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ECLAC, ILO predict fall in regional unemployment

Friday, November 09, 2012    

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THE Economic Commission for Latin America and the Caribbean (ECLAC) and the International Labour Organisation (ILO) says that labour markets in Latin America and the Caribbean were fairly resilient to the slowdown in the regional economy in the first half of 2012, which bodes well for a positive outcome in this year's employment and unemployment indicators.

The two United Nations agencies launched their latest issue of the joint publication, The Employment Situation in Latin America and the Caribbean, which states that the region's open urban unemployment rate will maintain its downward trend to finish 2012 with a variation of 6.4 per cent (which is lower than the 6.7 per cent posted last year).

The positive trend will be maintained despite the slowing economic growth rate, which went from 4.3 per cent in 2011 to an estimated 3.2 per cent this year. According to the publication, the labour market has been key in preventing an even greater slowdown in the economy, as there was a surge in household purchasing power thanks to job creation and a rise in real wages.

The document highlights an increase in the employment rate of 0.5 percentage points to 56 per cent in the first half of 2012, improvements in job quality through a three per cent expansion in formal waged employment covered by social security, and a three per cent rise in real wages during the same period.

In the foreword to the document, Alicia Barcena, executive secretary of ECLAC, and Elizabeth Tinoco, regional director of the ILO Office for Latin America and the Caribbean, state that "In the first half of 2012, many countries maintained the recent trend of improvements in job quality, characterised by buoyant generation of waged work, significant increases in formal employment and a reduction in under-employment".

They added "We now have a regional labour market with indicators that are in a better position than before the crisis".

While the regional prospects are positive, ECLAC and ILO point out that the performance of the region's countries will be uneven. One group of countries will see a slowdown in job creation and formal employment, while another group will see greater buoyancy thanks to economic growth based on the relatively strong increase in investment (Chile, Ecuador and Panama) or exports (Costa Rica, Mexico and Nicaragua).

Barcena and Tinoco emphasised the situation of young people, who are facing obstacles in joining the labour market despite the positive conditions in the market. This results in high rates of unemployment, job insecurity and low incomes.

They indicated that "This generates problems not only for the individuals and their families, but also a burden on countries' future social and economic development. As we have observed in different parts of the world, this can generate considerable social and political conflict".

The new ECLAC-ILO document therefore dedicates much of its content to the processing of household surveys on changes in the employment situation of young people during the recent episodes of economic crisis and recovery.

According to the study, although young people suffered the impact of the international financial crisis in a similar way to adults, the aggravating factor is that the former had a weaker starting position, with higher unemployment and job insecurity: before the 2008-2009 crisis the unemployment rate among 15 to 24-year-olds was between 2.3 and 5.5 times higher than the rate among adults aged 25 and above.

However, the gap between youth and adult employment during the crisis increased in only five countries, while dropping in eight countries, including the largest countries such as Brazil (from a difference of 3.4 times in 2007 to 3.2 times in 2009) and Mexico (from 2.7 times to 2.5 times). For the region's 13 countries as a whole, the gap went from 2.9 times in 2007 to 2.8 times in 2009.

As a result, in relative terms the crisis did not impact young people more than adults. One positive fact in the publication is that the crisis has not interrupted the trend for young people to stay longer in the education system.

Meanwhile, at the end of the crisis between 2009 and 2011, the gap between youth and adult unemployment widened once more in nine countries and narrowed in four, which implies that young people have initially benefited less than adults from the recovery.

According to the publication, there remain structural problems that have a negative effect on the labour market situation of young people, and therefore on their longer term life prospects and societies' potential for development.

There also remains a high proportion of young people who do not study or enter the labour market (20,3per cent), especially young women dedicated to domestic work, who will find it difficult to enter the labour market in the future, and will have fewer life options in general, according to the document.

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