La Paz, Bolivia
Thomson Reuters Foundation

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 income of around the monthly minimum wage of $US300 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.

About a year ago, Luna and seven other hard-up entertainers started producing their own line of clown and superhero-inspired face 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."

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Reynaldo Luna does home deliveries of his handmade face masks by motorbike in La Paz, Bolivia, on 23rd February, 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. PICTURE: Thomson Reuters Foundation/Wara Vargas.

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.

"Formal sector jobs are being replaced by informal activities. The expectation is that there will be less formal employment and lower earnings in the informal sector."

- Martin Rama, chief economist for Latin America and Caribbean at the World Bank.

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. 

"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," he added.

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," said Philippe Vanhuynegem, Andean countries director at the International Labour Organization.

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Patricia Llave works at her home alongside her son and daughter-in-law in La Paz, Bolivia, on 23rd February. 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 eight out of 10 work cash-in-hand. PICTURE: Thomson Reuters Foundation/Wara Vargas.

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, a 48-year-old mother-of-three, is acutely aware of how precarious her livelihood is.

She used to make about $US700 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 sanitiser, face masks and movies on DVD in La Paz's steep streets.

"If we don't go out, we don't earn."

- Patricia Llave.

"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.

To help cushion the COVID-19 economic blow, millions of Bolivians have received some $US700 million in government cash transfers.

Bolivia's left-wing President Luis Arce, who took office in November, has pledged to dole out social payouts "as many times as necessary", and the aid has benefited students, people with disabilities, poor families and mothers.

Women in Bolivia, as in the rest of 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.

They 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.

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The pandemic has led to more Bolivians scraping a living as street vendors in a country where eight out of 10 Bolivians work cash-in-hand. To help cushion the COVID-19 economic blow, the government have handed out some $US700 million in cash transfers targeting poor families and informal workers. Pictured is a street in La Paz, Bolivia during February. PICTURE: Thomson Reuters Foundation/Wara Vargas.

Bolivia was one of the region's steadiest economic success stories during the near 14-year rule of left-wing Indigenous leader Evo Morales, which ended in 2019, averaging 4.9 per cent annual GDP (gross domestic product) growth, 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 per cent to 58 per cent of the population between 2005 and 2017, official data shows.

Yet the coronavirus threatens to undermine such gains.

Bolivia's economy, dominated by farming and natural gas exports, shrank by 7.3 per cent last year, while the number of poor people - defined as those earning less than $US5.50 a day - rose from 22 per cent to 31 per cent, the World Bank estimates.

Reskilling workers will be vital to achieving a sustained recovery, labour experts said.

"Better jobs require better productivity," said Manuel Urquidi, the IDB's labor markets lead specialist in Bolivia. "In a post-pandemic world, the need for retraining will become bigger."

But for many of the nation's informal workers, changing tack to adapt to the times comes naturally.

Jose Valdez, a former self-employed radio presenter, lost his job last year as advertising revenue dried up.

That prompted him 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 on foot and bike.

"We decided to learn new skills," said Valdez, 35, who hopes to expand his business nationwide by selling it as a franchise. "We decided COVID wouldn't defeat us."