Published On: Thu, Dec 15th, 2016

ILO: Unemployment increased sharply in Latin America and the Caribbean

unemployment1LIMA - The unemployment rate in Latin America and the Caribbean reached 8.1 per cent in 2016, the highest level in a decade, amid an economic contraction that has also affected the quality of employment, the ILO said today in its annual report on the region's labour market.

That rate is 1.5 percentage points higher than in 2015, when it stood at 6.6 per cent, and it means that some 5 million people joined the ranks of the unemployed, a figure that now stands at about 25 million workers, according to the "2016 Labour Overview of Latin America and the Caribbean", which the ILO Regional Office has published at the end of every year for more than 20 years.

“The labour scenario in the region worsened in 2016: there has been a sharp increase in unemployment, informality is increasing and the quality of employment has deteriorated," said the ILO Regional Director for Latin America and the Caribbean, José Manuel Salazar. By the end of the year, there was "a worrisome series of setbacks and negative impacts in multiple indicators", he said.

“Although there are significant differences between countries and sub-regions, on average for the region this is the worst year in a decade, in terms of both economic growth and the unemployment rate", the ILO Regional Director warned. "The economic contraction reduced job creation."

Of particular concern, he said, is that if forecasts of slow growth for 2017 hold true, unemployment will increase again next year to 8.4 per cent.

The ILO report notes that the increase in unemployment comes as an economic contraction of -0.6 per cent or -0.9 per cent is projected by the IMF and ECLAC, respectively, for 2016.

The average economic growth rate for the region reflects diverse situations, the report notes, because Central America, the Caribbean and Mexico are seeing positive economic growth rates, while there is a contraction in South America, especially in Brazil, where nearly 40 per cent of the region's economically active population lives, and which has a strong impact on the average for South America and the region as a whole.

Although unemployment rates also reflect diverse national situations, in 2016 "a region-wide phenomenon was detected", as the rate increased in 13 of the 19 countries with data available as of the third quarter of the year.

The increase in unemployment affected women more than men. The increase in women's unemployment was 1.9 percentage points, raising the rate to 9.8 per cent, nearly in double digits for the first time in a decade.

In the case of young people, the ILO Regional Director said the increase of nearly 3 percentage points is "of extreme concern". That increase raised the youth unemployment rate to 18.3 per cent, the highest in a decade. The unemployment for young people is 3.1 times that of adults over age 25.

This edition of the annual ILO report also includes the most recent informality data. In 2015, a slight increase was seen, from 46.5 to 46.8 per cent in informal employment. The report warns that this trend toward greater informality continued in 2016.

“We estimate that some 134 million workers are in informal employment, a persistent phenomenon in our region, which poses a major challenge for policy makers", said Juan Chacaltana, ILO regional specialist on employment, who coordinated the preparation of this 2016 Labour Overview.

In the report, the ILO says that other indicators of deterioration in the quality of employment are the decrease in registered employment, which dropped by -0.7 percentage points in 2016, and the increase of 0.5 percentage points in self-employment "associated with lower-quality working conditions".

The report also notes that real average wages in the region decreased by -1.3 per cent in 2015. According to data available for eight countries as of the third quarter of 2016, that trend could continue this year, as there are indications of a decrease in wages in the registered or formal sector.

Meanwhile, real minimum wages increased by an average of 4.4 per cent. In 14 of the 16 countries with information as of the third quarter of 2016, an increase was seen as a result of efforts to raise minimum wages above the inflation rate.

Indicators collected in 2016 show that "in the past two years, there has been a reversal in some of the labour-related progress achieved in the region in the previous decade", Salazar said.

“Although with different combinations and degrees of urgency, the countries of Latin America and the Caribbean face a dual challenge: on the one hand to design short-term responses to mitigate the negative social and labour impacts of the deceleration and return to a growth path, and on the other to take action to address the structural problems of low productivity and the lack of productive diversification", Salazar said.

The Labour Overview is prepared by the Regional Office using data from official sources in each country, which are gathered and processed by the Labour Analysis and Information System for Latin America and the Caribbean (SIALC-ILO).

For further information: 2016 Labour Overview. Latin America and the Caribbean. Executive Summary

 

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