The COVID‑19 pandemic has hit Colombia hard, destroying millions of jobs and pushing millions of people (back) into poverty. A significant policy response has cushioned the economic effects of the pandemic through an expansion of existing as well as new social benefits, wage subsidies, tax deferrals and credit measures (OECD, 2022[2]). However, the pandemic has exacerbated many long-standing social challenges, pushing up already high rates of income inequality and informality (Figure 1.1). Employment and income losses were concentrated among households with the lowest incomes, whose labour incomes declined by up to 30% (OECD, 2022[2]). Especially informal workers, women and young people have been hit hard during the pandemic.
OECD Reviews of Labour Market and Social Policies: Colombia 2022
OECD Reviews of Labour Market and Social Policies
1. Recent poverty and informality trends
Figure 1.1. The pandemic has pushed up poverty and labour informality in Colombia
Income poverty and informality indicators for Colombia, 2017‑21
Note: Relative income poverty is measured using the OECD definition of 50% or less of average household income. Extreme income poverty is computed by Colombia’s National Department of Statistics (DANE) based on the price of a basket of food goods using data from a household budget survey. Labour informality is measured as the share of workers who are not affiliated to social security in total employment.
Source: Data provided by the Ministry of Labour.
Initially, the share of informal workers dropped in 2020, but the change was largely due to a drop in the number of informally employed workers as a result of the pandemic. Although the labour market “improved” in terms of formality, in reality, there was a larger outflow of informal workers than among formal workers. By 2021, the share of workers who are not affiliated to social security reached 61.6%, reverting years of slow progress in informality reduction. Similar trends are observed in other Latin American countries, where informality also declined initially and rose again afterwards (Acevedo et al., 2021[4]).