Latin America in a post-Covid world
The informal sector has been most negatively impacted during the pandemic. With the Colombian government prioritising public health over livelihoods, a new study sheds some light on the hardship of street vendors during the pandemic and the deepening of their vulnerabilities.
Text and photos: Nicolas Forsans
Informality is a common characteristic among countries of the global south, with an average of 60% of the working age population in Latin America earning a living through informal employment, and even more so countries such as Honduras, Guatemala and Bolivia.
Street vending is an important part of the world of informal employment. Street vendors have historically faced significant socioeconomic challenges. The highly public nature of street vending makes insecurity, harassment, evictions and confiscations forms of exclusion that significantly impact on one’s ability to earn a living.
Street vending as a class issue
Governments have a complex relationship with street vendors. Apparent concerns about public health, a perceived blight on urban aesthetics, and safety issues are often used to justify a restrictive approach to street vending by local and national governments. But they are a diversion from the desire to protect formal businesses and obvious policy failures.
Street vending is an obvious manifestation of urban poverty, and a threat to government finances. And therefore, issues of power – be it economic or political – are often at play. Street vending can be viewed as “a class issue in which the power of the state is used to enforce a certain vision of who, and what a city is for and how it should function”.
The problem is compounded by other forms of marginalisation, discriminations and exclusion.
Gender, race and ethnicity, as well as migration status generate barriers to access to education, health, employment and opportunities. And by failing to address those inequalities the state is often colluding with vested interests while overseeing an economy in which certain groups of people are prioritised over others.
Cali, the third largest Colombian city
With a population of 2.5 million people, Cali witnessed the expansion of the middle class, although high levels of inequalities and poverty still characterise the urban area.
A large proportion of Cali’s population lives in neighbourhoods of low socioeconomic status and have limited access to basic public services. Given high levels of segregation in the city, those neighbourhoods tend to be the ones with the highest prevalence of violence and crime.
In Cali like in many other cities in the region, informal employment dominates the world of work, and in particular in mobility services and street vending.
Government response to the pandemic was among the most restrictive in the world in terms of mobility and economic activity.
Colombia’s lockdown lasted for six months – one of the longest in the world. As in many other countries, Duque’s government prioritised public health over livelihoods, and Colombia’s response to Covid led to the single largest contraction of GDP per capita (a measure of wealth per inhabitant) in 2020.
The result is a sharp increase in poverty: 40% of Colombia’s population found themselves in poverty, and extreme poverty rose from 10 to 15.5% according to official government data. The recovery that followed in 2021 has been insufficient to revert back to pre-pandemic levels. By the end of 2021, 19.5 million Colombians (or two fifths of the population) were still in poverty, and 6.1 million in extreme poverty. The DANE defines poverty as those surviving on US$3 a day, and those in extreme poverty live on US$1.36 a day or less.
Street vending in a pandemic
A new study reveals Covid restrictions severely limited any informal economic activity, including street vending. Informal workers, and street vendors in particular are characterised by lower educational attainment, precarity and lack of resilience, making them unable to cope with external shocks – let alone a pandemic.
A very diverse group, street vendors are vulnerable to economic shocks, with the majority of them having only completed elementary school. Few are reported to participate in the welfare system, and most are ‘household breadwinner’ providing for two to four children. Many informal street vendors are rural migrants displaced from the conflict, and immigrants from Venezuela.
Around 10,280 street vendors operate in Cali, with the largest concentration to be found in comparatively poorer neighbourhoods.
Geographically, Cali’s downtown area, close to the bus station, has the largest concentration of street vendors, especially in food markets where the most vulnerable street vendors can be found.
They tend to be of ethnic minority origins, displaced, and have lower levels of educational attainment.
Although they tend to earn on average about 20% more that the average monthly minimum wage, they tend to be excluded from the banking and financial systems.
Access to credit is through payday lenders who charge rates of over 20% per month. And so, they have to work most days to cover their basic living expenses – any day off-work is a day when those basic needs cannot be fulfilled.
With the unemployment rate in Colombia increasing to 23% in the second year of the pandemic, the vulnerabilities of street vendors had deepened. 70% of those interviewed reported being unable to work for more than three months.
Unsurprisingly their income experienced a significant drop, particularly for ‘women and members of ethnic groups’. And while nearly half of them had school-age children, a quarter of them reported their children had dropped out of education during the pandemic.
This, it is argued, could be explained either as a result of the limited availability of internet-connected devices necessary for online education, or as a result of someone in the household going to bed hungry, a daily occurrence for a fifth of the street vendors interviewed for the research. This could result in children having to work to support ‘the provision of basic household needs’, or in their inability to focus while learning.
This series argued earlier for a renewed social contract, and what street vendors need is a new social contract that “cements their participation in the region’s political and economic systems”.
If governments wish to provide meaningful support and address issues of multidimensional inequalities they need to work with them and integrate those vulnerable populations in their decision making processes. This is the only way for the region to prosper – for the benefit of everyone.
* Nicolas Forsans: Professor of Management and MBA Director at the University of Essex, UK. Co-director of the Centre for Latin American & Caribbean Studies and a member of many Latin American societies and think tanks, Nicolas investigates the economic and societal challenges in the region generally, and in Colombia more specifically.
Latin America in a post-Covid world: Street vendors during the pandemic.