, said he was less worried about contracting the virus than he is about the economic impacts of the pandemic.

His business has already cratered: His sales are down about 50 percent from two weeks ago and still falling.

If the authorities force street vendors to shut down — and Mr. Meneses knows it is extremely likely — he does not know what he will do to support his wife and three daughters. Maybe start pawning possessions, he said.

The family had no health insurance and would have to pay for medical care out of pocket.

“For us, it’s a luxury to get sick,” he said.

In some countries in the region, poor workers have rebelled against government restrictions and been met with force. In Peru, more than 21,000 people, including street vendors and other laborers in the informal economy, have been detained for not complying with the government’s orders to stay at home.

Governments in Latin America have promised to help the poor, in some places announcing cash assistance programs. In Colombia, President Iván Duque recently announced, among other aid measures, payouts of about $40 for informal workers who were not already receiving social assistance.

But as Colombia began its quarantine this week, there was widespread concern that these financial disbursements would not be enough to maintain social order.

Particularly vulnerable are the 1.5 million Venezuelans who have immigrated to Colombia, escaping their country’s economic collapse. Many of them use each day’s earnings to pay that night’s stay in a motel. With the nation shutting down, many are already finding themselves on the street.

On Tuesday, a large crowd of protesters packed Bogotá’s Plaza de Bolívar to voice their anger. “We’re hungry!” they shouted.

In neighboring Venezuela, the government has implemented a nationwide lockdown, and said it would transfer the equivalent of up to $50 to six million informal and private-sector workers to compensate them for lost income. For most, the amount will barely cover a fraction of their losses.

Meanwhile, the López Obrador administration has been designing an economic recovery plan that would directly benefit Mexico’s poor. On Wednesday, the president said the plan would include a million loans, each worth about $1,000, to small businesses in both the formal economy and informal economy. Eligible recipients, he said, would be “humble, hard-working people.”

Mr. Levy of the Brookings Institution said that even if governments go through with these cash handouts and other compensatory programs, many workers in the region’s informal labor sector are invisible to government agencies because they don’t appear on social security or tax registries.

“Even if the governments want to transfer income to all these people, the tools to do so are very imperfect,” Mr. Levy said. “Where are these guys? Who do you send a check to?”

José Luis Miguel Monroy, 30, a coconut water vendor in Mexico City, said he was now the only breadwinner in his immediate family since his two brothers were laid off in pandemic-related staff cuts.

Grossing about $25 on a good day, he is now supporting his wife and daughter as well as his four siblings and mother, all of whom are living in the same home in a working-class neighborhood of Toluca, a city in the state of Mexico.

Should he be forced to stop, Mr. Miguel said, the eight-member family might be able to stretch their savings for a month.

He has heard about social distancing, but in his job he has little opportunity to practice it with his clients, most of whom have paid the recommendation no mind, he said. At night it is even more difficult: He shares a rented room in Mexico City with five other street vendors.

“I’m a little more vulnerable,” he acknowledged. “If we get infected, we don’t have a lot of resources to treat ourselves.”

As bleak as the landscape looks for informal workers, Luis de la Calle, a Mexican economic analyst, argued that living outside corporate structures may have its advantages. Some who have built their careers on the street are able to adapt quickly to the changing demands of their clientele, a skill that will be useful as the pandemic reorders even the most stable economies.

During the influenza pandemic of 2009, which came on the heels of the global financial crisis, Mexico’s informal work force grew as people sought new ways to eke out a living. “That becomes part of the solution,” he said. “The more flexible you are, the better.”

But Mr. Meneses, the hamburger vendor, is not as sanguine. All he can see is disaster ahead, particularly for the workers in the informal economy.

“If it comes and hits us hard, it’s going to be a massacre,” he said. “I hope this is just a dream and it passes fast, a nightmare that we wake up from.”

Kirk Semple reported from Mexico City and Natalie Kitroeff from New York. Paulina Villegas and Elda Cantú contributed reporting from Mexico City, Julie Turkewitz from Bogotá and Anatoly Kurmanaev from Caracas.


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