Edition No. 22 of the report Employment Situation in Latin America and the Caribbean. Work in times of pandemic: The challenges of the coronavirus disease (COVID-19) (May 2020) was presented simultaneously in Santiago, Chile and Lima, Peru, via a virtual joint press conference led by the Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), Alicia Bárcena, and the ILO’s Regional Director for Latin America and the Caribbean, Vinícius Pinheiro.
In addition to providing estimates on labour market dynamics in recent months, the ECLAC-ILO joint report explores some of the policies implemented by countries to protect formal employment, safeguard the income of workers in the formal and informal economy, and protect the productive sector.
According to the document, the implementation of policies aimed at reactivation will require a heavy component of security- and health-related training and education for people in the world of work. Bolstered institutional and budgetary resources will be needed to ensure compliance with such measures, which should include good practices such as putting into place a health and security protocol on the job that involves staff inductions, adopting staggered schedules for entering and leaving work to avoid crowding, disinfection routines and a hand-washing system, the obligatory use of face masks, and a protocol to follow in case a worker has symptoms.
Furthermore, it adds that if the crisis is prolonged over time, it will be necessary to take a new round of measures oriented towards both protecting employment and workers’ income as well as limiting the impact on companies, with a special focus on vulnerable groups such as migrants in non-regularized situations, domestic workers and caretakers for older persons, salaried workers and self-employed workers in critical sectors, and health workers on the front lines of response to COVID-19.
Looking ahead, both United Nations officials note that the crisis is starting to forge numerous changes in the working world that will become permanent with the aim of moving towards a “better normality.” “The policies aimed at recovery should not just strive for a ‘new normality’ that is similar to what existed before, but instead a ‘better normality’ with greater formality, equity and social dialogue,” Bárcena and Pinheiro indicated.
In terms of the current context, ECLAC and the ILO state that the pandemic has produced sharp negative effects on the labour market, with consequences in the formal sector (reduced hours, a decline in wages, and dismissals) and the informal sector (a loss of employment due to distancing and bans on movement, less access to income compensation). In addition, they warn that female workers are the most vulnerable and that labour-intensive sectors such as tourism, commerce, manufacturing, real estate and entertainment have been heavily affected. Also, the Small and Medium-sized Enterprises that account for 46.6% of all employment in the region are at a high risk of going bankrupt.
Before the pandemic, Latin America and the Caribbean was exhibiting low growth, and the worst economic contraction since 1930 is forecast for 2020, with a drop in regional Gross Domestic Product (GDP) estimated at -5.3%, which will have negative effects on the labour market. The unemployment rate is expected to rise by at least 3.4 percentage points, reaching 11.5%, which is equivalent to over 11.5 million more jobless people. If the economic contraction worsens, the unemployment rate will be higher.
Along with increased unemployment, a marked deterioration in the quality of employment is expected, the report indicates. Informal work is the source of income for many households in Latin America and the Caribbean, where the average rate of informality is approximately 54%, according to the ILO’s estimates, with this situation affecting the most vulnerable groups.
Meanwhile, according to the ILO’s calculations, the health crisis prompted by COVID-19 and related confinement measures are causing a loss of around 10.3% of working hours in the second quarter of this year, which is equivalent to 31 million full-time jobs (based on a 40-hour workweek).
This situation will negatively affect poverty and inequality dynamics and the achievement of the 2030 Agenda’s commitments, the UN organizations add. ECLAC estimates that in 2020 the poverty rate will rise by up to 4.4 percentage points and extreme poverty by 2.6 percentage points versus 2019. This means that poverty would therefore affect 34.7% of the Latin American population (214.7 million people) and extreme poverty, 13% (83.4 million people). Greater inequality is also expected in all the countries of the region, with increases of between 0.5% and 6.0% in the Gini index.
Beyond the issue of poverty, sizeable population groups live in chronic conditions of economic insecurity and are vulnerable to the loss of labour earnings. Thus, ECLAC has proposed providing a basic emergency income (BEI) of an amount equivalent to one poverty line over the course of six months to meet basic needs and sustain household consumption. This would entail additional spending of 2.1% of GDP to reach all the people who will find themselves in situations of poverty in 2020.
In this area, the strategic, long-term objective is the gradual implementation of a universal basic income, funded by sustainable and innovative financing mechanisms, the Commission adds.
The report reiterates that it is necessary to rethink the development model and consolidate the economic, social and environmental dimensions of sustainable development, leaving no one behind, as the 2030 Agenda for Sustainable Development sets forth. Furthermore, in parallel to labour policies, a social protection system with a rights-based approach is needed, one that is sensitive to differences and includes universal, redistributive and solidarity-based policies.
For queries or to arrange interviews, contact:
ECLAC’s Public Information Unit in Santiago, Chile.
Email: mailto:email@example.com; Telephone: (56 2) 2210 2040.
Sonia Álvarez, ILO’s Press Officer in Santiago, Chile.