The Informal Economy in CETRAMs

Operating Outside Regulation


Informality is an elusive yet commonly used term in urban planning, generally referring to business activities that happen outside state regulation, do not generate tax revenues, and/or do not report to a formal authority. A large percentage of informality in the economy is common among countries in the Global South (ILO, 2014). According to Roy (2005) urban informality was once associated with poor squatter settlements, but the term is now used to refer to a more general form of urbanization. Roy defines informality as all activities that are exceptions to formal urbanization, and argues that since informality is so common, planners in developing world cities must learn to work with this state of exception. Roy and other scholars argue that informality is not consistently defined and should be thought of as a gradient — on one extreme is the highly powerful, formal organization, and on the other extreme lies the less politically connected individuals and enterprises, often excluded from funding, services, and regulation (Roy, 2005). In Mexico, an estimated 59% of workers operate informally across many sectors of the economy like housing, transport, commerce, and credit (Castillo Olea, n.d).

Informality is present in CETRAMs in many ways. The colectivo routes themselves operate outside direct control of the state. Even if state governments operate vehicle registries and provide driver licenses, they have little practical influence on actual colectivo route planning and operations. Furthermore, an important share of colectivos operate illegally, without permits or licenses — an estimated 15% in the State of Mexico (Cruz, 2016). The lack of government control means that agreements between operators are enforced through other means — sometimes through corruption, extortion, or violence — in a constant negotiation for markets, territories, and boundaries. On the positive side, however, and as discussed above, these services do provide flexible, ubiquitous, self-financing public transportation, at relatively affordable prices (Guerra 2013).

Informality is also present in CETRAMs in the form of the vendor markets that emerge around them. These markets provide commuters a wide variety of services and goods at affordable prices, some highly needed, like food and household items, but even less typical ones, like tattoos and computer software. In these markets, space is managed by the powerful leaders of vendor organizations that craft backdoor agreements with authorities. In exchange for bribes or political support, authorities look the other way, allowing vendors to operate in normally regulated public places, the most valuable naturally being those with high pedestrian flows. Individual vendors pay a fixed rent to the leaders of such organizations and agree to participate in their political activities, with few guarantees in return. Without protection from the state, their livelihoods are dependent on these arrangements, rendering them vulnerable to extortion or crime.