HAVANA._ A recent report from the Economic Commission for Latin America and the Caribbean (ECLAC) and the International Labor Organization (ILO) revealed that, for the first time since 2009, the unemployment rate in the region rose from one year to another.
In the study titled the Employment Situation in Latin America and the Caribbean, the two UN organizations estimated that urban unemployment in the region is likely to register 6.6 percent by the end of 2015, representing a 0.6 percent increase over the previous year.
Even though the figure stays at historically low levels, according to experts, the projected increase is related to the economic slowdown in the region, hence affecting employment indicators and posing new challenges to regional governments.
Though at different paces, the growth rate of most South American countries has been decreasing since 2012. The region’s growth rate for this year is estimated to shrink by 0.3 percent, hence corroborating the aforementioned decreasing trend.
This situation, and the fact that the economic slowdown is affecting the labor market have made ECLAC and other entities and analysts define the economic situation in Latin America and the Caribbean as complex and worrying.
Among the reasons for making such assertions they noted that the risks implicitly involved by unemployment may prevent advancing toward the reduction of poverty and inequality. The ECLAC/ ILO report defines these two elements as “major achievements attained by the region since the beginning of the last decade.”
In this sense, researchers envisage negative impacts in several aspects of the labor markets which, together with the social policies implemented in the region, have largely contributed to the mentioned achievements.
According to analysts, the mechanisms supported many times by new labor policies used by countries in the region for generating formal jobs and reducing wage differences, “were decisive in improving the well-being of millions of families.”
However, although real wages continue to register moderate raises in many cases, the current situation and the development of the labor market during the analyzed period (first semester of 2015) are demonstrative of a likelihood of worsening, in line with the rest of the macroeconomic indicators.
According to ECLAC and ILO, a determining factor for this development is the fact that the new jobs are increasingly generated by poorly productive activities, as is the case of self-employment.
This phenomenon and the poor generation of employment were more noticeable in the first trimester than in the second. That condition, together with the economic figures envisaged for this year, prevent foretelling a change in the tendency for the second semester.
All these factors together are indicative of the projected rise in the unemployment rate.
Except for in some countries, today the report reads that the South American countries are the most affected by the current economic slowdown, which largely owes to the growth of the world economy, because the demand for their top export products has decreased.
The two events that have most contributed to that situation are the projected economic slowdown for China -the largest investor for most of those countries- and the drop in the prices of raw materials -their top export product over the last few years.
Meanwhile, the growth indicators of the region’s northern countries –though not exempt from the situation- were similar to last year’s; and the Caribbean nations recorded a moderate growth.
The ECALC and ILO report on the performance of the labor market is based on a context marked by a poor increase of the region’s Gross Domestic Product.
As a way to cope with the slackening trend in the labor market, the two organizations propose enlarging investments and aiming for a structural change that targets economic growth with views of increasing productivity.
“Only with clear productive development policies” –they noted-“will the region be able to overcome the obstacles preventing it from growing and generating more and better jobs”.
Though not alarming, the new challenge posed by unemployment must be understood as a warning of what needs to be tackled.Share on FB Share on TT