Informality in Indigenous Labour: Limits of Legal Recognition

The following piece, written by Incomindios UK intern Fabian Cortez, is the first of a series of pieces exploring the relationship between informal labour within Indigenous communities across the Americas. This piece posits a critical view of informality as a consequence of historical and economic flaws pertaining to state development in the Americas. This pieces also examines the limitation of legal recognition for informal practices without substantial governmental support. Opinions here pertain to the author.

There’s a tendency for informal labour to be described within development and policy discourses in terms of an “adaptive” or “pragmatic” situation (UN Habitat 2016), even when formal employment is scarce. For Indigenous Peoples though, this widespread use of informal work represents neither the resilience nor choice that communities and nations so desperately need but is due to a history of dispossession itself, an ongoing racialised process of exclusion and unequal development. Rather than serving as a remedy for marginalisation, informal work often contributes to replicating the underlying circumstances that support marginalisation. Indigenous peoples are over-represented in informal jobs across Latin America and other post-colonial contexts, such as street vending, domestic work, care work, subsistence trade, and artisanal economies. According to information available from the ILO, countries like Nicaragua, which classifies more than 77 percent of its labour force as informal, highlight that 9 out of 10 Indigenous Nicaraguans are being forced into informality (Marcelino and Sans, 2023). Ultimately, this signals the systematic informalisation of labour forces which are excluded from full spectrum labour protections, social security mechanisms and collective bargaining mechanisms (Lobato, 2025). As a consequence, informal labour has been linked to unstable pay, unsafe working conditions, increases in exposure to displacement, harassment and criminalisation. To this end, Indigenous workers’ continued informality is best understood as a structural product of exclusion in a capitalist system, rather than an alternative form of economic participation.

Exclusion for Informality

Informal labour is often described as existing outside regulation, or as being beyond the purview of state institutions (ibid). This framing obscures the fact that informality is socially generated, through the active choice of policy, to limit access to land, education, public employment and social protection. In this regard, for Indigenous Peoples, informal labour is often the result of limited options made as a result of those colonial legacies and unequal models of modern development. In this way, informality is a racialised labour condition. Indigenous labour is economically imperative but politically marginal: it nurtures urban economies, food systems and care infrastructures but is excluded from the protections associated with formal employment. Instead of presenting an alternative economic model, informality transfers the threat to workers and protects states and employers and the global economic system from accountability.

Jose Valdez, a former self-employed radio presenter, poses with his courier bag near his house in La Paz, Bolivia, February 22, 2021. After losing his job as advertising revenue dried up, he set up a new food delivery business called Chasqui Delivery that employs about 30 people. Thomson Reuters Foundation/Wara Vargas.

Indigenous Peoples and informal economy as labour market.

The concentration of Indigenous workers in informal jobs is not a historically new phenomenon. “Indigenous peoples are overrepresented in informal employment, where decent work deficits are most acute and labour protections are weakest,” the International Labour Organization has noted. Importantly, the ILO connects this pattern to structural barriers such as discrimination, land dispossession, and exclusion from education and social protection systems, rather than cultural preference. This analysis posits that informality – although at times a source of empowerment for some Indigenous communities – should be seen as a systemic issue. Although Indigenous economies frequently contain collective and non-wage forms of labour, this informalisation has accompanied the decline in security and recognition in capitalist development frameworks. As is evidenced, for example, in the growth in the number of informal workforces in the Mexican state of Chiapas, a notoriously underfunded, underdeveloped, and heavily Indigenous local authority in Mexico where the figures pertaining to the number of informal workers have declined every year after the 2021 with the exception of 2025. Ultimately, this post argues that informality does not shield Indigenous people: It subjects them to market fluctuation while denying protection under the law.

Legal Recognition and Its Contradictions

Recent human rights interventions have tried to extend labour rights to informal workers. For example, the Inter-American Court of Human Rights has determined that labour rights include whether work is carried out in the formal or informal economy. Although this interpretation contests the law’s non-formal exclusion of informal workers, it doesn’t respond to structural conditions that give rise to informality in the first place. This brings me to a key limitation:  by not treating informal labour in a rights-bearing manner but rather as rights in itself without considering its continuance, legal frameworks tend to normalise informality in its status as a permanent state, rather than as a problem that must be addressed, disregarding qualitative realities such labour conditions, racialised work hierarchies and gender disparity in labour.  For Indigenous workers, whose informality is intimately connected to land losses and labour deregulation, (alongside policies of austerity and global economic instability as seen by decades of state services roll back the large parts of the Global South), such recognition, while limiting the worst abuses of state-sponsored negligence, can also leave entrenched inequalities in place. In this sense, the rights-based approach can unintentionally stabilise informal labour regimes by controlling their effects, rather than dismantling their origins. Legal recognition, as meaningful as it may be, does not replace redistribution, access to land, or membership in formal labour and welfare systems.  

Bolivian construction labourers in the municipality of Cochabamba (The Guardian). Informal labourers make up the majority of contractors in countries with large Indigenous populations such as Bolivia and Peru.

Gender, Care and Informality

The limitations of informality are particularly manifest when it comes to care work. Indigenous women are disproportionately affected by unpaid and underpaid care labour within their communities and within larger informal economies. This can be seen in the fact that in countries such as Chile and Peru women domestic workers from Indigenous communities earn roughly 30 percent less than non-Indigenous domestic workers (ILO, 2012). By the informalisation of the domestic sphere, this labour is constantly being undervalued and unsupported – racialised inequalities are exacerbated and filtered through the lens of gender inequality. While recent legal interpretations of care have recognised care within the framework of labour rights, recognition alone does not address the material conditions that necessitate Indigenous women bearing care burdens without adequate compensation or social protection. As long as care remains informal, it is structurally devalued.

Conclusion

The relationship of Indigenous peoples to informal labour highlights the shortcomings of development approaches that have both tolerated precarity and depicted them as adaptive or inevitable. Informality is not a neutral, or even benign, condition. For Indigenous workers, though, it is rooted in historical dispossession and the kinds of policy decisions today that favour flexibility and expense over security and rights. Legal recognition of informal workers is a powerful challenge to outright exclusion, yet it doesn’t address the broader political and economic forces that underpin informality in practice. Ending extractive practices of Indigenous exploitation needs to extend rights within informal economies but also address the factors that create systemic conditions such that informality is the default condition of Indigenous participation in the labour market.

Fabian Cortez is currently in the process of completing his MSc at the School of Oriental and African Studies whilst teaching history and politics at secondary schools. His research focuses on power and state project consolidation. He can be reached at 724381@soas.ac.uk

Footnotes

International Labour Organization, Indigenous Peoples and the World of Work:

Global Estimates (Geneva: ILO, 2023), p. 6.

United Nations Human Settlements Programme (UN-Habitat). Enhancing Productivity in the Urban Informal Economy. UN-Habitat, 2016.

International Monetary Fund. How to Mitigate the Impact of Economic Downturns on Labor Markets: Evidence from Nicaragua. IMF Working Papers, International Monetary Fund, 2022.

Lobato, Julieta. “Unveiling the Structural Character of Informal Work: New Labour Subject and Financial Exploitation Beyond the Promise of Transition.” Industrial Law Journal, 2025.

OECD, Expanding Social Protection and Addressing Informality in Latin America, OECD Publishing, Paris. 2025.