A new technical note from the International Labor Organization (ILO) indicates that the Latin American and Caribbean (LAC) region lost 26 million jobs as a result of the pandemic. According to the ILO, the region has started 2021 with a complex employment landscape. As such, the prospects for recovery in the labor market of the LAC is very much uncertain. This is due to the new waves of contagion and slow vaccination processes.

“The quest for better normality will require ambitious action to recover from setbacks in the world of work. It is now time to rebuild the jobs lost by the pandemic and create new decent work opportunities”.
Vinícius Pinheiro, ILO Director for the LAC

Commenting on the note, Pinheiro called for urgent measures despite adversity to arrest the situation. He also called for a consensus so that “2021 is the year of vaccination and economic recovery with more and better jobs”.

However, the ILO Regional Director highlighted that “in the pursuit of recovery, addressing pre-existing conditions in the region will be unavoidable. Those conditions are key to understanding why the impact of the pandemic on employment was so strong. Many of the challenges we had before the pandemic remain in place, although they are now more urgent”.

Challenges facing LAC labor markets

Meanwhile, he enumerated some of the causes of the huge job losses in the region. This comprises high informality, small fiscal spaces, and persistent inequality. He also cited low productivity and poor coverage of social protection, and persistent child labor and forced labor as some of the problems. He emphasized that these “are part of the ongoing challenges in the region”.

The ILO regional technical note is titled “The employment crisis in the pandemic: Towards a human-centered job recovery”. It emphasizes that the labor impacts were devastating in the second quarter of 2020. This was when the employment and participation indicators plummeted, and then partially recovered.

However, by the end of 2020, the region’s average employment rate had fallen from 57.4 percent to 51.7 percent. This, according to the ILO, was a sharp drop equated to the loss of around 26 million jobs. Out “of which 80 percent, or more than 20 million people, left the workforce”.

Meanwhile, the ILO noted that this significant exit from the workforce was unprecedented and has been characteristic of 2020. As a result, the ILO noted that the unemployment rate partially reflected the magnitude of the difficulties in the LAC’s labor markets.

In addition to lost jobs, the region experienced a sharp contraction in working hours, as well as a reduction in labor incomes. This accounted for “80 percent of what people in Latin America and the Caribbean earn. The region has recorded the largest losses in hours worked worldwide”.

The ILO’s technical note indicates that during the crisis both formal and informal employment experienced very pronounced contractions. Nevertheless, the was a greater intensity for the latter, “and for this reason, the informality rate was reduced (temporarily)”.