Structural Heterogeneity and Poor Microenterprises in Argentina
Marta Bekerman and Cecilia Rikap
Legal status

In this category, we analyze if the microenterprise has a type of legal status, that is to say, if it is a consolidated legal entity and if so, what kind: a public corporation, a limited liability corporation, a de facto association, etc. The results obtained indicated that none of the enterprises has formal legal status whether as a civil society or a commercial entity and 91% are not registered with the Federal Administration of Public Revenue (Administración Federal de Ingresos Públicos-AFIP). On the other hand, only 1% of the enterprises is registered with the Registry of Establishments and the Registry of Products and 95% are unfamiliar with the Social Monotributary System (Monotributo Social) afforded by the Ministry of Social Development.10 Not only is this a highly informal sector, but it also shows a strong lack of information in regards to existing regulations and possibilities for formalizing their economic activity.

Schooling and access to training

The positive association between education and work has been historically demonstrated by countless studies. Regardless, given the current situation of public education, the heterogeneity of the labor market and the numerous subsistence strategies that families adopt today, this association has overtones that appear in the survey results.

We observed a lack of a strong positivie association between the three types of enterprises and the level of education, which reveals a frequent situation in the post-crisis context to the 2001-2002 financial crisis. The fact that a significant number of entrepreneurs began or finished their secondary schooling (61%) or have some college education (7%) indicates that education does not guarantee protection from underemployment, a low income or poverty.

Within the sub-segment of infra-subsistence enterprises, we encounter two very different groups in regards to their level of education: a core group living in poverty with low levels of education (31%) and another group composed of women with middle to high levels of education who carry out these activities as a secondary family income (69%). Given the fall in the real income of workers over the past decade, the income of spouses/partners is an important supplement for domestic economies.

In regards to technical support, it is noteworthy that only one third of entrepreneurs mentioned having received some kind of support in the past three years. The majority of those interviewed (60%) believe that their performance would improve if they were to receive training and/or technical support. Entrepreneurs with small surpluses were seen to be more self-confident in regards to their business performance and management although they revealed other concerns, such as gaining access to more capital.

Management capacity

The need to include production conditions and management capacity –linked to so-called human capital– as elements to shed light on the analysis of each productive strata is increasingly evident in both the bibliography on this subject, as well as in our analysis of current realities. One issue linked to management is the ability to purchase inputs and raw materials and to sell one's products –individually or associatively– which can influence income levels in relation to the possibility of reaching economies of scale. Nevertheless, more than 70% of those interviewed have never carried out purchases or sales collectively. Thus, it is important to implement measures to incentivize this type of strategy through technical assistance.

In this regard, it is correct to believe that microenterprises in the informal economy are not pursuing economies of scale. Such economies would be possible by establishing ties among peers for exchanging information, knowledge and innovations. Although here, another one of their limitations comes to light: in general, these enterprises do not have strategies for developing innovations and diversifying their products, which is what would allow them to increase sales. Consequently, the easy entrance for new potencial bidders who “reduce the residual demand and the income of established companies” heightens the tendency not to invest in these strategies (Bekerman, 2009: 526).

10 For a nominal fee, the entrepreneurs can enroll in the National Performers Registry of the Ministry of Social Development as small contributors, thus allowing them to issue invoices and to have access to social works. The sum of their years registered as small contributors or independent workers are then counted towards their retirement plan, although they must make the corresponding contributions in order for these years to be considered.