Argentina's informal employment nears 50%
by Banyeliz Muñoz · UPIJune 26 (UPI) -- Informal employment in Argentina rose to 44.2% during the first quarter of 2026, reaching its highest level since official records began in 2023, according to data released by the country's National Institute of Statistics and Census.
The figure increased 2.2 percentage points from the same period in 2025, when the informal employment rate stood at 42%, confirming a steady rise in jobs outside the formal economy that now affect nearly half of the country's workforce.
The government estimates that about 5.9 million people work in the informal sector across Argentina's largest urban areas. These workers are employed without being registered in the country's social security system.
That means they generally do not receive pension contributions, employer-sponsored health coverage or full legal protections against dismissal and other labor rights.
The data are based on a survey covering Argentina's 31 largest urban areas, home to most of the country's population.
Within those areas, the National Institute of Statistics and Census estimated a population of 30.1 million people. Of those, 14.6 million were part of the labor force. About 13.5 million were employed while approximately 1.1 million were unemployed.
Argentina's unemployment rate stood at 7.8% during the quarter while the underemployment rate reached 11.1%. The latter includes people working fewer hours than they would like and actively seeking additional work to increase their income.
The increase in informal employment has renewed debate over its underlying causes. Some analysts argue that Argentina's legal framework and recent labor reforms may have influenced hiring decisions.
Hernán Letcher, director of the Center for Argentine Political Economy, told UPI that part of the increase may be linked to changes introduced by the Base Law promoted by President Javier Milei's administration and approved in 2024. The legislation eliminated or reduced financial penalties for employers who fail to formally register workers.
"That creates an incentive to maintain unregistered employment," Letcher said.
He also pointed to a common trend during periods of weaker economic activity. When workers lose formal jobs and cannot quickly find similar employment, they often turn to self-employment or temporary work, including informal retail activity, domestic services and freelance jobs without pension contributions.
Labor attorney Walter Mañko, a partner in Deloitte's Labor and Social Security practice, said informal employment is a long-standing structural problem in Argentina that cannot be attributed to a single cause or solved quickly.
He said recent labor reforms have not yet had enough time to produce measurable effects in the labor market.
Mañko noted that Argentina's Labor Modernization Law introduced measures designed to encourage formal hiring, including the Labor Formalization Regime, which took effect in early May.
The program reduces payroll costs for companies that hire and formally register new workers, aiming to reduce informal employment by creating incentives for legal hiring.
However, he said its effectiveness should be assessed over the coming quarters after the program has been in place for a longer period.
Regarding broader labor market conditions, Mañko said hiring decisions by small and medium-sized businesses depend largely on expectations for future economic activity.
"Formal job creation is usually one of the last variables to respond during an economic recovery. Companies, particularly small and medium-sized businesses, first wait for demand to strengthen, confirm that growth is sustainable and only then begin permanently expanding their workforce," he said.
He added that during economic recoveries, employment growth often begins through informal jobs or positions offering fewer labor protections before transitioning into more stable employment.
The combination of high informal employment, moderate unemployment and elevated underemployment reflects persistent pressures in Argentina's labor market, where a significant share of workers lack full employment protections or sufficient income.