SANTIAGO, Chile – Governments in Latin America and the Caribbean (LAC) face the challenge of supporting the income and labor reintegration of the most vulnerable segments of society, especially women and young people, according to a new report released here on Tuesday.
Photo courtesy of CARICOM.The report undertaken by the Economic Commission for Latin America and the Caribbean (ECLAC) and the International Labour Organization (ILO) indicate that in the current context of crisis, the LAC countries face these challenges while also fostering the conditions for creating decent jobs, above all among Micro, Small and Medium-sized Enterprises (MSMEs).
Furthermore, the report argues that in the medium term, reforms will be needed to make labor markets more resilient by supporting reactivation measures with programs to drive the shift from informality to formality, together with a redesign of social protection.
According to the publication titled “Employment Situation in Latin America and the Caribbean: Policies to protect labor relations and hiring subsidies amid the COVID-19 pandemic,” the two United Nations organizations analyze the effects of the crisis caused by the coronavirus disease (COVID-19) pandemic in the region’s labor markets during 2020 and 2021, and they stress the importance of the policies implemented by countries to mitigate this impact.
The report notes that in 2021 the recovery in employment and job creation has been partial and slower than the reactivation in economic activity.
Although it is forecast that the region will end this year with 5.9 per cent economic growth, this will not be enough to return to the level of gross domestic product (GDP) or employment recorded in 2019, the report notes, adding therefore, labor markets will have experienced their second year of unprecedented crisis.
ECLAC and the ILO add that during the first half of 2021, an increase was seen in the labor participation rate, which reached 60 per cent or 2.7 percentage points below the levels in the same period of 2019 and employment recovered, although without regaining pre-pandemic levels, the employment rate reached 54 per cent still 3.4 percentage points below the figure from the same period of 2019.
“As a result, the unemployment rate has gone down slightly versus the second quarter of 2020, but it is still 1.7 percentage points higher than in the second quarter of 2019, amounting to 10.1% on average.”
In addition, the gaps in labor integration between men and women have widened in 2021, and women have slower labor reintegration and face more difficulties in finding work.
The report notes that the recovery in employment has taken place primarily among self-employed workers, while salaried employment is still lagging, which suggests that the increase in the employment rate is associated with lower-quality work.
Moreover, the inflation dynamics observed in the first six months of the year could have a negative impact on workers’ real wages and, therefore, on household consumption.
“Given the slow recovery of labor markets, policies to boost employment are still very important and the challenge is to make progress both in creating new jobs and in avoiding the destruction of existing sources of employment,” Alicia Bárcena, ECLAC’s Executive Secretary, and Vinícius Pinheiro, the ILO’s Regional Director for Latin America and the Caribbean, said in the report.
The report takes stock of the measures implemented in the region to maintain jobs, primarily in 2020, which proved effective in reducing the decline in employment.
These programs mainly included requirements linked to wages and to the use of the minimum wage as a reference for determining benefit amounts, which meant that they were primarily geared towards formal salaried workers with the lowest income.
However, the high incidence of informality and the absence of unemployment insurance in various countries made designing and implementing these economic support programs for vulnerable groups a more complex task.
