ILO reports labor outlook for Latin America and the Caribbean after two years of pandemic

The economic growth registered in 2021 was insufficient to recover the labor markets in Latin America and the Caribbean, affirms a new report published by the International Labor Organization (ILO). The Labor Overview of Latin America and the Caribbean indicates that after two years of crisis, the region faces high unemployment and the prospect of an increase in informality.

"The labor outlook is uncertain, the persistence of infections due to the pandemic and the prospect of mediocre economic growth this year could prolong the employment crisis until 2023 or even 2024," said Vinícius Pinheiro, ILO Regional Director for Latin America and Caribbean.

"An employment crisis that is too long is worrying because it generates discouragement and frustration, which in turn affects social stability and governance," added Pinheiro.

The new edition of the Labor Overview of Latin America and the Caribbean offers a look at the worst employment crisis since the ILO Regional Office began publishing the annual report in 1994.

The strong economic recovery recorded in 2021, with higher growth at 6 percent, it was not enough to recover the jobs that had been lost. 4.5 million of the 49 million jobs that were lost at the worst moment of the crisis in the second quarter of 2020 remain to be recovered.

Of these, 4 million jobs are people who have lost their jobs due to the pandemic crisis, 500,00 are those who have not returned to the labor market. As of early 2022, there are an estimated 28 million unemployed people in the region.

The average regional unemployment rate at the end of 2021 has been estimated at 9.6 percent, which represents an improvement compared to the 10.6 percent reached in 2020, but a setback compared to the 8 percent registered in 2019 , which in this case is used as a reference to calculate the two-year impact of the pandemic.

The ILO highlights that the forecast of much lower economic growth in 2022, just above 2%, is a clear indication that the region will take longer to emerge from the COVID-19 crisis. Under these conditions, and considering the persistence of the pandemic, the ILO estimates that the unemployment rate this year could fall between 0.2 and 0.3 percentage points, remaining above 9 percent.

This would be insufficient to return to the levels of 2019 when, in any case, the situation of the labor market was far from positive in a region that was already trapped in a scenario of slow growth, with low productivity and high levels of informality and inequality. .

"In Latin America and the Caribbean, the pandemic had a more severe impact due to 'social comorbidities' such as informality and inequality," Pinheiro explained. He added that when the crisis began "they contributed to the loss of jobs and income, without adequate social protection regimes to sustain people in such a difficult time."

The ILO report highlights that after the start of the pandemic, the crisis manifested itself in an atypical way and instead of affecting formal occupations more, it was reflected in a greater loss of informal jobs that left millions of people without income. In some countries, the informality rate even fell.

But since then, the situation has been reversed. The countries with available data indicate that between 60 and 80 percent of the jobs recovered until the third quarter of 2021 were in informal conditions. The rate is already 49 percent, similar to what it was before the pandemic, and indicates that one in two employed persons is informal.

The report also highlights that the unemployment rate for women has remained high at 12.4 percent since 2020 and has not improved in 2021, which contributes to amplifying the impact of the crisis on gender inequality at work.

“The most intense impact among women in the region is associated with the greater presence of women in economic sectors strongly affected by the crisis, such as hotels and restaurants, and in other service activities and the home sector. This impact can also be attributed to the higher incidence of informality among women”. says the report.

The regional youth unemployment rate remains worrying and remains at unprecedented levels, warns the ILO. Before the pandemic, it was around 18 percent and already considered too high. But with this crisis it quickly exceeded the 20 percent limit and still stands at a level of 21.4 percent.

The Labor Outlook also includes data on urban-rural differences in employment, occupation by activity sector and occupational category, the evolution of minimum wages and average income.

“The growth of employment in 2021 was particularly significant in sectors such as construction (16.7%), commerce (9.1%) and transport (6.7%), which contrasts with what was observed in 2020, when these sectors registered strong contractions”. says the report.

The Regional Specialist in Labor Economics of the ILO, Roxana Maurizio, emphasized that in the current scenario it is imperative "to adopt a broader agenda of comprehensive and far-reaching policies focused on people and, in particular, on the creation of formal employment" .

"Without a coherent set of measures to generate employment, the impacts of the crisis will be prolonged and will leave deep social and labor scars in Latin America and the Caribbean," added Maurizio, who coordinated the team of ILO specialists in charge of preparing this report. 

Digital transition and labor markets

The Labor Overview of Latin America and the Caribbean 2021 concludes with a special analysis of the challenge posed by digital transitions and the acceleration of trends caused by the pandemic, including the greater presence of teleworking and the evident increase in web-based services. digital platforms.

This new scenario poses important challenges for policymakers to take advantage of the opportunities offered by these transformations and avoid possible disruptions in labor markets.

The report warns of the need to adapt the content and scope of vocational training to improve the match between the supply and demand for qualifications, to be better prepared for the skills required in the future and to reduce the disruptive impacts of technology.

It also highlights the need for public policies that help remove obstacles and ensure that this transition leads to the creation of more and better jobs.