Janina León: "Sustained economic growth is key to reducing informality in the region"

Santiago de Chile.- Faced with the multiple challenges posed by a world of work in constant and rapid transformation, the Researcher at the Department of Economics of the Pontifical Catholic University of Peru (PUCP), Janina León, highlights the importance of sustained economic growth, to confront permanent problems in the region such as the informality of the economy and inequality.

Janina León, who will participate as a speaker in the Symposium that the ILO will hold this November 15 and 16 on the occasion of the 30th Anniversary of the Regional Labor Panorama Report, spoke in an interview with the ILO about the performance of the world of work in Latin America and the Caribbean, the persistence of the informal economy in the region and the challenges posed by the transformations that the world of work is currently experiencing.

What stands out especially in the last three decades of performance of the world of work in the region?

There are several advances in the world of work, inside and outside the region. I could say that the economic expansion of several countries managed to reduce (just a little) the high economic and labor informality. Technological advances and their applications in business activity and in society in general have favored the expansion of several companies and economic sectors, promoting employment. Other favorable factors in some countries have been the legal reforms (tax, business, etc.) that have adapted the requirements to the possibilities of microenterprises, promoting their formalization and economic and labor expansion.

However, there have also been various global events that have affected the world of work in Latin America and the Caribbean (LAC) in these decades: changes in the major ruling political parties and leaders, internal wars in several countries, terrorism both inside and outside of the region, terrorist attacks inside and outside America, the wall between Mexico and the United States, even the poorly regulated use of the Internet, financial crises, etc. The recent economic and political crises resulting from COVID-19 have further complicated labor challenges in the region. Added to all of the above are the effects of climate change and its impacts, with economic and labor consequences in urban and rural areas.

““The economic instability (of the region) led to a low generation of jobs and salaries and adequate working conditions.

Janina León, PUCP

The economic and social activity of LAC has been sensitive to these events, and the consequent economic instability led to low generation of jobs and salaries, at least good jobs and salaries and adequate working conditions. Faced with the expansion of the available labor force and the slow expansion of adequate employment, from my perspective, there have been at least three major consequences for the world of work: first, the persistent importance of microenterprises, many of them unprofitable; the persistent high of inappropriate employment, and the growing international migration of workers within the region, especially of young workers.

What do you consider to be the main challenges and dilemmas for reducing informality in the Region?

I believe that a great challenge to reduce informality and in general strengthen the quality of the world of work in LAC is to have sustained economic growth, oriented towards the greater use of labor in a persistent manner. And this implies several challenges, among which I think we should include: negotiation with medium and large companies, which are the ones that demand labor, so that they promote work-intensive activities and technical changes, in a legal framework that encourages to such changes and allows the assumption of such associated costs, with various fiscal instruments.

Then, fiscal and economic stimuli for the growing expansion of those economically viable microenterprises, with increasing intensive investment in labor, and incentives and intersectoral coordination to increase the productivity of labor, but also of the various types of capital, with the participation of the various economic, financial, legal sectors, etc. A great challenge is to achieve a minimum consensus for the design of such a policy package in terms of its economic, administrative, legal, and even political costs.

A great help these days can be technology, which, as we have learned worldwide, with its proper application, allows for better communication, greater economic activity, and increased job and income opportunities, although today challenges persist in terms of the quality of employment generated in various scenarios.

““I believe that institutions will have to adapt, or will be forced to adapt, to global and regional changes, which pose challenges to the world of work.

Janina León, PUCP

What do you think are the prospects for the performance of institutions in the world of work that would allow for reducing inequalities in the region?

I believe that institutions will have to adapt, or will be forced to adapt, to global and regional changes, which pose challenges to the world of work. The growing negotiations with the authorities that make political decisions have to be accompanied by greater involvement with the actors that make economic decisions, both in the formal and informal spheres, despite their problems of representativeness.

More macro, more aggregated decisions, and consensus at all levels, can promote the best performance of institutions. However, it is essential that these institutions promote sustainable and continuous economic growth, aimed at greater employment of labor, even involving technological advances; only in this way can there be more and better jobs and labor income, for a sustained reduction of inequalities in the region.

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Janina León. Peruvian economist, with decades of academic and professional experience in Peru and abroad. She holds a PhD in Development, Environmental and Agricultural Economics from The Ohio State University. She is a professor and researcher at the Department of Economics at the Pontifical Catholic University of Peru (PUCP). She is an international consultant in various countries and topics. Her areas of interest and publications include labor markets, microenterprises, microfinance, financial inclusion, migration, gender, in Peru and Latin America. She actively participates in academic associations (ASSA-AEA, LACEA, UAA, APE, LASA). In the public sphere, Prof. León has assumed positions of professional responsibility in the public and private sectors.

More information:

Symposium website Three decades of performance of the world of work in Latin America and the Caribbean: Progress and Perspectives