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ILO/ECLAC joint report

Slow COVID-19 labour market recovery expected in Latin America and the Caribbean

The pandemic has led to the biggest contraction in the region in the last 100 years, with 47 million jobs lost across the region in the second quarter of 2020.

News | 10 November 2020
SANTIAGO (ILO News) ‒ The post-COVID-19 labour market recovery in Latin America and the Caribbean will be slow, according to the International Labour Organization (ILO) and the Economic Commission for Latin America and the Caribbean (ECLAC) in a new joint report.

The report, Employment situation in Latin America and the Caribbean. Employment trends in an unprecedented crisis: Policy challenges says that the COVID-19 pandemic has led to the biggest contraction in the last 100 years, with major economic, labour, social and production-related costs.

The greatest effects were felt in the second quarter of the year, when it is estimated that approximately 47 million jobs were lost across the region. Many of those who lost their jobs were unable to find opportunities to swiftly re-enter the workforce or they withdrew from the labour market because restrictions on mobility prevented them from seeking employment.

Returning to pre-pandemic economic activity levels will take several years, said the report. If the average growth rate in regional Gross Domestic Product (GDP) held steady at 3.0%, GDP would only return to 2019 levels in the year 2023. However, with the average growth rate seen over the last decade at 1.8%, GDP would not attain 2019 levels until 2025.

The health crisis has highlighted the importance of having a strong and efficient public sector that is able to react quickly to shocks with strong economic and social impacts, say the report authors.

The two organizations stress that active macro policies are needed along with sectoral policies that would promote sustainable development with employment. This entails furthering environmental policies that stimulate jobs and growth, activating fiscal policies that foster employment, favouring labour-intensive investment projects with a focus on environmental sustainability, and putting in place industrial and technological policies to build national productive capacities and increase competitiveness.

The joint report also indicates that women, young people and migrants have suffered the brunt of the crisis most acutely.

The groups most affected have been those that cannot work from home because of their type of employment. They include women, who in addition to experiencing job losses have also had to leave the labour market to take care of their households; informal workers affected by prohibitions on people’s movements; sectors related to commerce, manufacturing, construction and services such as tourism and entertainment; young workers who are just joining the labour market; lower-skilled workers in more informal jobs that require physical proximity; and micro, small & medium enterprises (MSMEs).

The pandemic has sharply affected the employment of young people between 15 and 24 years of age, because there are fewer entry-level vacancies, fewer renewals of temporary contracts and fewer hires. According to available data from four countries in the region, the drop in employment for people in this age range was -7.8 percentage points, compared to -7.3 percentage points for those 25 and older.

“In terms of employment, the health crisis affected vulnerable groups above all, deepening inequality in the labour market. Women have been most affected by job losses and the decline in labour market participation. A strategic view must link sustainable development with job creation,” said Vinicious Pinheiro, ILO Regional Director for Latin America and the Caribbean, and Alicia Bárcena, ECLAC Executive Secretary in a presentation to media of the joint report.

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