Sixty-two percent of Paraguay's economic actors operate in the informal sector, which poses a significant obstacle to the country's economic development. This high rate of informal employment severely limits workers' job security, access to social security, and the acquisition of other labor rights.

According to the National Institute of Statistics (INE)'s household survey for the fourth quarter of 2024, the current number of employed individuals in Paraguay is 2,996,000, which refers to citizens participating in economic activities for at least one hour per week. Of these, 1,691,000 are men and 1,305,000 are women. On the other hand, the number of unemployed individuals who have not found work is approximately 142,000, representing 4.6% of the economically active population, with a nearly equal gender ratio. Labor market analysis reveals that over 60% of all workers are employed in the tertiary sector, including commerce, restaurants, and services. The secondary sector, encompassing manufacturing and construction, accounts for 21%, while the primary sector, including agriculture, livestock, hunting, and fishing, constitutes only 16%, with its share decreasing annually.

Iván Ojeda, the director of INE, analyzed the results of the fourth-quarter 2024 household survey and reiterated that one of the major challenges facing Paraguay is its high informal employment rate. He pointed out that "62% of Paraguay's economic actors belong to the informal sector," a figure higher than the regional average of about 55% but lower than Peru's 74%. In contrast, Uruguay and Chile have the lowest informal employment rates at around 25%. Although more than 100,000 new jobs have been created between August 15, 2023, and early 2025, not all of these are formal positions. Director Ojeda explained that the concept of "employed individuals" includes not only formal workers but also those working temporarily without labor contracts or social security benefits.

The number of formal workers is recorded at 1,503,000, with 279,000 in the public sector and 1,224,000 in the private sector. The private sector, in particular, is considered a major driving force of the Paraguayan economy. Among formal private-sector workers, there are 834,000 men and 390,000 women, indicating a clear gender gap in the labor market.

Director Ojeda also mentioned the increasing phenomenon of digital platform work, such as motorcycle delivery drivers. While this form of employment generates income, it often occurs in unstable working conditions and without labor protections. INE measures this phenomenon within the category of "underemployment due to insufficient hours," which includes individuals working less than 30 hours per week who actively wish to work more but are unable to do so.

Despite these difficulties, Director Ojeda expressed optimism about Paraguay's economic outlook. He emphasized that "Paraguay is among the top 3 or 4 countries in the region with the highest growth prospects and holds an investment grade, placing it among the 60 most attractive countries for investment worldwide."

Meanwhile, the unionization rate in Paraguay is only 6.7%, and due to the high informal employment rate, low levels of industrialization, and public distrust, the organizational strength of labor unions is very weak. The report notes that Latin American labor unions face their greatest challenges in history due to liberal-leaning governments, limited labor reforms, and the spread of informal employment. Amidst confrontation, adaptation, and weakening power, Latin American labor unions are at risk of being reinvented or disappearing in a changing and unequal environment. Domestically, workers continue to fight for their constitutionally guaranteed right to form unions, but this is systematically ignored by the government.

Paraguay faces a serious problem with its high rate of informal employment, which negatively impacts the quality of life for workers and the country's economic development. On this Labor Day, the Paraguayan government, businesses, labor unions, and civil society must further strengthen their joint efforts to address the issue of informal employment. Through this, a society can be built where all workers can utilize their abilities in a stable environment and enjoy their legitimate rights.

[Copyright (c) Global Economic Times. All Rights Reserved.]