LatAm faces insufficient labor market recovery

In the first quarter of 2021, about 76% of Latin American independent workers and just over a third of wage earners were in the informal sector, the International Labor Organization (ILO) reported on Saturday.

ILO´s technical note explained that although it is premature to state that there is a process of informalization of previously formal employment, taking into account the experience of previous crises, ‘this is a significant latent risk.’

Latin American and Caribbean economic recovery in recent months is not reflected in job creation, since 7 of 10 new jobs are informal and do not replace the jobs lost during the Covid-19 pandemic, ILO said.

In this regard, ILO called for action to face the impact of current health crisis with more and better jobs.

‘Neither the quantity nor the quality of jobs that this region requires to cope with the aftermath of an unprecedented crisis are being created. The labor overview is complex and poses challenges of great magnitude,’ announced Vinícius Pinheiro, ILO Director for Latin America and the Caribbean.

Most notably the reduction in employment between the first and Q2 of 2020 at the worst moment of the COVID-19 crisis was just over 43 million jobs. The subsequent recovery from that point to Q1 of 2021 was around 29 million. Therefore, the increase in jobs did not fully compensate for the previous loss, the publication highlighted. About 30% of the jobs lost have yet to be recovered.

The ILO technical note also reveals that women, youth and the lower-skilled have been disproportionately affected by the contraction of employment and incomes, and are more strongly affected by the unequalizing and poverty-increasing impacts of this crisis in the region.