Publication

Productive transformation and sectoral policies during the COVID-19 crisis in El Salvador and Costa Rica

Employment policies that promote productive transformation are key to promoting job-rich growth. In this context, the current report reviews the past experience of two small open economies, Costa Rica and El Salvador, in introducing policies aimed at structural transformation, as well as how employment aspects have been included, and their lessons for employment-rich recovery strategies in a post-COVID-19 setting.

Employment – whether wage employment or self-employment - is the main means of access to income for the vast majority of the population. It is, therefore, the key mechanism through which the benefits of economic growth are distributed, and social justice promoted. Employment policies that promote productive transformation will, in turn, drive job-rich growth. The COVID-19 crisis has been unprecedented in terms of both the impact on employment and how countries have responded through a range of policy measures, covering health, macroeconomic, employment and social protection dimensions.

The impact of the COVID-19 crisis has highlighted the importance of policies that strive to achieve both productive transformation and employment growth. The challenge for governments is to develop and implement faster-acting measures to either support sectors, or to help people and businesses move between sectors. This is further complicated by the uneven nature of the crisis and recovery.

In this context, the current report reviews the past experience of two small open economies, Costa Rica and El Salvador, in introducing policies aimed at structural transformation, as well as how employment aspects have been included. The study also highlights lessons, which can be derived from these experiences for employment-rich recovery strategies in a post-COVID-19 setting.