14 Poverty and the Importance of the Informal Sector Clearly the informal sector of the economy is fraught with many problems, but that does not mean it serves no purpose; thus, it should be considered more broadly. To facilitate a more targeted analysis and policy discussion, poverty, which is closely associated with economic informality, should be differentiated into two components. The World Bank defines those in poverty as anyone who survives on less than $1.90 per day. Theoretically, people living in poverty have access to shelter, food, clean water, and basic services provided by the Argentine government. People who live in extreme poverty are deprived of even those basic human needs (Frykholm, 2016). When adjusted for inflation, the average salary in the informal sector in Argentina is about 28 Argentine pesos ($.32) per hour (Maurizio, 2014), which is about $2.56 per day, working 8 hours a day. If informal workers completely lost their salaries and also were unable to find employment in the formal sector, as is likely, they would be unable to afford basic human needs, and thus be thrown into extreme poverty. The Argentine legislature since 2003 has enacted a variety of social programs designed to alleviate extreme poverty. In 2008, the Universal Child Allowance program was launched and now reaches more than 3.6 million families, or nearly 10% of the Argentinian population (Frayssinet, 2015). The program gives unemployed and informal workers $45 per child per month (Arévalo, 2018). It worked to mitigate the most extreme poverty, at least until recently. Before the program was widely implemented in 2010, the extreme poverty rate had been above 5%. Unfortunately, more recently, in the wake of the recession, COVID-19 pandemic, and inflation and debt crisis, the extreme poverty rate in Argentina rose from 3% in 2018 to 7% in 2020, and the poverty rate rose from 20% to 47% during the same time frame (Misculin et al., 2020). Table 1 Sociodemographic Characteristics of Formal vs Informal Employment as Percentage of Total Employment Formal Informal Gender (%) Male 58.57 50.85 Female 41.43 49.15 Age, years (%) 16 to 24 9.14 27.33 24 to 54 80.15 64.58 55 to 64 10.70 8.08 Educated through primary school or less (%) 17.83 35.70 Marital status (%) Married or common-law couples 66.70 48.48 Widowed, divorced, or separated 7.90 8.65 Single 25.39 42.87 Job Weekly hours 40.60 36.20 Hourly wage (pesos) 17.42 10.60 Source: Albertini et al., 2019.
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