Employment in Latin America has recovered based on informality and its future is uncertain

Although Latin America and the Caribbean was one of the regions with the highest growth in 2021 after being one of the most affected in 2020 as a result of the COVID-19 pandemic, the The slowdown in the upturn seen this year has held back the recovery in labor markets that, based on informality, had advanced along with the economy in 2021, pointed out this Thursday the International Labor Organization (ILO).

In a technical note of the Labor Outlook for the region in 2022, the ILO specified that the unemployment rate stood at 7.9%thus returning to the level prior to the pandemic, but with complicated and uncertain prospects that could imply an increase in unemployment, informality and poverty.

The analysis explains that low growth, high inflation and the global crisis exacerbated by the war in Ukraine have a impact not only on the employment rate, but also on the quality of jobs.

The ILO explained that, regardless of regional averages, each country has different realities, citing that ten of 14 nations examined did not reach their level of employment in 2019 during the first quarter of the year and that only three of them recovered the rate of economic participation before the pandemic.

Informality

The publication highlights that the recovery of employment has been based on informal jobsto which between 50% and 80% of this rebound is attributed, which means that at least one out of every two workers works in informal conditions, with all that this implies.

The disaggregated data shows that informality in the case of young people reaches an average of 63% in eleven countries, a number higher than 48% of adults.

At the press conference to present the report, the ILO regional specialist in labor economics recalled that informality is a structural problem of the region and pointed out that this type of employment is unstable, “in general with low income and without protection or labor rights.”

working poor

Roxana Maurizio, who is also the main author of the study, also estimated that the current economic situation and inflation affect the level of real income, generating a loss of purchasing power.

“That gives rise to the so-called ‘working poor phenomenon,’ which means that aside from having a jobeven if it is formal, the worker can live in a situation of poverty”, he detailed, adding that although it is not something new in the region, the incidence of the phenomenon can increase substantially.

Maurizio referred that this situation demands the implementation and strengthening of policies that promote the creation of formal jobs; strengthen labor institutions such as the minimum wage and collective bargaining; support businesses, especially small ones; and guarantee universal access to social protection and income support for vulnerable workers.

“The inflationary context demands the strengthening labor institutions, especially the minimum wage and collective bargaining. Social dialogue acquires a key role in allowing this path to be followed, attending to the needs and possibilities of workers and employers. This is even more relevant in a changing context in the organization of work and where progress is required in closing persistent labor gaps that allow the positive effects of the digital transition and the just transition to be enhanced.

Atypical jobs include temporary, part-time, agency or subcontracting positions. File Photo: UNDP Dominican Republic

Women

The impact of the crisis has been more serious on women given the greater presence of women in highly affected economic sectors, such as hotels, services and households. Also, informality is greater among womenwhich deprived them of being beneficiaries of the employment or income support policies implemented by various governments in the region to alleviate the effect of the emergency measures adopted during the pandemic.

On the other hand, women faced enormous difficulties in reconcile paid employment with housework in a context of suspension of face-to-face classes and an increase in care tasks due to confinements.

The scenario did not change the greater affectation of women despite the fact that after the worst moment of the crisis the recovery was more intense in female employment than in men in the 14 countries studied: for the fourth quarter of 2021, the female employment rate was 2% lower than that observed before the start of the pandemic, double that registered among men.

There is no magic formula

The ILO regional director for Latin America and the Caribbean, Claudia Coenjaerts, also present at the press conference, emphasized that there is no magic formula for regularize and formalize employment.

And the region faces many challenges Regarding the formalization of the labor market, he warned.

“There is always a need to balance the protection of labor rights, which are very important and, at the same time, to be able to promote a world where companies can grow. And the way to find the best solution at the national level is to have a permanent social dialogue”, concluded Coenjaerts.