White Paper: Workplace Community - The Overlooked Catalyst for Transforming EMs

EMs face a persistent development paradox: the middle-income trap, where nations stagnate between low-wage competition and high-value innovation. In Latin America (LATAM), this manifests as chronic labour informality—50% of workers (140 million people) operate outside formal institutions, sacrificing social protections for flexibility and community.

During economic stagnation, however, LATAM workers have continued to develop their skill sets informally and through intermittent periods of formal employment. Their skills and experiences represent an extraordinary opportunity to galvanize the region’s productivity. The key to unlocking this potential is to create sustainable opportunities that link skilled informal workers to formal industries.

Offering a new perspective, we argue that traditional policy solutions have failed because they overlook a critical insight: workers reject formal jobs not due to tax avoidance, but because rigid workplaces alienate their identities and caregiving roles.

Through ethnographic research across India, Mexico, Brazil, China, and Indonesia, we identified three systemic barriers to formalization:

1. Psychosocial Mismatch: Formal jobs often demand sacrifices of flexibility and community ties that informal work preserves.

2. Compensation Disconnect: Monthly pay cycles disrupt cash-flow management for workers accustomed to daily earnings.

3. Identity Erosion: Standardized roles conflict with caregiving identities, particularly for women and marginalized groups.

This paper demonstrates how businesses can unleash LATAM’s potential:

• Reducing informality by redesigning workplaces around worker values

• Boosting productivity through higher retention and engagement

• Accelerating progress toward SDG 8 (Decent Work) and inclusive growth

The path out of the middle-income trap requires recognizing that formalization is a cultural challenge—not just an economic one. Private sector leadership is facing a promising opportunity to scale this model across LATAM and beyond.

Please download the paper here

20251104 Workplace Community The Overlooked Catalyst for transforming EMs White Paper.pdf

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