One out of three Latin-Americans start their own business as self-employed or micro-entrepreneurs, in many occasions as a response to the lack of labour opportunities. En such cases, what prevails is low productivity and small chances of succeeding.

According to Pablo Sanguinetti, Socioeconomic Research Director of the Latin American Development Bank (CAF), that is one of the main conclusions of the Economy and Development Report (RED2013) published by the institution.

Sanguinetti said that “In Latin America, business structure is too unbalanced, there are too many small companies”.

Over 90% of the companies in the region have less than four employees, and most have none. This is the self-employment phenomenon.

The research “Start-ups in Latin America: from survival to productive transformation” points out that self-employed workers and micro-entrepreneurs “represent and average 28% of the employed population”.

Companies of up to 5 employees –including those with no employees at all- cover 38% of the entire workforce.

The report establishes that people with “low skills” are developing individual business, when their best option would be employment.

According to the research, these new companies “do not only generate low and unstable incomes” to new entrepreneurs, “but they also prevent them from developing labour capacities and aptitudes. Therefore, the potential to acquire a job in the formal sector reduces as time goes by”.

The country with the highest number of cases is Honduras, where 42, 8% of the economically active population is self-employed and barely 2, 4% is employer. Dominican Republic shows a similar situation with 42% of the active population being self-employed and only 3, 6% employers.

Colombia has 39, 1% self-employed registered and 4, 5% of the population are employers.

Chile has the lowest self-employment rate (18, 1%) and percentage of employers around 2, 8%, while Brazil has 18,9% self-employed and 4% employers.

The proportion of employed people in the region (54, 8%), is considerably low when compared to USA (80, 4%).

The report shows that the countries where the proportion of employed people is lower are Bolivia (37, 2%), Peru (41, 5%) and Colombia (41, 7%), while those with highest proportion are Argentina (71, 3%), Costa Rica (70, 6%) and Chile (68, 5%).