Structural characteristics and previous trends in labor markets in Latin America

Structural characteristics and previous trends

in labor markets in Latin America

The COVID-19 coronavirus pandemic caused a global crisis that is at once economic, social and humanitarian in nature, which continues to be underway, and of which the final effects continue to be unknown. The world will change in various ways following this pandemic, and there have been numerous discussions about this. We will most certainly see changes in the means of production and the way working and living are carried out.

With regard to our region, the limited scope of this report, and the content developed in this section, we sought to analyze how the labor market was affected in 2020 as a result of the pandemic and, in turn, to relate these impacts to preexisting structures and trends in labor matters. It is hoped that this information will also contribute to thinking about what changes may occur in the future, and how workers should prepare to collectively face those changes.

In relation to the structural characteristics of Latin American countries, two aspects were highlighted that, going beyond the differences between nations, are specific to the region and involve problems that differ from those of developed countries.

On the one hand, this is an employment structure featuring a high contingent of self-employed workers and, more generally, of employment in the so-called urban informal sector. Prior to 2020, there was a high proportion of employment in the informal sector in all the countries analyzed, from just under 30% in Chile to the maximum levels of 50% or more in Ecuador, Peru and Bolivia. Historically, occupations in the informal sector have tended to function as a “refuge”, increasing in situations of socio-labor crisis. It will be seen that, in particular in the current crisis, this type of employment was found to be especially exposed in the context of economic crisis, above all, showing the greatest difficulties in being protected by labor legislation and the various policy measures taken for the preservation of jobs.

On the other hand, there preexisted abysmally higher levels of poverty than those existing in developed countries, which implies that this crisis hit households that were already in situations of previous hardship, with fewer assets, less savings and lesser possibilities of coping with conditions of isolation and reduced income. Also

regarding poverty, the differences between countries are significant: from incidences of below 5% in Chile and Uruguay to values close to or above 30% in Colombia and Nicaragua according to World Bank measurements quantifying the percentage of the population whose average per capita income is below USD$ 5.50 (PPP) per day.

It is not a coincidence that levels of informality and poverty are correlated, such that countries whose labor markets are characterized by a greater percentage in the informal sector also tend to have greater incidence of poverty.

In addition to the structural labor and social problems of the countries in the region, the labor market was already showing general marked difficulties at the time of the outbreak of the pandemic. The unemployment rate, which can be considered the most representative synthetic indicator, had experienced an increase in most countries, either because of declines in the employment rate or because of greater increases in the economically active population than in jobs. While higher unemployment implies an imbalance of forces against the workers, regressive labor reforms as well as attempts to advance in this direction were followed in several countries, continuing the trend in the region occurring since the 1990s. In this respect, it is worth mentioning the Brazilian reform of 2017, the frustrated attempt for reform in Argentina in the same year, the project in Uruguay at the beginning of 2020 and the reform of the state promoted in Paraguay.