A construction worker at Panama.efe
Employment in Latin America has recovered since the economic crisis triggered by Covid-19, the International Labor Organization (ILO) reported in its annual report on Tuesday. The unemployment rate, which represents the proportion of unemployed in the labor force, fell to 7.2% at the end of last year. In the first quarter of 2020, when the coronavirus pandemic hit, that figure was 9%.
The decline in unemployment “is positive news, especially after the large-scale crisis caused by the pandemic,” ILO Regional Director for Latin America and the Caribbean, Claudia Coenjaerts, said in a press release published on Tuesday. However, high levels of informality and in-work poverty continue to hamper labor markets in the region. In addition, the recovery was not homogeneous. In nine out of 15 countries, the employment rate at the end of last year was lower than three years earlier, while the labor force participation rate exceeded pre-pandemic levels in only two out of 15 countries.
“Labour markets in the region are under the influence of several interconnected crises,” Coenjaerts said at a virtual press conference, such as “the persistence of the Covid-19 pandemic in some countries, the war over the invasion of Russia – Ukraine and an economic context, characterized by slow growth and high inflation”. According to the ILO, the weak momentum of the world economy forecast for this year will have a negative impact on the creation of new jobs.
The report ensures that the employment recovery in 2022 was more intense among women than men and among young people than adults, two groups hardest hit by the pandemic on labor issues. “On the other hand, there are still structural gender and age differences on the labor markets,” according to the ILO in its statement.
Despite progress, informality remains high in the region, Coenjaerts noted. “The phenomenon of the working poor means that people can live in a situation of poverty even if they have a job, even a formal job,” said the director.
The ILO recorded an increase in the proportion of the working poor. According to the report, the incidence of in-work poverty has increased in most of the ten countries considered in this part of the study compared to 2019. In some cases, the values even exceed the values registered a decade ago, in 2012. It has to do with informality, Coenjaerts explained, since informal workers are three to four times more likely to be poor than formal workers.
“In addition to informality, countries in the region will face the consequences of a period of high inflation and the depreciation of real wages, which are the main source of income for Latin American and Caribbean families,” Coenjaerts said. In this region, 80% of income comes from work.
“The recovery in real labor income has been making it more difficult since 2021 as inflation weighs negatively on the purchasing power of wages. In nine out of 17 countries in the region, the real value of the minimum wage was lower in the second half of 2022 than in the first half of 2019, with a very high correlation between informality, low income and in-work poverty,” said Coenjaerts.
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