Abstract
Since the beginning of modern labor markets, formal and informal activities have coexisted alongside each other. However, most of the traditional approaches to informality are not fully able to explain the multiple forms by which this phenomenon manifests itself today in certain contexts. Informality in Latin American societies, particularly in Argentina, is heuristically revelatory for illustrating the need for a more complex definition and less rigid theoretical classifications. The main purpose of this article is to contribute to an empirical analysis about informality by addressing two points. First, the article provides a better understanding of the heterogeneous nature of informality—“involuntary” or “voluntary” informal work, “half-formal/half-informal” work—in the field of youth employment. Second, in connection with debates about the sources of informality, the article explores the hypothesis of the existence of state-created informality. The article illustrates these points at different levels: youth careers, employers’ recruitment strategies, and states policies. This perspective seems useful for identifying the actors involved, acknowledging the blurry boundaries between diverse informal situations, and understanding actors’ uses of them. The points are illustrated by evidence from a qualitative and longitudinal study on youth employment careers in Argentina. The article concludes with a discussion about some key issues of informality, such as legality, regulation and agency.
Introduction
Since the beginning of modern labor markets, formal and informal activities coexisted alongside each other. Traditional theoretical approaches, which Portes (1995) alternately named “legalist,” “structuralist,” and “dualist,” examined different sources and characteristics of informality separately. These approaches respectively looked at informal activities as being a response to state regulations (De Soto, 1990), an essential feature of the system (Castells and Portes, 1990) or a dysfunction (Souza and Tokman, 1995). Yet after decades—and in spite of certain theoretical updates (Chen, 2012; Martin et al., 2016)—none of these traditional approaches to informality are fully able to explain the forms by which this phenomenon manifests itself today in certain contexts. The informality characterizing Latin American societies is especially useful for illustrating the need for a more complex, dynamic, and flexible definition of theoretical classifications. In this region, informal work appears to be the consequence of a political economy that segments society into highly competitive state-regulated sectors on the one hand, and low-productivity unregulated sectors with a lower capacity for accumulation on the other hand. Moreover, informal activities (by contrast with dominant, formal and more productive activities) are commonly associated with marginality within certain population groups (the structuralist perspective). Also, after major neoliberal crises in the 1990s, avoiding juridical formality emerged as a solution for many employers (legalist perspective). Explanations here are complementary and need to be supplemented by others to shed light on the multiple practices and positions surrounding informality.
Traditional approaches also largely define informal activities in opposition to formal ones, especially delineating their legal and illegal forms. However, it is necessary to go beyond a binary outlook in order to grasp other aspects of informal work, such as the institutions that produce it, the people who engage in it, the social categories involved, and the duration or informal work in individual careers. In contrast with an academic logic of segmentation and a dichotomous conceptualization of informal work, our view is cross-cutting and encompassing. Indeed, this phenomenon crosses over various legal, institutional, economic, political, and sociological classifications. Informality has many causes and actors, and thus needs to be understood by observing the wide variety of interactions from which it arises.
The main purpose of this article is thus to contribute to a theory-building empirical analysis of informality by addressing two points. First, as opposed to a restrictive definition of informality, the article provides a better understanding of its heterogeneous nature by describing its manifestations in the field of youth employment in Argentina. These heterogeneous manifestations—including “involuntary,” “voluntary,” “half-formal/half-informal” work—tell us more about the ongoing relations between the formal and informal economy, enterprises, workers, and activities, thereby expanding our understanding of the boundaries of informal work. Second, in connection with debates on the sources and causes of informality, the article explores the hypothesis of the existence of a state-created informality, through “grey areas” of informality. The way that state policies attempted to resolve employment problems and informality during the last few decades, particularly in Argentina, raises broader issues. The first is the role played by the state and its relationship to both citizens and the market, while the second speaks to the alternative policies implemented within the labor market in order to challenge social exclusion and the neoliberal paradigm (Rovira Kaltwasser, 2011).
The article will illustrate both of these main points about informality (heterogeneous forms and state-created) at different levels, namely youth careers, employer recruitment strategies, and state policies. This perspective seems useful for identifying the actors involved, acknowledging the blurry boundaries among diverse informal situations, and understanding actors’ uses of them. Addressing these different levels also allows us to reconceptualize continuities (e.g. the association between informal work and poverty) and discontinuities (e.g. informal work being the result of a state actively fighting social exclusion at the beginning of the twenty-first century) in the debates on informality.
In approaching these issues, youth employment in Argentina is heuristically revealing since it embraced formal, standard employment as its dominant model in the past and since it now espouses professional informality as young people’s primary employment experience today. This is despite fluctuating economic phases of recession and growth (Barbeito et al., 2007). Unlike adults, who witnessed or experienced a stable and secure model of employment for some decades, most of these youth experienced different forms of informality since the neoliberal 1990s. This can be seen not just at different stages of their careers (entry on the labor market, training, work practices, and career development), but also in their frequent alternation between formal and informal spaces over time. This situation explains why the state strongly invested in youth employment policies at different periods.
This article begins with a literature review focused on the conceptualization of the social reality of informality (section “Informality’s landscape: concept, political debate and social reality”). The next section summarizes the historical context of state policies and labor market informality in Argentina (section “The Argentinian case: the protected employment model and informality emergency”) and briefly describes the qualitative research on young Argentinians’ careers (section “Methodology”). This is followed by a description of findings, first in terms of the heterogeneous manifestations of this phenomenon based on several empirical examples of youth-employer interactions (section “Heterogeneous informality: interactions between employers and young workers”), and second, in terms of the forms of youth employment produced as a result of state action (section “The paradox of informality under an active state”). The article concludes with a summary of findings and a discussion on legality, regulation and agency in connection with the results presented here.
Informality’s landscape: concept, political debate, and social reality
Recent updates were made to the theoretical debates on the origins of the concept of informality (Chen, 2012; ILO, 2013; Longo and Busso, 2018). These updates show that traditional theoretical approaches, which Portes (1995) alternately named “legalist,” “structuralist,” and “dualist,” continue to shape our understanding of the sources and characteristics of this phenomenon. The first of these traditional approaches, sometimes called “neoliberal,” views informal work as a result of excessive bureaucratic regulation by the state compared to actual market forces (De Soto, 1990). The second approach, called “neo-Marxist,” suggests that informality is fundamental to the structure of the capitalist system (Castells and Portes, 1990). The third approach, “dualism,” is more institutional and representative of the International Labour Organization (ILO). It suggests that informal work is an overflow of the formal economy, that is, a function of the formal sector’s inability to absorb available labor (Souza and Tokman, 1995). Wilson (2011) underlines that even if these approaches (especially neoliberal and neo-Marxist) seem diametrically opposed, they do share commonalities. One of these consists in seeing “the ‘problems’ of informal work in the legislative policies of the state” (Wilson, 2011: 208), in unjust (De Soto) or superfluous (Portes) laws. Moreover, these approaches, mainly focused on theoretical definitions and policy proposals, are often criticized for their aims, which tend to be more descriptive than explanatory (Salas, 2006). While they are interesting for understanding the sources of informality, they place less importance on the dynamics or empirical complexity at play in the phenomenon. Furthermore, they tend to base their explanations on a highly dichotomous definition of informality. In turn, this makes it difficult to grasp its full meaning or scope. Indeed, using only dual schemes is problematic for several reasons. First, dual schemes entail a dominant organizational form of social production, even though many others also exist (Maldonado, 1985). Second, informal work sometimes results from adaptive mechanisms and social learning among individuals within society, and local politics (Auyero and Berti, 2015). Individuals sometimes chose informality as they adjust their expectations and careers. Informality is also able not only to stimulate efficient organizations among popular segments of society, but also to solve pressing social problems (Busso, 2009; Forni and Longo, 2007; Roldan, 1990). Finally, informal work represents more than just the negative side of formal activities. Informality in employment sometimes appears as a “grey area” (Cross, 2000) “in which the overlapping of precarious labor and steady labor in the same working area forced the interaction between the new and the old” (Varela, 2016: 109). Moreover, with regard to empirical research, some authors emphasize, that informality suggests more of a “process” than a fixed object (Longo and Busso, 2018). Thus, informality appears more as an “informalization” (Boudreau and Davis, 2017) widely distributed throughout the labor market, in different spaces and temporalities. However, even if a processual definition might be more realistic, it hardly translates into operational measurements that respect the diversity inherent in informality.
A recent report by the International Labour Organisation (ILO, 2013) states that “statistical knowledge of the informal economy remains at best fragmented, cursory and anecdotal.” (p. 44). This last report compares different definitions of informality that reflect the multiplicity of informal-work realities. It abandons the utopian ideal of a single definition, even if since 2003 the term “informal wage employment” has been widely used, and defined as employment “not subject to national labor legislation, income taxation, social protection or entitlement to certain employment benefits” (ILO, 2013: 46). On a national level, recent Argentinian public statistics 1 adopted reduced measurement, such as the number of unregistered jobs (Bertranou and Casanova, 2014). 2 Although this empirical measurement is directly observable, it refers to “juridical” rather than “functional” informality, the former being defined largely as a matter of choice and the latter, as being related to labor market dynamics (Gibson and Flaherty, 2016). Extending the usual statistical approach, Beccaria and Groisman (2008) desegregate and measure different positions of informality in employment. Specifically, they delineate undeclared self-employees, 3 unregistered employees in the formal sector, 4 unregistered and registered employees in the informal sector (defined by firms with fewer than six workers), 5 domestic cleaning staff, family workers, and recipients of public employment programs (included since 2002 because of the high numbers of such recipients). They study informal employment as an aggregate of all these categories, and define informality as the sum of occupations not subjected to diverse labor regulations (Beccaria and Groisman, 2008).
Beccaria and Groisman’s measure supports the empirical heterogeneity observed in our qualitative results. It transcends legality as a unique criterion of informality situations, and takes into account different definitions (labor regulations, firm size, and productivity), as well as labor market relations (workers, employers, state) and political contexts.
In parallel with academic and statistical discussions—interpreted as “conceptual anarchy” by authors in favor of abandoning the notion of informality (Salas, 1992, 2006)—research proves that work informality constitutes a social reality, a heuristic phenomenon that uncovers specific social ties in modern societies (Lesemann, 2010). Putting the focus on measures or on illegality criteria makes informality dependent on the laws of a given country, so that changes in laws could make this social reality disappear (Salas, 2006).
Applying this notion to a variety of employment situations shows that the informal sector includes dissimilar actors—self-employers (Busso, 2007; Cross, 2000), poor workers (Chen et al., 2006; Noiseux, 2000), domestic workers (Georges, 2010), innovative enterprises (Zogning et al., 2017), young workers (Longo et al., 2014), and so on—and activities associated with heterogeneous productive and technological structures. Informal work can also be found within formal enterprises and sectors of the economy, and in cases where the state intervenes to manage poverty and other urgent problems (Auyero, 2010). Moreover, aside from the legal and administrative problems associated with the non-declaration of employment, informal work has consequences on the careers of individuals. The instability and uncertainty of individuals’ professional situations, their lack of rights, and the ambiguity of their social and professional relations can end up depriving workers of the resources they need for autonomy and professional development. It is also known that working-class youths tend most often to engage in informal work, even in cases where they hold the same level of education as their middle- and upper-class peers (Perez et al., 2013). Informality entails a drop of income, that is, between 35 percent and 40 percent less than formal workers. However, Beccaria and Groisman (2008) suggest that informality should not be seen as a cause of poverty, but rather that both are manifestations of a labor market that is not creating enough quality jobs, so that people are forced to accept informal and precarious positions. Elbert (2015) examines the links between informality and social class, discussing Portes’ (1985) analyses that regard informal and formal proletariat as separate classes. Ebert, using a diachronic approach, shows the existence of continuity between these classes in both formal and informal positions in the labor market, with regard to people’s careers and household compositions. This last author proves that in Argentina, families are often made up of both formal and informal workers, and that individuals can hold formal and informal positions multiple times over the same career (Elbert, 2015).
At the same time, research confirms that informality has both benefits and constraints. Informal work can constitute a re-appropriation of professional instability (Nicole-Drancourt, 1992). In various national contexts, the absence or flexibility of status, contracts, job duration, working hours, and social security can also serve as new resources and opportunities in a context of greater mobility (Longo et al., 2014; Vultur, 2010). Indeed, some workers “may prefer the flexibility, hours or absence of surveillance and intrusion that the informal sector sometimes offers” (Gibson and Flaherty, 2016: 437). In their study on Argentina, Brazil, and Mexico, Bosch and Maloney (2007) point out that the informal sector seems to be a stepping-stone between the functional and formal sectors in the labor market, to use Gibson and Flaherty’s terms (2016).
Finally, beyond the individual worker level, informality entails collective commitments and changes related to the economy and policies. Flexibility and informality are not aspects of separate segments of the labor market, and levels of informality can explain part of the domestic demand for flexibility. As Cook (2007) writes, Informality indicates a good deal of flexibility in the labour market. It is often a condition that employers can exploit because of the lower costs involved and the flexibility of employment relationships. Informality does, however, present high costs to governments in the form of lost revenues due to the failure to pay taxes and other social charges. It remains a concern of international financial institutions and other international agencies, and is often cited as a reason to adopt reforms aimed at introducing more labour market flexibility. (p. 6)
Carnes and Mares (2014) underscore that a long-term rise in economic insecurity has increased the relative demand for tax-financed, rather than contribution-financed, social insurance. Past elected officials, especially those partaking in the “rise of the Left” within Latin America have proven eager to meet this demand. New policies characterized by conditional cash-transfer programs (Cortes, 2009) and basic social guarantees for the population at large, especially the more disadvantaged (Jacinto, 2016), are employed by various countries, creating new political configurations beyond neoliberal politics. However, these policies have also come up against many obstacles related to the structural conditions of the labor market and existing income inequality. Concerning direct regulations in the labor market, analysis shows that the drop in informal employment in recent years seems to result less from formalizing unregistered work than stimulating the creation of formal employment offerings (Bertranou et al., 2013). In fact, the strong increase in worker numbers in the workface, re-establishment of collective bargaining bodies, and creation of a national wage policy (by branch and not by company, thus reinforcing labor segmentation) affected workers who had a contract—formal workers—without affecting the still-high number of informal and precarious workers (Marticorena, 2014). In addition, Varela (2014) analyzed some contradictions of this period, pinpointing the main losers of these reforms: poor workers, most of them young. The author observes that the high percentage of unregistered labour and other methods of flexibility are a necessary condition for the “new labour relations model,” and not a residual effect of the nineties; it works as it adapts to the wage policy that has existed since 2003. (Varela, 2016: 109)
Salvia et al. (2016) historically analyzed the economic and social policies that have indirectly combatted informality and their impacts on poverty and social inequality during different periods. Contrary to the neoliberal period, state spending increased during the post-neoliberal period, in the way of extended social security and cash-transfer programs toward poor and vulnerable households. While these policies expanded household budgets, they had a limited redistributive impact. Indeed, given that inequality responds primarily to income increases resulting from large-scale changes to the labor market, low-wage informality continues to persist.
The Argentinian case: the protected employment model and informality emergency
Argentina is a special case among Latin American countries because of the scale of the protected employment model implemented following the Second World War. For several decades, social rights and individual life trajectories fostered employment integration and career security, creating a stable, homogeneous salary structure. State intervention in the economy also translated into a generalized formalization of control and order, and also legally regulated labor practices and activities. This type of formalization also led to dichotomies between “the discursive and ideological imperative to separate the formal and the informal, the public and the private, the traditional and the modern, or even the advanced and the backward” (Boudreau and Davis, 2017: 152).
The political dictatorships of the 1970s, concurrent with a new reorganization phase in the capitalist world, were a key driver of changes to the model’s basic structure. These reforms reached their peak in the 1990s, under the newly democratic and unflinchingly neoliberal governments that promoted the expansion of the free-market economy and applied a set of policies called the “Washington Consensus” (fiscal discipline, privatization of public enterprises, and the deregulation of the financial sector; Panizza, 2009). Problems intensified during this time, and by 2003, “informal” or “unregistered” work accounted for 50 percent of employment (Ministerio de Trabajo Empleo y Seguridad Social, 2007), 6 exacerbating social inequality (Ministerio de Trabajo Empleo y Seguridad Social, 2005). Taken together, these factors spurred the economic, social, and political crisis of 2001, when unemployment jumped to 20 percent, the poverty rate surpassed 55 percent, and both the population and the country’s GDP went into sharp decline (Perez, 2008).
The year 2003 was a watershed in Argentina. 7 A new era began with phases of manic growth, thanks to a shifting macroeconomic regime and new international economic conditions. During this period in Argentina, some regulations were implemented to compensate for the neoliberal labor flexibilization of the 1990s. For example, the employment trial period was shortened, the legal working age was lowered to 16, certain flexible contracts were abandoned, employment, and collective employment agreements were promoted, cooperatives were better formalized, work inspections were performed to fight illegal informal work practices, and the private pension system for retirees was eliminated.
Whatever the term used, 8 to name this common political process that unfolded across different Latin American countries, there is no widespread agreement on a broad new model of development, despite the alternative discourse opposing the neoliberal model. 9 While they improved many people’s living conditions, the overall results of this phase show that this discourse never quite delivered on all of its promises. In fact, the state succeeded in recreating the image of a democratic state guarantor of rights between the market and the society; universalizing policies; and re-regulating work relations with a significant increase in wages and conditions within the formal sector, but without eliminating the influence of some neoliberal laws or concentrated union power that greatly affected informal workers (Perez, 2014).
For youth, new educational reforms and social employment policies put the focus on formal and permanent education, vocational training systems, active public empowerment, employability programs, and young people’s socialization at work. However, these shifts did not always bring about massive change, and in some instances, the programs became subsidized forms of employment flexibilization, especially when included in formal employment that did not solely depend on individuals’ educational capital. According to Salvia et al. (2007, 2013a, 2013b), the problem of youth employment was not due to unemployability or contractual flexibility—the two primary thrusts of these policies. Rather, the problem came from the structural limits of demand for employment in an economic system based on conditions of accumulation and salary regulation that excluded a significant portion of the population. In addition, during a new reactivation period of the Argentinian economy (2009–2011), which witnessed a 9 percent growth in GDP and a broad recovery of employment, revenue, and household consumer capacity, 20 percent of youths were underemployed, and only 35 percent had “decent work” according to the ILO (Salvia, 2013a, 2013b). Though the unemployment rate of youths aged 16 to 24 has waned since 2003, it remains four times higher than the rate of the adult population aged from 25 to 64. The proportion of young salaried workers not covered by social security dropped from 72 percent in 2003 to 58 percent in 2008. However, between the same years, when adding the number of non-salaried youths without social security, the rate dips from 79 percent down to 65 percent. Informality has thus clearly become the primary ongoing employment experience for young Argentinians.
Methodology
The data used for this article originates from a qualitative and longitudinal research panel on Argentinian young people and their careers. The research began with a survey of 422 young people living in the North Section of Greater Buenos Aires, the country’s most populated and heterogeneous area. The respondents were in their last year of studies at nine different educational institutions, whose principals agreed to participate in the study after receiving invitation letters. First, institutional sampling helped include a large sample of cases on the longitudinal panel. Second, this approach ensured that all the respondents were at the end of an educational program, while also helping to differentiate cases by type of educational pathway, namely general secondary school, technical secondary school, or vocational training for those who did not finish secondary school. Third, institutions were selected based on two criteria: type of program (technical/general/vocational) and educational sector (public/private). Social, educational, and labor segmentation prevail in Argentina (Tiramonti, 2004). Consequently, different social classes are associated with each of these types of programs, 10 in both private and public institutions. 11 Generally, young people in private general secondary and technical secondary schools come from middle- and upper-class families; young people in public general secondary or technical secondary schools come from middle and lower class families; and young people in vocational training come from a lower social class. This segmentation confirms social class distribution in our panel, verified afterward by parents’ socio-laboral status indicator as is usual in Argentina 12 (see Graph 1). The standardized survey focused on the last year of the young people’s educational pathways. Besides answering short questions about their work and education plans, they also expressed their willingness to take part in a longitudinal research program. We invited them to the longitudinal panel that was to follow in the future.
Young people in the Argentinian Panel: Distribution by education level and social class.
The panel was set up in 2006, and included 85 young men (N = 47) and women (N = 38). Data were collected in three waves over a 6-year period (2006, 2008, and 2011). Seventy-nine young people remained in 2008 and 56 of the initial young people were still interviewed in 2011. 13 At the time of the first wave, the respondents were 16 years old and 19 years old. The data covered practices and representations associated with the respondents’ academic and professional careers, as well as other general topics, such as residence, family, love, leisure, and biographical turning points. Even though informality was not an explicit goal of the research, this factor was highly significant, since at this period in their lives 80 percent of young people in Argentina start working in informal jobs, and they often struggle throughout their careers to penetrate more protected segments of the labor market. While this article does not focus on youth careers over time, it will briefly touch upon the longitudinal dimension of this research to explore the entry and exit processes to and from informality among young workers. The interviews were transcribed and coded using the NVivo software platform, which flexibly helps handle and classify a vast amount of data (approximately 700 hours of recordings).
Heterogeneous informality: interactions between employers and young workers
Broadly defining informality in the field of youth employment in a way that takes into account legal demarcations, work relations, and employment regulations allows us to include numerous situations, forms, and interactions between formality, informality, and (re)in/formality that are too often overlooked. Below, we examine heterogeneous dynamics of informality with a focus on the links between young workers and employers, starting with the most obvious and studied forms of involuntary and voluntary informal work before moving on to the less obvious forms, related to “half-formal/half-informal” work.
Poverty, social class, and informal work
Nearly 7 out of 10 Argentinian youths work unregistered jobs (Salvia, 2013a), a situation that poses a major challenge for the majority of young workers and is greatly exacerbated by social inequalities. Our qualitative panel data confirm this statistical trend among young people: almost everyone started working informally (72/85), one-third occupied an informal position during all three study periods (31/85), and among this third, two-third (20/31) came from the lower social classes.
As seen earlier in the literature review, age and social class have a direct bearing on informality since access to a job is mediated by employment offers limited by territory and mobility, educational level, and social capital. These ways in which social class lays the groundwork for access to informal work were frequently mentioned in the panel when discussing practical decisions for seeking and retaining employment. In fact, most of the matches between lower class young participants and employers are based on their social environment, neighborhood, and willingness to do low-qualified tasks without a contract. For example, Gimena (lower social class, living in a poor district and without a secondary diploma) describes how she obtained access to all her subsequent informal jobs: “My brother usually went to her house to paint; it was a little informal job. The woman knows him and he talked about me, and because she has a small store and needed someone, she proposed that I work in sales there, and I agreed” (2006). “My sister in law worked in that grocery and she heard that this man was looking for a babysitter, something informal; she thought of me and gave me a call” (2008). “My father signed me up in that co-op, he stopped by and put my name in the list, to do something” (2011).
Another example, less frequently explored to observe the links between social class, poverty, and informality, is awareness of class and poverty identity as a factor in seeking work and accepting informal conditions. Ricardo, one respondent from the Argentinian panel without a diploma and belonging to a lower social class, illustrates this situation perfectly. Like others, he has only had an informal career in terms of employment. He is aware of how the labor market is segmented between registered work (en blanco) and unregistered work (en negro). He knows also that work is highly socially distributed, for young people such as him, coming from lower classes, with less mobility, who are job-matched by their relatives. They do not have any choice: Informal jobs such as those I’m used to are physical work where you don’t need to think, rather to act [ . . . ]. In poor groups, there are many people who work in informal settings and nearby carpentry factories because it’s a way for people like me to get resources. We have nowhere else to go.
As we can see from the Argentinian panel data, informal work is particularly concentrated among the most disadvantaged youths. Whether explicit or implicit in narratives, the question of agency—or lack thereof—in informality thus emerges since young people in this situation often cannot choose between jobs, or can choose only between informal work and inactivity and withdrawal from the labor force. Among disadvantaged youth, the little room available for choice reflects the structural and involuntary nature of informality, and thus supports a structuralist perspective (Portes, 1985). Yet, this does not mean that linking poverty to informality is simple. While 85 percent of employment within poor households—of which young people form a large part—is informal, both formal and informal poor workers can have low incomes that approach the poverty line in Argentina (Beccaria and Groisman, 2008).
Tolerated use of informal work
In addition to structure and involuntary informal work, agency also plays a significant role. In fact, informality cannot be boiled down to poverty alone, even if the probability of informal employment is higher among economically disadvantaged segments of society. Informal work can also be a voluntary strategy among youth.
According to our data, some young people use informal work as a springboard to start their careers without requiring an overly high investment of labor, and because they have only a limited interest in work due to other life plans such as education, creative pursuits, or family. For example, Camila comes from a middle social class and began her professional life in a women’s clothing store, working as a salesperson at times and handing out store flyers on the street on occasion. She wanted to earn money for clothing, even though “my mother never withheld money from me.” She enjoyed not having to commit to a contract since she could choose how much she wanted to work (sometimes full-time, sometimes part-time), allowing her to have a flexible schedule.
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In addition, she had a good relationship with her employer, and was able to prioritize studying or relaxing over working: It isn’t something formal; we agreed on it, and I enjoy it this way. If I have exams, I don’t go to work. I prefer to stay home to study or just stay home. [ . . . ] I haven’t got a work schedule. I don’t like schedules. And because of that, I’m very happy.
Another example is young people who place importance on other aspects of employment than security. Mauro, who holds a technical diploma and is from a middle social class, chooses informality. After working in his field as an operator in a metallurgy company, with a formal contract and safety benefits, we learned at the second wave of the panel that he had quit this job for another in computing, which was informal but offered to him by his uncle, who owned the company. He preferred this work as he viewed it as more exciting (he traveled around the country), confident on family relations, and better paid, even if his definition of a “real job” is, registered employment: It has to be “in white” [registered] to be a real job, with benefits and all. [ . . . ][however] I accepted this one [computing] to be with my uncle, I know him. The fact that I am a relative, I know he will not disappoint me, and the fact is that he pays me very well.
As a stepping-stone for work, for a transitional stage of life, or because it emphasizes other aspects of employment, voluntary informal work stands as an option for people at the beginning of their careers. However, others choose voluntary informal work under certain conditions, such as confidence in relations with employers, and employment benefits.
Our longitudinal research shows also that a majority of the youths—in all social classes —alternated between “unregistered” and “registered” jobs, with a progression toward formal jobs over time. Though the degree of individual appropriation or internalization of informality varies depending on the individual, it is certainly indicative of the precarious and unstable labor socialization that young people experience. In any case, and depending in part on individuals’ social class—as shown here and in the preceding section—informality clearly serves a variety of purposes, some more or less forced upon and others actively chosen by young people. Hence, in discussing informality, agency is far from absent.
Employers’ informal labor strategies
Aside from cases where informal work is performed alongside formal salaried work (Sevilla, 2011), there are less obvious forms of informal work that blur the boundaries between formal and informal labor—demonstrating a non-dichotomous nature of informality. Some informal situations shift from co-existing with registered and protected employment to becoming more semi-legal forms of informality. Paradoxically, these forms are more difficult for the state to regulate due to a lack of transparency, and because sometimes they are located in specific geographical environments, such as rural farms (Lamanthe, 2008). Our data found such linkages of informal and formal work within the same kinds of networks and careers as previously verified by researchers (Elbert, 2015; Wilson, 2011). However, our evidence also shows the existence of simultaneously formal/informal situations that can be experienced by the same youth within the same job.
Examples from our data include youths who state that a portion of their salary or hours worked are undeclared, or not determined by a work contract. This is a strategy often used by employers to lower their retirement and social security benefits—a form of evasion occasionally engaged in with the consent of young workers, who are not necessarily victims of these illegal actions since they allow them in order to benefit from other job advantages. Again, structure and agency appear to coexist in the same labor situations, affording different opportunities and strategies, and resulting in certain limitations.
An example of this is Gustavo, who accepts being in a “half white—half black” position because his job is close to home, is in his field of study, and he has a good salary: “In theory, I’m half-registered. As a salesperson I work full-time, but I’m only registered as part-time. [ . . . ] I accepted this job because it was in my field of study and because it was close to home.”
Another way in which the informal is woven into the formal is when a position seems more limited, with fewer benefits and a lower salary, than is actually the case. Once again, this is an intentional strategy employers use to sidestep job classifications within their business and bring down operating costs. For example, Mercedes told us about her efforts to have her position at a perfume laboratory recognized, which resulted in her being fired. She worked in both the production and commercial sides of the sector, occasionally holding both positions at the same time, but she was only paid as a manual worker (associated with the first of the two positions): I went to the commercial sector, but they didn’t change my contract—it still said manual worker, “perfumer.” They paid me like a perfumer. So at the same time I was making perfumes and doing sales work. [ . . . ] I was covering the position of two people, and they paid me only according to one post, the lower one.
The illegal informalization of work—under-declaring salaries, hours, and positions—in a formal business has consequences on an organizational level, in terms of recruitment, professional relationships, and taxation (Gradeva, 2009). It also accentuates the irreversibility of the behavior surrounding informality, because it is rooted in the functioning of the business. Moreover, companies’ use of informality has consequences on formal employment, not only as a way to employ a flexible and vulnerable workforce but also drive down overall wages and thus the cost of formal workers (Varela, 2014).
The paradox of informality under an active state
The heterogeneous manifestations of informal work presented earlier cover the most discussed forms in the debate about youth employment. They touch directly on the relationships between workers and employers, citizens and the market, in the field of work. The state has intervened directly in these relationships of informality by trying to prevent and penalize them, as well as to offer solutions. Significant measures proposed by the Argentinian state during the post-neoliberal period have included the following: (1) simplifying the processes and rules for accessing formal labor; 15 (2) legitimizing informal workers in formal businesses; 16 (3) developing special programs for at-risk people, including migrants, cleaning staff, and temporary workers; 17 and (4) reinforcing work inspections in critical sectors 18 (ILO, 2015).
In addition, the state developed other measures, which, while more indirect, fight informality with the broader goal of improving the employment situations of workers of all ages. These measures are also intended to compensate for individual disadvantages in order to ease the transition into more formal positions, such as making up for a lack of experience, qualifications, and income. In particular, these measures aim to empower civil society through employment, 19 employability, 20 and social inclusion 21 programs.
Despite some continuities with the past, the new policies enacted during the post-neoliberal period emphasized the process of social learning, fiscal responsibility and new regional cooperation (Rovira Kaltwasser, 2011), and created a particular framework of actors for public policies, including in the area of employment. This framework varied according to the country, depending on existing relations between parties, leaders and grassroots organizations (Panizza, 2009). In Argentina, this situation led to the creation of certain public programs that encouraged relatively ambiguous positions that in fact ended up being closer to informal employment—and in some cases, even entailed unforeseen consequences that worked against the formalization of youth employment. Some programs did not constitute a stepping-stone to formal jobs, or a way out of the cycle of poverty and precariousness among more disadvantaged young workers. Below, we look at these paradoxical manifestations of informality in youth employment with a few illustrative examples. 22
“Black and white” in employability youth programs
To encourage efforts to improve young people’s employability, in the early 1990s, the Argentinian state created several tools to facilitate the hiring of young workers, in turn producing flexible jobs with lower costs for employers and weakened protections and insurance for workers. This was an era of massive unemployment in conjunction with an enormous gap between worker skills and the skills required by the labor market. Despite being canceled in the ensuing decades, 23 these programs were not completely eradicated and continue to affect youths’ integration into the labor market, resulting in jobs closer to informality.
Such is the case of “trial contracts” (contratos de prueba) and “internships” (pasantías), which to some extent are used by youths to develop socio-professional skills, obtain training and prepare for more formal positions by accumulating experience to put on their resume. They are also used by employers for “temporary” employment while reducing worker protections (under this arrangement, the worker-employer relationship is not recognized and salaries are often referred to as a “consideration”). These mechanisms afford workers no stability in the company. In fact, few companies keep youth workers on staff once these arrangements come to term, and unions and companies make little effort to standardize the skills acquired (Salvia, 2013a). In some instances, these arrangements are implemented “abusively” and as we saw in the data, they are perpetually renewed, which is clearly illegal.
An example in our data is Esther, from a middle social class. Seeking experience before finishing a university diploma in marketing, she accepted an internship at a big company in documental engineering. She was less well-paid than in a part-time job, but had a position apparently in her field, and remained 6 months, until she felt that she had had enough of this discretionary and unequal situation: In my third year of university, I looked for an internship for experience [ . . . ]. I was hired as a “junior account executive,” it was an internship. We were four young trainees in a big company, a million-dollar company, a leader in its field, I had a good relationship with my boss [ . . . ] I left for several reasons. The money was not enough. Even if it was an internship with only a “consideration,” I calculated and they paid me really bad, they paid me one thousand pesos, and I worked a lot of hours, I told myself, they had to pay me at least one thousand two hundred . . . so one day together with the other trainees, we stood up and rebelliously went to our boss [ . . . ], he called someone from human resources who explained to us that this wasn’t possible, we were outraged [ . . . ]. After that, I took some vacation time and when I got back my colleagues Eric and Denise were gone, they were fired! [ . . . ] I also started to feel I wasn’t evolving, I was junior executive but there wasn’t really a marketing area . . . I decided to quit.
Overall, these arrangements have much in common with informal work, despite being part of a legal and state-sanctioned framework. Young Carla, from a lower social class, makes links between informality and “youth contracts,” citing that Anyway, most work is “in the black,” it doesn’t last. Things are no different with jobs “in the white,” you are working at a company and one a day they tell you: you’re fired, so whether you’re “on white or black,” it’s always uncertain. Also if you are hired by a temporary agency or a program, they don’t consider you the same way as if you were hired directly by a company. So it’s always unstable for us.
In this context, and without financial public incentives, the effort of following up was the responsibility of the youths, even in the most disadvantaged conditions with few paths for accessing formal work networks. Although programs that included work-integrated learning and internships facilitated access to the formal sector, programs without these arrangements did not seem to affect future formal careers in the short term (Lepore and Alvarez, 2016, cited by Jacinto, 2016). Overall, the collective professional socialization of youths occurred in a context of instability and flexibility existing in the informal economy.
“Grey” occupational positions in social inclusion policies
State intervention ended up undermining its own employment formalization objectives owing to the vagueness of the job positions proposed and the unclear missions of certain social programs, including job-creation measures. These programs’ ambiguity sometimes contributed to fuzzy definitions of what is and what is not part of a job, and even which jobs should be protected. Gautié (2003) uses the term “halo of transitions” to describe this lack of a clear dividing line between different employment statuses (employment/unemployment/inactivity/training/internship).
This situation undeniably emerged from the state recognizing that realities of social exclusion required efforts to improve citizens’ basic living conditions before developing new employment measures. The state acted according to an integral view of recipients of public aid as citizens with rights who required the creation of opportunities over time, as well as inclusive trajectories (Jacinto, 2016). All of these programs aimed for empowerment, social inclusion, wider social coverage, and a transfer of income to the most disadvantaged citizens. However, these employment policies were not well articulated enough to fully address the problems of informal work.
This shows through in our data. For example, several young people such as Noelle participated in a program that aimed to promote social inclusion through employment cooperatives with educational components—the “Ingreso social con trabajo” program. In the program, she was a recipient of public aid, a worker for the cooperative, a student in a post-secondary physics program, a literacy trainer for her neighbors, and a political agent of the government. Noelle defines her activities as being her “current job,” and in fact, she has some of the benefits of formal work, including employment insurance and pension coverage (she also has health coverage
24
and is enrolled in a group pension plan, the “Monotributo social,”
25
through the cooperative contribution plan): Actually it isn’t a contract. Normally, the state gives us a grant over three years, but because we will be starting a cooperative project, we’re in training. [ . . . ] We collect our wages every month, we share it to pay for travel and member training, and then we will switch roles, and others will do their training later.
It was only during the interviews for this research that Noelle learned that they do not have a work contract, that the program had a limited duration, 26 and that they did not even know the terms of their employment. In this young woman’s career, formal status as a recipient of public aid is mixed with informal labor (in cooperative forms) with collective rights, illustrating the controversial results of policies attempting to pursue multiple goals at the same time.
The tertiarization of informality
Public action also produced informality since in recent years, the state preferred to implement social programs through localized stakeholders within civil society. Concurrently, state decentralization during this period gave local and municipal governments a more prominent role in implementing policies (Goldfrank, 2009). Indeed, in the eyes of a state that promoted citizenship and regulated conflicts, citizen mobilization, and participation in public policy were very important (Perez, 2014). Thus, in addition to strengthening permanent, public institutions such as schools and unions (Varela, 2016), policies sought to stimulate an “expanded social dialogue” (dialogo social ampliado) that included less-institutionalized actors, and in the case of employment, more than the conventional three actors in the labor market (Jacinto, 2016). As such, local representatives from associations and federations (particularly in the water, housing, and labor sectors), found themselves being transformed into agents tasked with implementing these policies in poor, disadvantaged neighborhoods. Regional localities were thus encouraged to mobilize civil society and maximize rights, while also considering contextual specificities and needs (Faur, 2016; Oyarzún et al., 2008). While aiming for inclusion, these programs were rarely able, or simply did not understand how, to coordinate productive development with traditional actors (unions and employers) used to manage state projects.
For example, Ricardo worked at a local brick making cooperative, which was run by his mother, a neighborhood political leader. He worked fixed hours for a stable wage, but had no legal contract, pension, or social insurance, or links to the building trade union. Moreover, as part of his job, he was encouraged to participate in political party meetings: They created a popular canteen. They built the project and the place itself and because they are with the Federation, which is how they managed several funded productive projects and obtained other things via government programs [ . . . ]. We have to go everywhere with them, we support “YY,” and all these people, and we accompany him to political meetings.
Local actors asserted that these programs responded positively to the demand for direct participation of civil society. However, this strategy of developing broader civil society’s trust in the state caused problems in Latin American countries because clientelism and political party favoritism is strong in the region and historically helped to regulate poverty (Auyero, 2010). This does not mean that poor people are passive, but rather that they embrace adaptive strategies for everyday life (Auyero, 2001), which exhibit different social logics and tensions during the policy-implementation process. Because of a lack of historical experience and connections with the state, the implementation of some programs thus led to job-creation practices lacking legal regulation or formality. In addition, due to the massive decentralization of social policy, implementation was strongly affected by institutional trajectories and experiences, sometimes leading to local distortions of the programs’ main guidelines (Partenio, 2015).
Conclusion
This article aimed to challenge rigid views of informality by bringing theoretical thinking closer to social realities.
First, it presented and illustrated heterogeneous manifestations of the phenomenon, namely in formal and informal sectors of the economy; within formal and informal companies. Heterogeneous manifestations include “involuntary” and “voluntary” informal work as well as original forms such as “half-formal/half-informal” work. The latter form shows the way companies deal with regulations and informality. In consequence, heterogeneity highlights that informality is not circumscribed in the labor market. Its dynamics span different forms, spaces and actors, especially for youth integration.
Certainly, informality is a generalized starting point for Argentinian youth beyond their social origin and is part of their careers. Our findings show that, whether willingly or out of a lack of choice, young people start or alternate their labor lives by working through informal conditions. Youth socialization on work is thus mostly informal.
However, another finding confirms the social class and opportunities link in contexts of informality. Beyond just a starting point, informality can become a frequent occurrence in an individual career for some young people, especially from lower social classes. Informality can thus be imposed by poverty and origins. To echo Perez et al. (2016), origins act as a dividing line when observing involuntary and voluntary informal work.
The article shows too that informality links not only young workers with employers but also young citizens with the state, even in different ideological and economic periods. We posit that informality results from willful neoliberal restructuring and emerges at the same time from unforeseen externalities or structural conditions in the post-neoliberal period. In fact, aiming to reduce unemployment and foster social inclusion, the state produced ambiguous positions in employment. Three examples of this last phenomenon were described in this article, namely positions resulting from legal youth employability tools; jobs created under certain social inclusion public programs; and implementation programs through localized stakeholders within civil society. In spite of positive effects in other domains (qualification, inclusion, citizenship, etc.), this ambiguous position sometimes produced flexible jobs closer to informal ones.
Moreover, acknowledging the empirical forms of informality brings to light the complexity of actors participating in the creation of informality, and helps expand its definition, particularly concerning some key aspects of the informal/formal discussion, such as legality, state regulation, and actors’ agency.
First, it is clear that informality cannot merely be reduced to a measure of illegal jobs as several statistical indicators still insist. Legal situations mix with illegal ones through the collaboration of various actors (workers, employers, state). This is best illustrated here by our results on semi-legal/informal situations, where some enterprises in the formal sector might respect certain regulations (such as commercial authorization or worker registration) and avoid others (such as worker benefits or salary classification). As Samson (2017) describes, instead of defining informal as lying outside the law, it can interact with the law in a variety of ways. This phenomenon crosses over many boundaries and includes many mutli-layered situations and social dynamics.
Second, the state can play a role not just in controlling but also in producing informality. This article shows that informality results from both deregulation and attempts at regulation, as social actors try to adapt to radical changes to the welfare state—from the neoliberal program to a new paradigm of social policy beyond free-market supremacy. As Kus (2010) shows, decreasing state regulation in the economy does not necessarily formalize the economy, as neoliberal orthodoxy predicts. The opposite can be true. It is clear that the new approach focused on expanding social rights, nationalizing resources, and combatting poverty. However, analysis does not suggest that the state fully and concertedly opposed the market (as political speeches emphasized), nor can we conclude that such policies either completely empowered or disempowered civil society. In this context, various levels of action (civil society, market, and state) reproduced employment informality, which led to regulation, varying degrees of protection, and broader manoeuvering room for individuals and groups. Especially in the field of youth employment, this did not ultimately consolidate a structural solution to the problems of informal work, instability, or flexibility.
Third, the debate about structure and agency essentially raises concerns about informality. Actors are not always compelled to adopt informality, and young people are not always the victims. As discussed earlier, informality is often an active response, depending on the actors’ interests: it is a strategy young workers use to adapt and build a career; by employers to lower employment costs in an unstable economic and political context; and by the state to reduce unemployment and social exclusion. However, the agency of youth, who make use of informality to enter the labor market, is not considered to be equal to that of employers, who use it to pay less in contributions. Consistent with Berens (2015), who showed that a large informal sector lowers formal workers’ expectations of state-funded social services, we believe that state action must counteract various forms of informality in the labor market in order to combat power imbalances and inequality and create secure and meaningful employment opportunities.
