MercoPress. South Atlantic News Agency

Urban unemployment in Latin America to increase 7% this year, says ECLAC

After six years without any increase, unemployment started growing in Latin America in 2015, going from 6% in 2014 to 6.5% last year.

Urban unemployment in Latin America will hit 7% this year, growing 0.5 percent point from last year’s 6.5% rate, the International Labour Organization (ILO) and the Economic Commission for Latin America and the Caribbean (ECLAC) said in a joint report — a drop linked to the region’s lower growth.

 “The evolution of labor markets in Latin America and the Caribbean during 2016 will generally be negative, due to forecasts for a more deteriorated macroeconomic context and growth levels than last year and to the weakening of some employment indicators,” the report reads.

After six years without any increase, unemployment started growing in Latin America in 2015, going from six percent in 2014 to 6.5% last year. The trend is now set to continue this year, ECLAC and ILO agreed.

The United Nations organizations point out in a new edition of Employment Situation in Latin America and the Caribbean that these factors, especially the low dynamism in job creation, will likely lead to an increase in urban unemployment.

“The process of continuous improvement of labor indicators that benefitted the region during much of the last 15 years halted in a more unfavorable global macroeconomic context,” Alicia Bárcena, Executive Secretary of ECLAC, and José Manuel Salazar, Regional Director of ILO for Latin America and the Caribbean, stated in the document’s foreword.

“This underscores the importance of taking measures not only to mitigate the effects of the crisis in the short term, but also to tackle the gaps and lags over the longer term, such as scarce productive diversification, productivity gaps, high informality and inequality,” they added.

The report provides an overview of the performance of Latin American and Caribbean labor markets in 2015. It indicates that, mainly as a result of a slight contraction in regional gross GDP, that year the average unemployment rate recorded its first increase since 2009.

That increase was produced by greater numbers of job seekers entering the labor market compared to previous years, who did not find the necessary quantity of jobs due to the weak creation of salaried employment—which reflects the low dynamism of economic activity, the study adds.

In addition, at a regional level job quality deteriorated because, in light of the dearth of sufficient salaried positions, self-employment expanded and was generally of lower quality.

According to the document, the weakness in job creation in 2015 was manifested in the third consecutive annual decline in the employment rate (by 0.4 percentage points), which implied a reduction in the number of wage income earners per household. This fall in income has played an important role in the estimated poverty increase for 2015 (to 29.2% of the region’s inhabitants, according to ECLAC’s latest projections).

Nevertheless, ECLAC and ILO stress that the deterioration of employment and unemployment indicators is not a widespread phenomenon in the region.

In 2015, the unemployment rate increased in just seven of 19 Latin American and Caribbean countries, while in nine others it fell and in the remaining three it held steady.

In general, in Central American countries, Mexico, the Dominican Republic and the Caribbean nations the labour market’s evolution was more favourable than in South America, whose performance was affected by the impact of the external context on its economic activity and inflation, among other factors.