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Labour situation in Latin America and the Caribbean

Labour indicators in Latin America and the Caribbean continue to deteriorate in the midst of regional economic contraction

ECLAC/ILO report indicates that urban unemployment increased during the first semester of 2016 and could reach 8.6 per cent for the year on average, with a marked variation between countries and subregions.

News | 19 October 2016
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SANTIAGO (ILO News) – During the first half of 2016, labour markets in Latin America and the Caribbean continued to suffer from the effects of regional economic contraction and experienced a significant increase in the rate of unemployment and a general deterioration of their labour indicators, a new ECLAC-ILO report said.

The Economic Commission for Latin America and the Caribbean (ECLAC) and the International Labour Organization (ILO) today unveiled its joint publication on the Labour Situation in Latin America and the Caribbean, which analyses the working performance of the region during the first half of this year.

The report notes that, according to the most recent projections, regional gross domestic product (GDP) will fall by 0.9 per cent during 2016. During the first semester, this contraction contributed to a drop of 0.6 percentage points in the urban employment rate, which, together with an increase in the participation rate, caused a rise in unemployment of 1.6 percentage points, compared to the same period last year.

The urban employment rate is the proportion of the population of working age that is employed, while the participation rate refers to the proportion of the population of working age that is employed or unemployed (i.e., it excludes people who are outside the labour force, mainly students, persons who do not work for pay or profit, retired people, etc.)

For the second half of 2016, a significant improvement in the employment situation is not expected at the regional level, the study said. The contraction in regional GDP and its impact on the demand for labour will probably maintain the year-over-year fall in the employment rate. On the other hand, the expansion of informal jobs, especially in the form of independent work, would mitigate this impact in quantitative terms, but would also reflect a deterioration in the quality of employment.

The document adds that open urban unemployment is expected to continue to rise and climb to 8.6 per cent in the region in 2016. On average, the regional unemployment rate reached 7.0 per cent in 2014 and 7.4 per cent in 2015.

"While this negative performance is strongly influenced by the case of Brazil and its effect on the weighted averages, all other countries in South America with available information, except Peru, also suffered from increases in their unemployment rate. In contrast, in the countries of Central America and the Caribbean, except for Panama and Trinidad and Tobago, the unemployment rate decreased," said Alicia Bárcena, Executive Secretary of ECLAC, and José Manuel Salazar, ILO Regional Director for Latin America and the Caribbean, in the foreword of the document.

They also noted that this marked heterogeneity between subregions can also be seen in the indicators available on the quality of employment, the inter-annual variation in employment recorded and in real wages in formal employment.

Along with analysing the labour situation in the region, the ECLAC/ILO report addresses the participation of the countries of Latin America and the Caribbean in global supply chains and their impact on decent employment. It indicates that the economic integration of the region is more limited than in other areas of the world and points out that the relatively poor linkages shown by Latin American and Caribbean economies reflect a low degree of product diversification. In this regard, the impact of exports on employment is higher in indirect employment, especially in sectors such as mining or food production, than in direct employment.

The report also discusses some examples of countries in the region that have achieved an improvement in their economic participation in global supply chains, which in turn can lead to social improvement by means of greater job creation, higher wages and increased formality. However, it is noted that this is not an automatic link, since the results in terms of decent work also depend on other economic, labour and educational policies to support this process.