Ana Birliga Sutherland
Esther Goodwin Brown
Circular Jobs Initiative
Circle Economy’s
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Informal work may be a cornerstone of the circular economy—but in Latin America and the Caribbean, its contribution is hidden

Informal work may be a cornerstone of the circular economy—but in Latin America and the Caribbean, its contribution is hidden
This article was originally published by Next Billion

Latin America and the Caribbean (LAC) is 1% circular—a far cry below the global average of 7.2%. This means that of all the materials flowing through its economy, less than 1% re-enter the economy for a second life.

This is an incendiary statement—and not an entirely true one. The Circularity Gap Report Latin America and the Caribbean, recently released by impact organisation Circle Economy Foundation, cautions against taking its trademark ‘Circularity Metric’ at face value in this instance. Although official statistics benchmark circularity at less than 1%, the region is home to a bustling informal economy—a network of street vendors, waste pickers, unregistered businesses and more, totaling 130 million workers and representing around 60% of the workforce. This level of informality means that there’s a range of ‘hidden’ activities that could impact the region’s circularity, as well as unknown material and carbon footprints.

Informal jobs lack official employment contracts or registration, meaning access to social protection is sparse and labour rights can go unrespected—but they’re also a hidden norm, employing an estimated 2 billion people worldwide. In some sectors, these roles represent the vast majority: in LAC, a staggering 86% of agricultural workers are informal, for example. But how does this relate to the circular economy?

Making the invisible visible, with data 

As a result of the work being informal, collecting data to understand its contribution is challenging: many informal workers directly contribute to the circular economy—through the resale of consumer goods, waste management and repair, for example—without it being picked up in formal databases. Worldwide, sectors associated with the circular economy often have high rates of informality. The informal economy has, at times, acted as an antithesis to the ‘more, newer, cheaper’ ethos of our current take-make-waste economy. Often stemming from necessity, activities carried out by informal workers are often highly efficient, maximising products’ and materials’ value and taking on circular activities that are largely overlooked or undervalued. Because of the role these workers play in recycling goods and materials—or selling second-hand products, for example—they have an unknown but potentially large effect on circularity. 

The outcome? That LAC is actually only 1% circular is unlikely—but without a more accurate benchmark, it’ll be difficult for the region’s 33 nations to set targets, leverage the skills and expertise held in its informal sector and roll out more formal circular economy initiatives at scale. 

As circular initiatives are often labour-intensive in certain sectors, the report points to the huge potential for job creation in LAC: nearly 9 million formal new jobs could be created if the agrifood, built environment, mobility and waste management sectors were to go all-in on circularity. But the high prevalence of informality in these sectors means that the transition’s impact on jobs could vary wildly—without clear data, it’s tough to tell how the policies driving the circular transition will affect work and workers, both formal and informal. 

How people, planet and business can thrive within an informal economy

Shifting to a circular economy offers an opportunity to overhaul more than just our modes of production and consumption. If designed with social justice in mind, it can improve workers’ livelihoods: for example, under an inclusive circular economy, those currently working as informal waste collectors, dismantlers and recyclers could be better involved in dialogues to transform economies for the better: from what is needed to ensure circular economy policies are fit for purpose to how to promote better working conditions. 

While addressing informality (especially within ‘circular’ sectors) will be critical, formalisation isn’t necessarily the end goal: many initiatives across LAC are already providing valuable examples of how informal workers can be protected and uplifted within current systems. Cataki, for example—an app dubbed ‘Tinder for Brazil’s street recyclers’—matches local waste collectors (or catadores) to those with waste to discard. The average Brazilian produces around 380 kilogrammes of solid waste each year, only 3% of which is recycled—the vast majority by waste pickers. The app helps these workers decide what recyclables to pick up, based on type and location, while fostering greater social awareness of and appreciation for catadores. Policy efforts are also giving protection to informal workers: one Chilean law has legitimised grassroots recyclers as essential waste management actors, also mandating that businesses must contribute to the formalisation, training and funding of these workers. 

Photo by Hermes Rivera on Unsplash

LAC countries can also look beyond their borders for inspiration: the World Economic Forum’s Global Plastic Action Partnership, for example, is using technology to measure the type and quantity of plastic waste pickers are collecting in Ghana—bringing transparency to value chains that can benefit all stakeholders. Waste pickers could be uplifted through fairer wages, while socially-responsible companies will pay a premium for so-called ‘social plastics’. This benefits businesses as well as people, as research shows that consumers are four times more likely to buy from brands making a positive social impact. 

Ultimately, the partnership could serve to bridge data gaps, too: new data collected will help inform public authorities and policymakers on where to build new recycling plants. Ecuador, the first country in Latin America to join the Partnership, will also be supported in capacity-building through access to global knowledge and practice networks—hopefully with the added benefit of uplifting informal workers. Apps, digital platforms and partnerships like these can also be leveraged to collect and put data to work, slowly bridging gaps to clarify current benchmarks and set targets. 

Addressing the region’s blind spots 

Data gaps associated with LAC’s informal economy perpetuates a vicious cycle: lacking statistics on large parts of the working population makes it hard to get a true picture of the circular economy in the region and how existing activities can be scaled. With a huge portion of economic activities invisible to policymakers, developing tailored strategies to bolster circularity is challenging—so while the informal economy is likely a hidden goldmine of circular practices, without recognition and support, its potential will remain untapped and workers within it risk being uncut by policies designed without data on where these jobs exist. Luckily, this may be set to change, with new standards to help countries collect better data on the informal economy adopted at this year’s International Conference of Labour Statisticians. Before we manage, we must measure: bringing the informal economy’s contributions to the circular transition to light will be a crucial piece of the puzzle in building a sustainable, resilient and socially just circular economy in LAC. 

Informal workers can be uplifted in a way that boosts circularity in the region through actions including:

  1. Ensure that the contribution of the informal sector is not overlooked, and give these workers and their activities the recognition and protection they deserve. This could include working through cooperatives that spur collaboration and build up informal workers’ bargaining power.
  2. Change the narrative around informal work and workers. These workers are not actually invisible: many formal companies actually rely on informally-source inputs for their operations to cut costs. Acknowledging the vital role they play in value chains of today and tomorrow is vital.
  3. Bring informal workers to the table, by giving them a say in the policymaking process and thereby ensuring new policies do not knowingly undercut these workers. Give skilled informal workers recognition and accessible opportunities for further skills development.
  4. Form data partnerships that can shine more light on the contribution informal workers make to the circular economy and working conditions. New standards—like those adopted by statisticians internationally this year—will help governments and businesses alike create a clearer picture of the world of work today and tomorrow.

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