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World Employment and Social Outlook | Trends 2022
of income in both Canada and the United States since the 1970s.17 In the COVID-19 recession, the labour share in the United States increased in the first half of 2020 and has had a downward trend since then (UNCTAD 2021).18 The low pre-pandemic labour share in comparison with historical levels, and conversely the high capital share, means that profit margins are sufficiently wide to accommodate a real wage increase without raising inflation (UNCTAD 2021, 10). Underlying these aggregate figures, however, lies significant heterogeneity across firms and workers. The pandemic has exposed the financial fragility of many SMEs that have faced severe liquidity constraints and insolvency (Bartik et al. 2020; OECD 2020a). There are signs of increased inequality among workers, reflected in an increasing wage premium between high-skilled and low-skilled workers. Real minimum wages have fallen steadily in the United States since 2010 (figure 2.6). Although some leading employers have initiated wage increases, the momentum in early 2021 for direct policy intervention to raise minimum wages seems to have subsided (UNCTAD 2021).
Labour market trends in Latin America and the Caribbean Latin America and the Caribbean was the most severely hit subregion in 2020, with high levels of contagion and mortality, the sharpest decline in GDP (7.5 per cent) and a drop in working hours equivalent to 36 million full-time jobs (table 2.2). In 2020, the subregion registered net employment losses of approximately 25 million, of which as many as 82 per cent translated into exits from the labour force. As the crisis affected all economic sectors, containment measures and mobility restrictions prevented labour reallocation to informal employment, which had previously been a key mechanism of labour market adjustment in the subregion (ILO 2021a). Rather than becoming unemployed or shifting to informal jobs, as in previous crises, laid-off employees and self-employed workers alike left the labour force. A disproportionate impact on informal workers was reflected in a decline in the informal employment rate in some countries at the height of the crisis in
2020 (see thematic section below). The pandemic has highlighted the close links in the subregion between informality, low household income and inequality (ILO 2021c). The closure and disappearance of millions of MSMEs across the subregion have suggested that employment recovery will lag behind the resumption of economic growth and that the quality of employment could deteriorate. Data on 26 countries presented in the eighth edition of the “ILO Monitor” (ILO 2021d) show disproportionate job losses and declines in working hours among smaller firms in comparison with larger firms. Besides MSMEs and informal workers, several other groups of workers have experienced the crisis more intensely, including women and youth – both of which have accounted for a disproportionate share of job losses relative to their share in employment – as well as workers with lower qualifications and migrant workers (ILO 2021c). The subregion’s economy rebounded in 2021 with an estimated GDP growth of 6.0 per cent, partly driven by favourable terms of trade for Brazil, and spillover to Mexico from growing demand in the United States (IMF 2021a). Brazil’s recovery is expected to pull the economy back above its pre-crisis GDP, thanks to higher commodity exports, but also thanks to larger and b etter-targeted fiscal measures than in both Mexico, which had a deeper recession, and Argentina, which struggled with financial constraints resulting from significant external borrowing before the pandemic (UNCTAD 2021). Chile, Colombia, Ecuador and Peru were similarly hard hit by the crisis but are expected to have recovered in 2021, with the exception of Ecuador, where fiscal and monetary policy have been constrained by the currency peg (UNCTAD 2021). The recovery of tourism-dependent Caribbean economies, many of which had double-digit GDP declines in 2020, will depend to a significant extent on vaccine roll-out and the lifting of international travel restrictions. In many countries of Latin America and the Caribbean, currency depreciation and commodity price increases in 2021 have pushed inflation up (UNCTAD 2021).
17 Based on Share of Labour Compensation in GDP at Current Prices, Canada and US data series (1960–2020) from the Federal Reserve Bank of St Louis. 18 This is consistent with the tendency of the labour share of income to increase initially in recessions, as profits drop, and then to decline thereafter as losses are passed on to workers.
