Pandemic of Covid-19 has left more than 30 million unemployed in Latin America and the Caribbean, another 23 million left the workforce this year due to lack of opportunities, and the unemployment rate rose by 2.5 percentage points, from 8.1% to 10.6%, according to the report “Employment Outlook 2020 ”by the International Labor Organization (ILO).
The consequences of the pandemic on the Latin American labor market are unprecedented in the region, which has fallen by at least 10 years in terms of employment in the last 10 months. The worst thing is that the crisis is far from over, according to IOM Regional Director Vinícius Pinheiro.
“We are reaching 2021 with intensive care jobs,” Pinheiro said at a news conference on Thursday, adding that “this is the biggest crisis in this report,” which began to be published. in fact, in fact, unemployment forecasts for the region next year show a rate of 11.2%, taking into account factors such as moderate GDP growth (3.5%), an insufficient figure to recover all that has been lost. during the crisis. In addition, there is uncertainty about the evolution of the pandemic.
In this context, regional governments will face the challenge of “laying the foundations for a new and better normalcy”, which will involve adopting strategies to generate more and better jobs, as production is reactivated and the urgency health is declining. .
“It is now essential to achieve economic growth through employment. Employment is crucial to reducing poverty and tackling the growing inequalities that this pandemic is leaving behind, “the ILO regional director added.
However, the IOM’s analysis warns that high unemployment is not the only problem on the Latin American labor market. In 2020, there was an unprecedented transition to inactivity of people who gave up their job search due to lack of opportunities. Thus, the labor force participation rate decreased by 5.4 percentage points, to 57.2%, according to data available at the end of the third quarter of 2020.
As economies recover, the return of these people to labor markets will put additional pressure on next year’s unemployment indicators.
WOMEN AND YOUNG PEOPLE, THE MOST AFFECTED
The report points out that before the health crisis, what supported regional participation and employment was the incorporation of women into the labor market.
However, the pandemic led to a regression in this process, so that the reduction in work participation was higher among women (-10.4%) than among men (-7.4%). “The 2020 health crisis has had an even more significant impact on the performance of women’s employment indicators,” the document said.
In the case of the population between 15 and 24 years old, in the first three quarters of 2020, the participation and employment rates of young people decreased by about 5.5 percentage points, reaching 42.7% and 33%. The youth unemployment rate rose by 2.7 percentage points to 23.2%, a level that had not been recorded before and which implies that one in four young people was unemployed in the third quarter of 2020.
By sectors, the contraction in employment was particularly severe 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 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 take into account the lessons learned during the epidemic, stressing that safety and health at work will be a key issue for economic recovery. The Director also emphasized the importance of social dialogue between governments, companies and workers, which is “more relevant than ever”.
SALARY EVOLUTION
Wages at regional level experienced 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 indicates that wage increases in some countries have been affected by the particular environment of the pandemic, so those with lower incomes have been most affected by job losses, which has reduced the importance of the smallest. salaries in the region.
With regard to the minimum wage, most countries recorded wage increases in January as part of their regular annual adjustments, with the exception of Nicaragua, which made wage adjustments in the first quarter, and Chile, which adjusted the minimum wage twice, once . in the first quarter and another in September.
STRUCTURAL PROBLEMS ALREADY EXIST
“The region has been hit hard by this crisis, even more than others in the world, and this has been largely due to the structural problems that existed and we knew about,” said Pinheiro, who stressed that some of these structural problems are persistent lack of fiscal space, coverage gaps in social protection, high social inequalities and high informality, which highlighted the precariousness of large sectors of society.
Regarding informality, the regional director stressed that in this crisis there will not be a protection mechanism as it was in the previous ones, because during the pandemic the informality of work was contracted, so its stabilizing role was not demonstrated. .
In turn, the report indicated that Despite the significant efforts of several Latin American governments during the crisis, in some cases “there was a feeling that aid was delayed or insufficient to cover lost revenue.”
The recipe for job recovery depends on several factors, according to IOM. These include the need to rethink the model of economic insertion, the implementation of technological development combined with environmental sustainability, the promotion of entrepreneurship in business, the formalization of employment and employment policies that respond to new realities.
“The road to a new and better normalcy will not be easy or short,” said Pinheiro, who said that “this is the legacy of 2020, the year we live with Covid-19.”