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The International Labor Organization reported that the regional unemployment rate reached 7.9% in the first quarter of 2022, a few tenths below what was registered in 2019, before the pandemic. However, informality and loss of purchasing power threaten recovery.
Although the unemployment rate in Latin America has dropped almost one percentage point since before the start of the Covid-19 health crisis, the recovery has uncovered a bigger problem: “working poverty”.
The International Labor Organization (ILO) defines it as the fact that people can live in a situation of poverty even though they have a job, even if it is formal, a phenomenon that has increased after the pandemic.
For the agency dependent on the United Nations, in addition to Covid-19, the war in Ukraine and its consequent inflationary effects have clouded the recovery almost all of the 49 million jobs lost in the region in the first half of 2020.
“Greater informality and an increase in the number of working poor are shaping up to be major challenges for the labor markets of Latin America and the Caribbean in 2022,” according to Claudia Coenjaerts, regional director of the ILO.
Wages and purchasing power, the great challenge
According to the Economic Commission for Latin America and the Caribbean, in 2021 the average real wages in the region in 12 countries analyzed had lost 6.8% of the value they had in 2019.
The real salary reflects not only the behavior of income but also how it has been impacted by inflation. For example, in Chile, the salary index increased by 10% between June 2021 and the same month in 2022. However, it did not compensate for the inflation registered in that period.
In Argentina, the published average salary index had accumulated an annual increase of 63.6% as of May 2022. But in that same period inflation was 61.2%.
The ILO considers that part of this phenomenon is due to the fact that between 50% and 80% of the jobs generated in the recovery process have been in informal conditions.
“This has caused the regional informality rate, which experienced declines at the beginning of the pandemic crisis when numerous jobs were destroyed, to return to pre-pandemic levels of 50%,” the analysis concludes.
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