The pandemic of Covid-19 has put more than 30 million people out of work in Latin America and the CaribbeanAn additional 23 million people have left the workforce due to the lack of opportunities and the unemployment rate has increased by 2.5 percentage points, from 8.1% to 10.6%, according to the Labor Outlook 2020 report from the International Labor Organization (ILO ).
The effects of the pandemic on the Latin American labor market are unprecedented in the region, which has declined in terms of employment by at least 10 years in the past 10 months. The worst part is that the crisis is far from over, according to the regional director of the ILO, Vinícius Pinheiro.
“We reached 2021 with intensive care work,” Pinheiro noted at a press conference on Thursday, adding that “this is the biggest crisis this report has ever recorded,” published in 1994. In fact, the unemployment forecast for the region next year points to a rate of 11.2%, taking into account factors such as moderate GDP growth (3.5%), a figure insufficient to account for all that was lost during the crisis to recover. In addition, the uncertainty about the evolution of the pandemic is added.
Against this background, regional governments will face the challenge of “laying the foundations for a new and better normalcy”, which implies adopting strategies to create more and better jobs as manufacturing is reactivated and the health emergency decreases. .
“Now it is essential to achieve economic growth with employment. Employment is crucial to reduce poverty and to cope with the growing inequality left by this pandemic, ”added the ILO Regional Director.
However, the ILO analysis warns that it is not only high unemployment that is the only problem in the Latin American labor market. In 2020, there was an unprecedented transition to inactivity for people who gave up their job search due to the lack of opportunities. For example, the employment rate fell by 5.4 percentage points to 57.2%, according to available data at the end of the third quarter of 2020.
As economies recover, the return of these people to labor markets for next year will put additional pressure on unemployment indicators.
WOMEN AND YOUNG PEOPLE, THE MOST INVOLVED
The report highlights that before the health crisis, the integration of women into the labor market maintained regional participation and occupation.
However, the pandemic has led to a setback in this process, causing the decline in the employment rate among women (-10.4%) to be greater than among men (-7.4%). “The health crisis in 2020 has had an even greater impact on the performance of women’s labor indicators,” the document states.
In the case of the population aged between 15 and 24, the youth and employment rates decreased by about 5.5 percentage points in the first three quarters of 2020 to 42.7% and 33%. The youth unemployment rate rose by 2.7 percentage points to 23.2%, a level not previously recorded, implying that one in four young people was unemployed as of the third quarter of 2020.
By sector, the contraction in employment was particularly strong in service sectors such as hotels (-17.6%) and trade (-12.0%). On the other hand, it is also noted that the health crisis has strongly affected employment in construction (-13.6%) and industry (-8.9%). The smallest decrease in employment was observed in agriculture (-2.7%).
Pinheiro has assured that there is no dilemma between maintaining health and the economy, because without health there is no production or consumption. For this reason, he stressed that in the future it will be important to consider the lessons learned during the epidemic, stressing that occupational safety and health will be a key element in economic reactivation. The director also stressed the importance of social dialogue between governments, companies and workers, which is “more relevant than ever”.
SALARY EVOLUTION
Salaries at the regional level had very different variations during the year depending on the country, so that in Brazil (+ 7.2%) and Costa Rica (+ 2.4%) there were wage increases, while in Colombia they contracted (-2 , 4%). ).
However, the ILO’s analysis shows that wage increases in some countries were affected by the specific environment of the pandemic, so that the lowest-income wage earners were most affected by job losses, diminishing its importance. of the lowest wages in the region.
Regarding the minimum wage, most countries registered wage increases in January as part of their periodic annual adjustments, except for Nicaragua, which made wage adjustments during the first quarter, and Chile, which adjusted the minimum wage twice, once. during the first quarter and another in September.
STRUCTURAL PROBLEMS ALREADY EXIST
“The region was badly affected by this crisis, even more so than others in the world, and this was largely due to structural problems that existed and that we were aware of,” explains Pinheiro, who emphasized that some of these structural problems the persistent problems are. lack of fiscal space, gaps in social protection coverage, high social inequality and high informality, which have highlighted the insecurity of large sectors of society.
Regarding informality, the regional director has pointed out that in this crisis it will not be a protection mechanism as it was in previous ones, as during the pandemic the labor informality was contracted, so its stabilizing role has not been demonstrated.
The report has indicated that for its part Despite significant efforts by several Latin American governments during the crisis, “there was in some cases” a feeling that aid was coming too late, or that it was not enough to cover for lost income “.
According to the ILO, the recipe for job recovery depends on several factors. One of these is the need to rethink the model of economic integration, the implementation of technological development in combination with environmental sustainability, the promotion of business entrepreneurship, the formalization of employment and employment policies that respond to new realities.
“The path to a new and better normalcy will not be easy nor short,” said Pinheiro, specifying that “this is the legacy of 2020, the year we live with Covid-19.”