Urban Unemployment Will Keep Rising in Latin America and The Caribbean

[dropcap]I[/dropcap]n a new joint report, ECLAC and the ILO indicate that labour conditions deteriorated in a context of low regional economic growth, although some signs of recovery exist.

(October 19, 2017) The low economic growth experienced by Latin American and Caribbean countries in the last few years will continue affecting the region’s labour market performance in 2017. According to the latest estimates, the rate of regional urban unemployment could reach 9.4% on average this year, which represents a 0.5 percentage point increase from the 8.9% recorded in 2016, ECLAC and the ILO indicated today in a new joint report.

The Economic Commission for Latin America and the Caribbean (ECLAC) and the International Labour Organization (ILO) released the newest edition of their joint publication Employment Situation in Latin America and the Caribbean (No. 17, October 2017), which sums up labor dynamics in the region during the first half of this year and analyzes the characteristics of the transition made by young people (one of the groups most affected by the labour deterioration) from the educational system to the labour market.

According to both United Nations organizations, during the first half of 2017 two trends were observed: while the deterioration of some labour indicators (such as the employment and unemployment rates) persisted, a slower pace of deterioration was noted, which could point to “a light at the end of the tunnel.”

The figures released in the report show a 0.3 percentage point decline in the rate of urban employment (the proportion of the working-age population that is employed) and a 0.9 point increase in the rate of urban unemployment between the first half of 2016 and the same period of 2017.

The report adds that, as in previous years, the regional trend is particularly influenced by the weak performance of Brazil’s labour market, although after several years of contraction, a very slight economic growth upturn is forecast for that country in 2017 and its employment indicators are starting to stabilize. In other countries of the region, labour market performance has generally been more favorable, especially in Central America, the study indicates.

ECLAC and the ILO sustain that weakness in the region’s labour markets is also reflected in the quality of employment. In six of the eight countries with available information, the creation of self-employment was more dynamic than the creation of salaried jobs during the first half of 2017. Stagnation in the creation of formal employment is also observed in several countries of South America (Argentina, Chile, Peru, Uruguay), while in Central America and Mexico, this variable showed greater dynamism. Finally, the real wages of formal jobs rose in six countries (Brazil, Chile, Colombia, Costa Rica, Nicaragua and Uruguay), while declining in two others (Mexico and Peru).

With regard to young people, the document explains that this group generally faces structural problems to insertion in productive employment and decent work. “Young people’s paths into the labour market in the region are found to be generally much longer than in the developed countries, something that is heavily shaped by the role of women, often still centred on caregiving and household activities,” Alicia Bárcena, ECLAC’s Executive Secretary, and José Manuel Salazar, the ILO’s Regional Director, state in the publication’s foreword.

The study analyzes the profile of young people who study and work according to their age group, finding some important differences. For example, among adolescents 15 to 19 years old, a great proportion of students work to contribute to the economy of their household. In contrast, in the subgroups of between 20 and 24 years and between 25 and 29, among those who combine work and studies, young people who are fully inserted in the labour market and carry out post-secondary studies as a key tool for upward labour mobility predominate.

The document also addresses the progress made and the policies implemented in the region to foster a better transition between education and work and increase the employability of young people. These focus both on aspects related to supply (training, career and employment guidance, transportation subsidies, care allowances, etc.) as well as demand (wage subsidies, incentives for enterprise creation), along with improved systems for employment intermediation systems.

The evaluations of these programs find positive impacts both in terms of employability and wages, mainly for the most vulnerable groups with the lowest income and educational levels. However, ECLAC and the ILO warn that it is necessary to make progress on gathering statistical information both to analyze aspects such as gender differences or qualification gaps, as well as to better monitor existing programs and carry out impact evaluations in order to incorporate adjustments that may be needed.