Since the pandemic, Latin America and the Caribbean have experienced significant employment recovery.
However, the labor market in this region may have an uncertain and complex future characterized by increased informality, unemployment and a greater number of the working poor.
High inflation, low economic growth and the global crisis significantly increased by the Russia-Ukraine aggressions have affected the quality and quantity of jobs that this region generates.
This will only prolong the negative impact of the pandemic on the labor market.
To address the problems of lack of purchasing power and lower economic dynamism, it is important to create formal employment.
According to data from the first quarter of 2022, there is an average unemployment rate of 7.9% within this region, an employment rate of 57.2% and a labor force participation rate of 62.1%.
These figures are similar to those of the first quarter of 2019. Given the devastating effects of the COVID-19 pandemic, this rate of regional recovery is positive.
However, the main challenges for the labor market in this region in the not-too-distant future are the growth of the working poor population and greater informality.
Of the 14 countries where data was collected, employment rates for Q1 2022 in 10 showed that they had recovered less than in Q1 2019.
Also, only three countries indicated that they had recovered the labor force participation rate to the level of the first quarter of 2019.
About 50% of the employed were still in informal conditions within this region.
These jobs are unstable, lack employment rights or protections, and are generally low-income.
Another cause of concern is the high inflation that has significantly affected the labor market.
Although the price increase started in 2021, the war between Ukraine and Russia has affected, among other things, the availability of food and energy.
Consequently, the level of real income from work has been directly affected. The continuous loss of purchasing power has caused the phenomenon of the working poor.
This means that people may have a formal job and even seek help from professional cover letter writing services and nursing resume writing services for some of these jobs, but they are still living in poverty.
Although this is not a new phenomenon in regions with high informality, it has increased significantly in this region.
In the current scenario, countries within this region should start focusing on creating and promoting more formal jobs.
They should do this by creating active policies, sectoral policies and professional training. It is also important to advocate for collective agreements and minimum wages within the framework of social dialogue.
During a crisis scenario, it is important to constantly develop social dialogue between workers, employers and the government.
In this way, it is easier to adopt policies and implement them in a way that responds to the challenges of the real economy with a high chance of success.
It is well known that crises rarely occur in stable countries, and even when they do, their effects are easily dissipated.
Of course, the lack of stability in Latin America and the Caribbean region is the reason why the effect of the pandemic and other crises has not yet disappeared.
This region has experienced several major shocks in recent decades, leaving long-term consequences and deep scars of unemployment.
On average, a major regional crisis occurs within three years, leading to a net loss of over 1.5 million jobs, a formal contraction of 3% of employment and an expansion of the informal sector by 2%.
Low-skilled workers suffer the most, exacerbating persistent inequalities within the region.
These people can suffer the scars of these crises for up to 10 years, with higher vulnerability and loss of income since most countries in the region have no unemployment insurance programs or national assistance.
However, the entire employment structure suffers from the crisis and the formal sector of the economy loses new opportunities, leading to lasting or sometimes permanent consequences.
This is an important consideration when the region is still suffering from the effects of the pandemic.
The recessionary impact may cause even more contraction within the formal sector (4%) than in the previous crisis.
Current losses may become long-term or permanent without taking appropriate measures to create new opportunities and recover lost jobs.
It is important to look in the mirror of the previous crisis to help avoid the same mistakes or consider returning to the situation before the pandemic.
The goal should be to be better.
Looking at some of the past major crises and their impacts on the labor market in the region, such as the 1992 Brazilian debt crisis, the 2008-2009 Mexican crisis, and the Asian financial crisis in Chile, it is very clear that a rapid recovery from crisis is a myth in this region.
In these cases, the employment curve suffered strong negative deviations due to the crisis and instead of reversing, it became more pronounced over time.
Some milder crises in the past were also followed by prolonged periods of little or no growth.
This is the dilemma that the regional leadership is facing with the impact of the pandemic. It is usually not very easy, but it is important to try to get better results by learning from past experiences.
This means that some policies should be implemented to facilitate the recovery of employment in this region while ensuring a sustainable reconstruction of the economies.
But the first step is to create a prudent macroeconomic framework and automatic stabilizers to protect the labor market from the effects of crises.
Sound monetary and fiscal policies can ensure macroeconomic stability and also prevent widespread financial strain when a crisis strikes.
Fiscal reforms should include efficient public spending, less distortionary taxation, clear fiscal rules and financially sustainable pension programs as the first line of defense whenever the crisis strikes again.
Other income support initiatives, such as unemployment insurance, can help economies recover more quickly from crises by limiting the damage from contractions.
It is also important to improve the capacity of labor and social protection policies in the region.
These policies should be blended into a system that seeks to provide income support by helping workers prepare for new jobs through reemployment and retraining assistance.
cONcluSiON
Historically, Latin America and the Caribbean region often do not recover well from crises and suffer long periods of employment problems as a result.
But this can change if lessons are learned from these crises and appropriate steps are taken to mitigate their effects.
