Unemployment Rises In LatAM.

The downturn affecting job markets in 2001, as a result of slow economic growth, forms part of a long-term context that is worrisome, according to the Social Panorama of Latin America 2000-2001, prepared by the Economic Commission for Latin America and the Caribbean (ECLAC). The demand for labour in Latin America rose 2.2% annually in the 1990s, while the supply of labour rose 2.6% annually. Because of this, unemployment rose from under 6% to almost 9%.

The number of unemployed rose by 10.5 million people, from 7.6 million in 1990 to 18.1 million people in 1999.

Moreover, job quality declined: throughout the past decade, seven of every ten new jobs in cities were generated in the informal sector. Rising unemployment in the region during the 1990s is one of the most worrying signs of the current situation on the job market, because of its powerful impact on poverty and unequal income distribution.

The increase in unemployment throughout the past decade affected primarily the South American countries. In Argentina, Brazil and Colombia, unemployment rose steadily. It also showed a tendency to rise in Bolivia, Chile, Ecuador, Paraguay, Uruguay and Venezuela. On the contrary, in Mexico and most Central American and Caribbean countries the prevailing trend was falling unemployment.

According to ECLAC, a range of factors contributed to ongoing unemployment. The labour market’s weakness was compounded in many countries by the State’s reduced role in generating jobs and restructuring of the productive system. Primary and secondary sectors now account for a smaller share of employment, at the same time as new jobs have been generated primarily in tertiary areas. Moreover, the intensive use of new technologies suggests that the formal or structured sector of the economy will become steadily less able to add to job supply.

Unemployment affects low-income strata and young people disproportionately. Toward the end of the decade, however, it began to affect middle-income sectors more. Similarly, the average time spent unemployed rose from 4.4 to 5.3 months. There’s also evidence that those who manage to find employment after a lengthy period of joblessness do so at wages that are 23% to 34% less than in their previous job.

According to ECLAC, the region’s current high unemployment will probably tend to last, because economic growth for 2001 is forecast to reach almost 2%, a substantial drop from the 4% reached in 2000.

Moreover, several indicators suggest that higher unemployment and a sluggish return to former levels of unemployment after slow-growth periods have become structural. The increased volatility of both, combined with the middle- and low-income sectors’ vulnerability during periods when unemployment is rising and job creation has slowed, clearly indicates the need to create protective mechanisms to cover these risks.

For a copy of the study CLICK below (Adobe Acrobat required):

http://www.eclac.cl/publicaciones/DesarrolloSocial/8/LCG2138P/PSE-2001-Cap3.pdf.