Bolivians rely on informal economy to survive COVID-19

As a clown with a talent for rapping, Reynaldo Luna used to make a decent living performing at children's parties in Bolivia's highland capital La Paz, where he goes by the name of Rapito Mix. But everything changed when COVID-19 reached the Andes.

Luna's monthly income of around the monthly minimum wage of $300 has been decimated by lockdown bans on parties and a deep recession in one of South America's poorest countries, forcing him to turn his creativity to a new, pandemic-friendly business: clown and superhero-inspired face masks.

Reynaldo Luna does home deliveries of his handmade face masks by motorbike in La Paz, Bolivia, February 23, 2021. Before the pandemic, he performed as a clown at children’s parties but lockdown restrictions prompted Luna to start his own line of face masks. Thomson Reuters Foundation/Wara Vargas.

About a year ago, Luna and seven other hard-up entertainers started producing their own line of masks and delivering them to customers on motorbikes - complete with red noses, painted faces and a bunch of balloons.

"It's a home delivery that lifts the spirit and puts a smile on a child's face. We tried to do something original," said Luna, 38, who has two children. "We haven't been able to save money. It's just to keep ourselves going."

Luna belongs to an army of self-employed people including street vendors, market traders and small business owners, who often work for daily cash in hand and make up the bulk of the informal economy in the nation of 11.6 million people.

Even before the coronavirus struck, eight in 10 Bolivian workers were off the books, according to the Inter-American Development Bank (IDB), meaning they have no social security, health insurance or employment protections.

As businesses close and people are laid off, the informal economy looks set to expand and incomes within it - for workers like Luna - are expected to be squeezed even lower.

Reynaldo Luna poses next to his motorbike in a street in La Paz, Bolivia, February 23, 2021. Before the pandemic, he performed as a clown at children’s parties but lockdown restrictions prompted Luna to start his own line of face masks. Thomson Reuters Foundation/Wara Vargas.

"Formal sector jobs are being replaced by informal activities," said Martin Rama, chief economist for Latin America and Caribbean at the World Bank.

"The expectation is that there will be less formal employment and lower earnings in the informal sector."

Many informal workers in Bolivia "live hand to mouth", and are invisible in unemployment figures, said Rama.

"Because they're self-employed, you may not see so much the loss of employment because they'll try to do something. But what you will see a lot is a loss of earnings," he said.

Reynaldo Luna leaving a shop in La Paz, Bolivia, February 23, 2021. Before the pandemic, he performed as a clown at children’s parties but lockdown restrictions prompted Luna to start his own line of face masks. Thomson Reuters Foundation/Wara Vargas.

On any given street in La Paz, a city starkly divided by class and race, the informal economy is in plain sight. Women sell snacks and hot drinks on the sidewalk, men clean car windscreens and make deliveries and children shine shoes.

While such scenes are a common feature of the urban landscape across Latin America, Bolivians are far more likely to work cash in hand and without a formal work contract.

"In Bolivia, the informal sector is large and one of the highest in the region. There are many informal business and a small formal sector," said Philippe Vanhuynegem, Andean countries director at the International Labour Organization (ILO).

The pandemic has exposed a reality faced by many Bolivians - that most workers, particularly farmers and manual or domestic laborers, often have low-paid and temporary jobs that come without safeguards.

Patricia Llave, 48, is acutely aware of how precarious her livelihood is.

She used to make about $700 a month selling her husband's hand-crafted furniture as part of the family's carpentry business, and as a part-time caterer for events.

But a year on, COVID-19 lockdowns have seen their earnings plummet and their savings run out.

Now the couple are scraping a living by hawking pandemic essentials - hand sanitizer, face masks and movies on DVD in La Paz's steep streets.

Patricia Llave poses with the products she sells in the city streets of La Paz, Bolivia, February 26, 2021. Before the pandemic, Llave worked as a part-time caterer and helped her husband sell his hand-crafted furniture. They now join an army of street vendors in a country where 8 out of 10 work cash-in-hand. Thomson Reuters Foundation/Wara Vargas.

"If we don't go out, we don't earn," said Llave, who sets off from home with her bag of goods in the chilly dark before dawn.

"More people are on the streets selling things and you see more mini markets. There's more competition," said the mother-of-three.

To help cushion the COVID-19 economic blow, millions of  Bolivians have received some $700 million in government cash transfers targeting poor families, mothers, students, and people with disabilities.

Llave said she used her government payments totaling $145 to get a home internet connection for her children to study online during ongoing school closures, and to buy stock to sell.

Patricia Llave works at her home alongside her son and daughter-in-law in La Paz, Bolivia. February 23, 2021. Before the pandemic, Llave worked as a part-time caterer and helped her husband sell his hand-crafted furniture. They now join an army of street vendors in a country where 8 out of 10 work cash-in-hand. Thomson Reuters Foundation/Wara Vargas.

Luna, the clown, received $215 from the government in two separate payments, which he spent on materials, food and rent.

Bolivia's left-wing President Luis Arce, who took office in November, has pledged to dole out social payouts "as many times as necessary".

Many other South American countries have given cash transfers to families and informal workers, serving as a lifeline for millions.

"We started (this pandemic) as if this was a sprint and it's turned into a marathon," the World Bank's Rama said.

"And the problem is that you can't sustain that level of transfers, as in the case of Brazil, for too long," he said, referring to Brazilian handouts that totaled some $57.3 billion last year.

Women in Bolivia, and across South America, are more likely to work in the informal economy, typically as domestic workers, cleaners and cooks, meaning they have been disproportionately affected by the pandemic.

"In Bolivia, and across Latin America in general, the face of the informal economy is the face of a woman, a young person, and an indigenous person," said ILO's Vanhuynegem.

Roughly half of Bolivia's population is indigenous, belonging to almost 40 different ethnic groups.

Women have also lost their jobs at a faster rate than men, as they are more likely to work in the worst-affected sectors.

"Many women were before the crisis working in the sectors that got hit the worst - tourism, hospitality," Rama said.

Ana Lia Gonzales, an Aymara indigenous woman, who runs a small travel tour business, used to spend her days scaling the glacial slopes of the Huayna Potosi mountain, a 19,974-foot (6,088-meter) peak outside of La Paz, with foreign tourists.

Mountain guide and climber, Ana Lía Gonzales, poses with her climbing gear in front of her house in El Alto, Bolivia, February 19, 2021. Gonzales runs a small travel tour business - Cholitas Tours Bolivia - for mostly foreign tourists looking to scale the glacial slopes of the Huayna Potosi mountain near La Paz. During the pandemic, she adapted by hosting online webinars and virtual climbing tours. Thomson Reuters Foundation/Wara Vargas.

Now Gonzales, 36, finds herself sitting behind a desk.

"Since lockdown began, there have been no tourists," said Gonzales, who runs the Cholitas Tours Bolivia company.

"We rely on tourism and visitors staying at our lodge and taking tours," she said.

With tourism on hold, Gonzales got together with other local tour operators to start online tours and promote her business and the family's mountain lodge on social media.

Ana Lía Gonzales gives an online webinar about her company - Cholitas Tours Bolivia – and mountain lodge business at her home in El Alto, Bolivia, February 19, 2021. Gonzales runs a small travel tour business for mostly foreign tourists looking to scale the glacial slopes of the Huayna Potosi mountain near La Paz. Thomson Reuters Foundation/Wara Vargas.

Her family, including her parents who are also mountain climbers and guides, is living off money she makes from the online tours.

About 40 people tune in every weekend to see photos of the snow-capped mountains and glaciers and to learn about climbing at high altitude and tours on offer, bringing in about $140.

"It's become a source of income that allows us to barely survive," said Gonzales, adding that she had received no government cash transfers.

Ana Lía Gonzales and her mother, who is also a mountain climber and guide, give online webinars at her home in El Alto, Bolivia, February 23, 2021. Gonzales runs a small travel tour business – Cholitas Tours Bolivia - for mostly foreign tourists looking to scale the glacial slopes of the Huayna Potosi mountain near La Paz. Thomson Reuters Foundation/Wara Vargas.

Bolivia was one of Latin America's steadiest economic growth stories during the near 14-year rule of former left-wing indigenous leader Evo Morales, which ended in 2019.

The country enjoyed average annual GDP (gross domestic product) growth of 4.9% during his time in office, according to the International Monetary Fund.

The former coca farmer's brand of socialist capitalism lifted many Bolivians out of poverty and saw the middle class grow from 35% to 58% of the population between 2005 and 2017, official data shows.

Yet the coronavirus threatens to undermine such gains, with economic damage caused by the pandemic estimated at about $5 billion and the country's unemployment rate rising to nearly 12% last year, according to the government.

Bolivia's economy, dominated by farming and gas exports, shrank by 7.3% last year, while the number of poor people - defined as those earning less than $5.50 a day - rose from 22% to 31%, the World Bank estimates.

Latin America's economy as a whole contracted by 7.7% in 2020, according to the U.N. economic commission for the region (ECLAC).

Bouncing back means training workers, experts said.

"Better jobs require better productivity," said Manuel Urquidi, the IDB's labor markets lead specialist in Bolivia.

"This requires skills and access to technology. In a post-pandemic world, the need for retraining will become bigger."

Jose Valdez, a former self-employed radio presenter has been developing new skills on his own. Last year, he lost his job as advertising revenue dried up.

That prompted Valdez to start a food delivery business and app, called Chasqui Delivery, that employs about 30 people to courier restaurant orders and ceviche made by his wife.

Jose Valdez, a former self-employed radio presenter, poses with his courier bag near his house in La Paz, Bolivia, February 22, 2021. After losing his job as advertising revenue dried up, he set up a new food delivery business called Chasqui Delivery that employs about 30 people. Thomson Reuters Foundation/Wara Vargas.

"We decided to learn new skills," said 35-year-old Valdez, who has also not received state emergency aid. "We're a company that creates jobs and allows people to work on foot. You don't need a bike or motorbike."

Valdez plans to expand his business across Bolivia by selling it as a franchise.

"We decided COVID wouldn't defeat us," Valdez said.

This photo essay is part of the series “COVID-19 The Bigger Picture” supported by the Omidyar Network. Photographers of the Livelihoods in Limbo series are winners of a competition to capture the most powerful images of the coronavirus pandemic’s impact on everyday people. To find out more about the photographers and competition click here.