“We are observing a delay in the recovery to pre-pandemic employment levels.”
(Transcription of Karina Batthyány's Column)
(In InfoCLACSO – July 20, 2022)
On July 20, the new parliament of Colombia took office, which is the first step in this historic moment that all of us in Latin America are observing with so much hope and expectation.
When we talk about Colombia, we're not just thinking about what's happening locally, about the impact of a new government, but also about how it was often the epicenter of neoliberalism, of its most extreme neoliberal ideologies. Clearly, in Colombia, this change has a local impact, but without a doubt, the impact can be framed within a regional context, and perhaps that's the most compelling aspect. We saw it in how the protests in Chile not only had a transformative impact on that country, but also how the region looked at Chile and saw itself in a different light. I imagine it's the same in Colombia, isn't it?
Absolutely. That's why I mention it before starting today's column. Furthermore, as we always delve into the complexities of inequality in these columns, it's important to mention this first step in Colombia, which is certainly significant not only for Colombia but also for all of Latin America and the Caribbean. This process continues on August 7th with the inauguration of the new president and vice president, Gustavo Petro and Francia Márquez. CLACSO will be observing not only in terms of the hopes and expectations it generates, but also in terms of the support we can offer through our various programs and activities in training, research, and collaborative work with social organizations and those leading the public policies that this Colombian government will implement starting August 7th. So, you will certainly find an ally in CLACSO to help build more just and equitable societies and to advance this historic opportunity for Colombia, which has implications for the entire region. So, I didn't want to start the column without mentioning what is happening right now in Colombia, which fills us all with a lot of hope.
In terms of our regular column, last week we were working on the issue of poverty. And I propose we look today at what's happening in terms of the labor market, the job markets. Because it's obviously very related to what we mentioned last Wednesday. And if I had to summarize it in one sentence, I would say basically that we're seeing a delay in the recovery to pre-pandemic employment levels, that is, to 2019, compared to what we're seeing in terms of the recovery of economic activity in countries.
This was made very clear in a report recently presented by ECLAC (Economic Commission for Latin America and the Caribbean) and the ILO (International Labour Organization), both United Nations agencies. They outline what is happening both at the level of the region's economies and how this economic situation is impacting labor markets. The report presents a context in which the region's economies grew by approximately 7% in 2021 (the latest available data), more specifically by 6.6%.
Key labor market indicators in our region showed improvements, most notably job growth and the labor force participation rate. Consequently, the unemployment rate also declined. However, this job recovery has been slow, incomplete, uneven, and at a slower pace than the overall recovery of economic activity.
This report, the 26th on the labor situation in Latin America and the Caribbean, also shows the reality of wages during the pandemic and also talks about the evolution and challenges of these wages, where it clearly states the delay in the recovery of employment and wage levels prior to the pandemic.
By the end of 2021, several countries in our region had already recovered their pre-crisis levels of gross domestic product, but employment levels were still below 2019 levels. According to figures and data from the ECLAC and ILO report, after the historic contraction of 8% in the number of employed people in the region in 2020, there was a significant recovery in that indicator in 2021, reaching 7% on an annual basis.
Despite the increase in employment throughout the year, it wasn't until the end of 2021 that the number of employed people in the region reached a level similar to that of the end of 2019. Furthermore, significant gender gaps in the labor market, which widened in 2021, are also highlighted. ECLAC and the ILO are demonstrating that the recovery of labor markets has therefore been unequal, and that this unequal recovery has been particularly detrimental to women. While there has been an improvement in employment and participation for both men and women, this recovery has been greater for men than for women.
The COVID-19 pandemic crisis disproportionately affected women's employment, resulting in a setback equivalent to more than 18 years in women's labor force participation rates. We have previously discussed this data, but it is worth reiterating so that when we talk about the labor market, we also consider this inequality between men and women.
The largest declines in employment levels for women occurred among those living in households with children aged 0 to 4. There, the drop was nearly 12%. This again highlights pre-existing gender inequalities, but also how caregiving responsibilities influence the labor market and underscores the need to improve childcare services, particularly for children aged 0 to 4.
This ECLAC-ILO report also shows that the COVID-19 health crisis had significant effects on wages in the region. On the one hand, in terms of the impact of recent inflation trends, which has been most clearly observed in real minimum wages, whose purchasing power decreased in 2021. This inflationary process, which began in 2021, has direct consequences for the real wages of the population in Latin America and the Caribbean.
Average real wages in the region in 2021 were approximately 7% below pre-pandemic levels. Ultimately, what workers in Latin America are receiving for their labor today is 7% below pre-pandemic levels.
As we know, the situation is worsening in 2022 for many reasons, including the conflict between Russia and Ukraine and its inflationary consequences for the global economy. Furthermore, the rise in inflation during 2022 was anticipated even before the outbreak of the war.
Given this situation, it is obviously absolutely urgent and a pressing need to reactivate certain institutionalized mechanisms in many of our countries, such as collective bargaining and the updating and determination of minimum wages, which we know have consequences for overall wage levels and social benefits. It is also, of course, crucial to re-emphasize the importance of the role of the State and public policies, in this case labor policies, not only to prevent the current deterioration in working conditions and wages for workers in Latin America from worsening.
I reiterate the need to reactivate these dialogue mechanisms between governments, workers, and employers, in order to achieve these salary updates and improvements in working conditions for people in a region where we must not forget that approximately 50% of the working population is in the informal sector and in many cases outside of all social protection mechanisms.
Let's also remember that we currently have an unemployment rate of almost 10%, and—as I mentioned—one in two workers is in the informal sector, a fact that must be carefully considered when discussing the labor market in our countries. We are also thinking about the specific measures that can be implemented to support those who currently make up that 10% of unemployed and underemployed workers in our region.
In a region where only eight countries have unemployment insurance and a concrete policy for the unemployed, it is urgent to review the entire social safety net to address this current crisis and prepare for future ones. Therefore, in my next column, I propose analyzing what is happening in terms of social protection and welfare in Latin America and the Caribbean.
It always seems the same sectors end up paying the price for everything… It’s clear the pandemic brought a number of deep inequalities to a head, but the increased inequality caused by the resulting problems is always paid for by the same sectors. And, on another note, I was thinking almost as a preview of what you’ll surely be discussing in your next column: universal basic income. We hear it mentioned many times as a great idea for social support, but what we always see or hear from many governments is that “it’s not the right time.” And if times of crisis aren’t the right time, when is the right time for such exceptional measures?
Absolutely. It is becoming increasingly imperative to consider universal social protection mechanisms, not necessarily tied to any specific condition, such as being a worker, to ensure minimum levels of protection for everyone in our region. This is an absolutely urgent discussion in Latin America; it was urgent in 2019, but it has undoubtedly become even more so given the impacts of the pandemic, which are not merely theoretical but are having concrete consequences on the lives and daily routines of the people who live in this Latin American region. That is why I wanted to share these interesting 2021 figures on labor markets and the employment situation in our region, which show us, once again, these inequalities and how they operate concretely in the daily lives of each individual, and, of course, the differential gender impacts in this situation as well.
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