Around 70 per cent of the jobs cre­at­ed in re­cent months in a group of Latin Amer­i­can coun­tries are in in­for­mal con­di­tions. Mean­while, un­em­ploy­ment and the de­cline in labour force par­tic­i­pa­tion are per­sis­tent. The In­ter­na­tion­al Labour Or­ga­ni­za­tion (ILO) calls for ac­tion to face the un­equal im­pact of the cri­sis with more and bet­ter jobs.

8 Sep­tem­ber 2021 (Li­ma, Pe­ru)—The eco­nom­ic re­cov­ery in Latin Amer­i­ca and the Caribbean is still in­suf­fi­cient to re­cu­per­ate the jobs lost dur­ing the pan­dem­ic, and has giv­en rise to a labour mar­ket char­ac­ter­ized by a high un­em­ploy­ment rate and a strong preva­lence of in­for­mal oc­cu­pa­tions, high­light­ed a new ILO tech­ni­cal note re­leased to­day.

“Nei­ther the quan­ti­ty nor the qual­i­ty of jobs that this re­gion re­quires to cope with the af­ter­math of an un­prece­dent­ed cri­sis are be­ing cre­at­ed. The labour overview is com­plex and pos­es chal­lenges of great mag­ni­tude,” an­nounced Viní­cius Pin­heiro, ILO Di­rec­tor for Latin Amer­i­ca and the Caribbean when pre­sent­ing the pub­li­ca­tion.

"In 2021, in­for­mal jobs are lead­ing the par­tial re­cov­ery of em­ploy­ment," added Pin­heiro. "These are jobs that are gen­er­al­ly un­sta­ble, with low wages, with­out so­cial pro­tec­tion or rights."

The ILO Di­rec­tor added that, “the close link be­tween labour in­for­mal­i­ty, low in­come and in­equal­i­ty has be­come even more ev­i­dent in this con­text.”

The tech­ni­cal note “Em­ploy­ment and in­for­mal­i­ty in Latin Amer­i­ca and the Caribbean: An in­suf­fi­cient and un­even re­cov­ery” re­views the changes de­tect­ed in labour mar­kets, in­come and in­equal­i­ty in re­cent months. It al­so ad­dress­es both the im­pacts of the cri­sis and the re­cov­ery of jobs as some eco­nom­ic ac­tiv­i­ties have restart­ed.

About 70 per cent of the jobs gen­er­at­ed from mid-2020 to the first quar­ter of 2021 are oc­cu­pa­tions in con­di­tions of in­for­mal­i­ty, ac­cord­ing to da­ta from a group of Latin Amer­i­can coun­tries, the ILO tech­ni­cal note ad­vis­es.

"In the first quar­ter of 2021, around 76 per cent of in­de­pen­dent work­ers, and just over a third of wage earn­ers, were in­for­mal," adds the tech­ni­cal note. It al­so ex­plains, "Al­though it is pre­ma­ture to state that there is a process of in­for­mal­iza­tion of pre­vi­ous­ly for­mal em­ploy­ment, tak­ing in­to ac­count the ex­pe­ri­ence of pre­vi­ous crises, this is a sig­nif­i­cant la­tent risk.”

The pub­li­ca­tion analy­ses the dy­nam­ics of in­for­mal­i­ty as a re­sult of the pan­dem­ic, high­light­ing an atyp­i­cal be­hav­iour, since un­like oth­er crises, in­for­mal oc­cu­pa­tions did not in­crease or of­fer refuge for those who lost for­mal jobs.

On the con­trary, the mea­sures nec­es­sary to face the health cri­sis had as a cor­re­late a strong im­pact on the de­struc­tion of in­for­mal em­ploy­ment and the loss of in­come among peo­ple who worked in these con­di­tions, who found them­selves with­out so­cial pro­tec­tion safe­ty nets, and with­out the pos­si­bil­i­ty of ac­cess­ing re­duc­tion of hours or tele­work­ing op­tions. In many cas­es, this even led to a tem­po­rary re­duc­tion in in­for­mal­i­ty rates in some coun­tries.

With the new sce­nario of a more in­tense im­pact of in­for­mal po­si­tions, it is pos­si­ble that in many coun­tries the in­for­mal­i­ty rate is sim­i­lar, or even high­er than that ob­served be­fore the pan­dem­ic, when it af­fect­ed around 51 per cent of the em­ployed.

Along with in­for­mal­i­ty, the re­gion is ex­pe­ri­enc­ing an in­suf­fi­cient re­cov­ery of jobs, ac­cord­ing to the da­ta in the tech­ni­cal note. Most no­tably the re­duc­tion in em­ploy­ment be­tween the first and sec­ond quar­ters of 2020 at the worst mo­ment of the COVID-19 cri­sis was just over 43 mil­lion jobs.

“The sub­se­quent re­cov­ery from that point to the first quar­ter of 2021 was around 29 mil­lion. There­fore, the in­crease in jobs did not ful­ly com­pen­sate for the pre­vi­ous loss,” the pub­li­ca­tion high­light­ed. About 30 per­cent of the jobs lost have yet to be re­cov­ered.

At the same time, at the be­gin­ning of the year crit­i­cal labour in­di­ca­tors were drag­ging. In the in­ter-an­nu­al com­par­i­son be­tween the first quar­ter of 2020 and the same quar­ter of 2021, an av­er­age re­duc­tion of 3.5 per­cent­age points in the em­ploy­ment rate was ob­served for the re­gion, and a con­trac­tion in the eco­nom­ic par­tic­i­pa­tion rate of 2.6 per­cent­age points. In ad­di­tion, there was a rise of 2 per­cent­age points in the un­em­ploy­ment rate.

This yields for the first quar­ter of the cur­rent year a val­ue of 59 per cent of the eco­nom­ic par­tic­i­pa­tion rate and 52.6 per cent of the em­ploy­ment rate – in both cas­es the low­est in at least a decade – and an 11 per cent un­em­ploy­ment rate, which im­plies that around 32 mil­lion peo­ple were ac­tive­ly look­ing for a job with­out find­ing it.

The re­duc­tion in the par­tic­i­pa­tion rate has been a pe­cu­liar­i­ty of this cri­sis, dur­ing which mil­lions of peo­ple pre­ferred to leave the labour force at the prospect of look­ing for jobs that were not avail­able. When many of these peo­ple re­turn to look for work, added to oth­ers who will need in­come af­ter the cri­sis, there will be ad­di­tion­al pres­sures both on the un­em­ploy­ment rate and on the lev­els of in­for­mal em­ploy­ment.

The ILO tech­ni­cal note al­so re­veals that women, youth and the low­er-skilled have been dis­pro­por­tion­ate­ly af­fect­ed by the con­trac­tion of em­ploy­ment and in­comes, and are more strong­ly af­fect­ed by the un­equal­iz­ing and pover­ty-in­creas­ing im­pacts of this cri­sis in the re­gion.

Rox­ana Mau­r­izio, ILO Labour Eco­nom­ics Spe­cial­ist and au­thor of the tech­ni­cal note high­light­ed that, “in the case of women, there was a de­cline in labour par­tic­i­pa­tion af­ter decades dur­ing which there had been an in­crease in their in­clu­sion in the work­force. It has been more than 15 years since there has been such a low rate of eco­nom­ic par­tic­i­pa­tion for women."

Faced with a labour out­look char­ac­ter­ized by an eco­nom­ic re­cov­ery with in­suf­fi­cient im­prove­ment in em­ploy­ment, "the re­gion needs to adopt a com­pre­hen­sive, con­sen­su­al and far-reach­ing hu­man-cen­tred pol­i­cy agen­da that un­der­pins the cre­ation of more for­mal jobs," Mau­r­izio ex­plained.

The mea­sures must go hand in hand with strate­gies to re­build the pro­duc­tion ap­pa­ra­tus, in­clud­ing the cre­ation of new com­pa­nies and the in­crease in pro­duc­tiv­i­ty of those com­pa­nies that man­aged to sur­vive the cri­sis.

The tech­ni­cal note ad­vis­es that the mea­sures par­tic­u­lar­ly fo­cused on im­prov­ing job cre­ation seek to pre­vent the cri­sis from con­tin­u­ing and leav­ing long-term so­cial and labour scars.

"The un­even rates of job re­cov­ery among dif­fer­ent groups of work­ers and the grow­ing lev­els of in­equal­i­ty and pover­ty can not on­ly se­vere­ly lim­it eco­nom­ic growth, but can al­so in­crease the de­gree of so­cial un­rest in the re­gion," cau­tioned the pub­li­ca­tion.