WASHINGTON, United States (CMC) — The Inter-American Development Bank’s (IDB) Better Jobs Index notes that while 55 per cent of workers in Latin America and the Caribbean (LAC) have informal jobs without a contract or social security coverage, three out of 10 do not earn enough to surpass the poverty threshold.

The Better Job Index is one of the IDB’s tools to identify areas of opportunity for developing and boosting productivity in Latin America and the Caribbean. It assesses jobs in countries through two dimensions: quantity and quality.

The quantity dimension comprises two indicators: the labour force participation rate and the employment rate (or occupancy rate). The quality dimension is constructed with the rates of formality and jobs with sufficient wages to surpass poverty.

Thus, the index is the weighted average of these four indicators, and scores range from zero to 100. For a country to score 100 points, all individuals participating in the labour force must be employed in formal jobs that provide them with living wages.

In its latest edition, Better Jobs Index, which assesses employment quality and quantity in the LAC every two years, said that while 70 per cent of working-age people are employed, the employment quality score is only 41.2 out of 100, based on the latest available data for 17 countries in the region.

The quality dimension of the index is constructed with indicators related to formal employment and sufficient wages to overcome poverty.

Although the quality dimension of the index is at its highest historical level since 2010, the overall low average underscores the urgency of improving employment quality in the region.

The 2024 Better Job Index also highlights significant disparities in the region’s labour markets.

Women in LAC have lower-quality jobs than men, with a 16-point gap in the Better Jobs Index. Additionally, young people in the region have lower-quality jobs than adults, with a 15-point gap in this dimension of the index.

Furthermore, countries with high scores in the overall index exhibit the largest gaps among these vulnerable groups.

“In a region where 70 per cent of people depend exclusively on their work to live and support their families, the quality of employment needs to improve rapidly,” says Laura Ripani, head of the Labour Markets and Social Security Division at the IDB.

“This means generating and connecting more people with formal jobs that allow them to save for retirement and have social security coverage against risks.”

According to the 2024 Better Job Index report, the evolution of employment quality has been slow since 2010, and at the current growth rate, reaching around 70 points would take nearly 48 years. The quantity dimension has remained stable, with a decline in 2020 due to the pandemic’s effects on employment but recovered by 2022.

IDB said equipping human capital with skills aligned to the talent needs of each country’s productive sectors, promoting formal employment with lower costs by making it a part of social security universal, and enhancing access to jobs by strengthening public employment services are some of the solutions and initiatives promoted by the bank to increase employment quality in the region.