ILO: In 2017 unemployment rose for the third consecutive year in Latin America and the Caribbean, but is expected to go down next year

The rate will decline in 2018 if all the forecasts for economic growth are maintained, says the ILO on presenting the annual Labour Overview of Latin America and the Caribbean report. The region presented mixed challenges, with some signs of improvement and other signs of deterioration in the regional and sub-regional averages.

News | 18 December 2017
 Lima – Unemployment in Latin America and the Caribbean increased for the third consecutive year and affected more than 26 million persons in 2017, according to an ILO report released today in which, despite the worrisome reality, it is noted that there are some positive signs in the labour market and a more positive evolution of the indicators is expected next year.

“The labour market in the region appears to be going through a change of cycle after a period of generalized deterioration of labour and social indicators, but improvements will depend on achieving greater economic growth”, warned the ILO Regional Director for Latin America and the Caribbean, José Manuel Salazar-Xirinachs.

The annual Labour Overview of Latin America and the Caribbean 2017 report, presented today at the headquarters of the Regional Office in Lima, highlighted the fact that there was a mixed performance of the main variables linked to the world of work.

The average performance rate of Latin America and the Caribbean rose from 7.9 per cent in 2016 to 8.4 per cent at the end of 2017, an increase of 0.5 percentage points. The total number of persons seeking employment without finding work rose by two million persons, to 26.4 million.

The ILO report underscored, however, that the average was strongly influenced by the situation in Brazil, where almost 40 per cent of the region’s work force is located and where the rate of unemployment stood at around 13.1 per cent in the third trimester of 2017. 

One of the other factors is that while there was a slight recovery in economic growth after a period of deceleration and contraction, this was not strong enough to change the tendency of a labour market that “has a delayed effect when there is recovery”.

Instead in 2018, when according to the recent forecasts the average economic growth of the region will hover around 2 per cent,  “it is hoped that the economic upturn would be more visible in the labour markets” and that the rate of unemployment would decrease for the first time in three years, to 8.1 per cent.

The ILO report says that at the end of 2017 there is a slight improvement in the employment rate which augurs well for a positive evolution next year however it warns that for now, the improvement is still “mild and fragile”.
In the sub-regional analysis, the report highlights that unemployment increased in the South Cone where the inter-annual variation in the third trimester went from 10.7 per cent to 11.9 per cent. In the Andean countries there was a moderate reduction from 6.9 per cent to 6.8 per cent, in Central America and Mexico it decreased from 4.5 per cent to 4 per cent, and in the Caribbean it decreased from 7.8 per cent to 7.4 per cent.

In 2017 unemployment increased in nine of the 19 countries with data from the third trimester, this also is a positive evolution compared with 2016 when the increase was noted in 13 countries.

“The main change in this Labour Overview is that, generally speaking, there is a glimpse of the end of the  widespread deterioration of the labour markets registered over the last two years and the start of an acceleration in the expected growth in 2018 which should materialize, and trigger  a new phase of improvement”, said Salazar.

Nonetheless, he reminded that unemployment is merely the most visible part of the functioning of the labour markets. “There are other dimensions of employment which must be taken into account in the countries of the region, such as persistent gender inequality, the lack of employment for youth and issues associated with the quality of employment which contribute to perpetuating informality”, he underscored.

In the case of women, the good news is that for the first time since the Labour Overview survey is conducted, the participation of women in in the labour market exceeds 50 per cent, standing at 50.2 per cent to be precise. This means that more than 100 million women form part of the economically active population. 

However, in spite of this positive change the gender gap persists. Participation rates and employment rates of women are less than that of men by more than 20 percentage points. Furthermore, the unemployment rate for women, of 10.4 per cent in the third trimester, continues to be 1.4 times that of men.

“The labour markets of the region continue to be highly segregated”, commented Salazar. On the other hand, the average rate of youth unemployment rose from 18.9 per cent to 19.5 per cent in 2017, which means that one in every five youths in the work force cannot access work. It is estimated that this situation affects some 10 million youths.

With regard to the quality of jobs, the ILO report indicates that job creation in the formal and salaried sector has remained weak, while there has been more growth in the creation of self-employment, usually associated with formal working conditions. 

In the case of jobs by sector, there was an increase of 1.9 per cent in employment in the manufacturing sector, normally associated with formal working conditions. With regard to wages, in a context of moderate growth and especially due to less inflation, in seven of the nine countries with available information, the real salaries in the registered or formal sector increased between the third trimester of 2016 and the third trimester of 2017.

The increase was more noticeable in the case of real minimum wages, with an average increase of 4.3 per cent in the third trimester of 2017, above the 2.3 per cent which was registered one year before.
A special theme included in this Labour Overview addresses the “Evolution of wages in Latin America and the Caribbean 2005-2015”.

The research highlights among other data that during this decade:
•    Real wages in Latin America increased by 19.8 per cent, or 1.8 per cent annually
•    On average, the real minimum wage increased by 42 per cent in Latin America
•    In Latin America public salaried workers represent 18 per cent of the total of salaried workers in 2015, domestic work represented 8 per cent and private sector employment represented 74 per cent.

The Labour Overview of Latin America and the Caribbean 2017 warns that the future prospects depend on maintaining a more stable international economic environment. Nevertheless, Salazar underscored that “although 1.2 per cent or 2 per cent growth is better than the recent rates, this “new normal” includes some bad news, because these levels of growth are insufficient to speedily reduce poverty, and to satisfy and finance the demands of the middle classes and to have really transformative impacts on the social and labour market indicators.”

For this “the countries of the region must grow to 5 or 6 per cent and this will only be achieved by bridging the gaps in productivity and the lack of productive development and diversification, as well as in education and vocational training and infrastructure”.

“Only in this way can we advance more sustained, inclusive and sustainable growth with more and better jobs”, said the Regional Director of the ILO.

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Gennike Mayers | | +1 (868) 623 7178/ 7704 ext 412