Employment transformation during and after COVID-19 in LAC

Jorge Umaña
Cepei
j.umana@cepei.org

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I. Introduction

According to the International Labor Organization – ILO (2020), the COVID-19 pandemic has affected the labor market in Latin America and the Caribbean,  representing a general decrease in working conditions, including less working hours and income. These conditions have made evident that once the COVID-19 crisis is over, the reopening of businesses and the generation of employment will occur slowly and unevenly, unless public policies are produced and financed by recovery programs centered on people’s needs and focused on ensuring decent work for all.

In this context, it is relevant to understand decent work, defined by the Thesaurus of the International Labor Organization (ILO) as:

Decent work sums up the aspirations of people in their working lives. It involves opportunities for work that is productive and delivers a fair income, security in the workplace and social protection for families, better prospects for personal development and social integration, freedom for people to express their concerns, organize and participate in the decisions that affect their lives and equality of opportunity and treatment for all women and men. (ILO) ).

The United Nations, in agreement with the Member States, established Sustainable Development Goal 8 -Decent work and economic growth- as a global objective to promote inclusive and sustainable economic growth, employment and decent work for all by increasing productivity levels and technological innovation, as well as promoting policies that stimulate entrepreneurship and job creation, as well as effective measures to eradicate forced labor, slavery and human trafficking (UNDP, nd).

However, the conditions and limitations resulting from the COVID-19 pandemic have caused a historic recession as evidenced below:

• According to estimates from the International Monetary Fund, as of January 2021, world GDP contracted 3.5% in 2020 compared to 2019, with record levels of poverty.
• According to the World Bank, in 2020, extreme poverty increased between 9.1% and 9.4%, equivalent to 88 million to 150 million people.
• According to data from the World Bank (2021), the world unemployment rate went from 5.4% in 2019 to 6.4% in 2020.

This has represented an unprecedented crisis, the consequences of which are reflected, to a greater extent, in vulnerable populations. According to the ILO (2021), in relative terms, the decrease in employment was more noticeable in the case of women equivalent to 5.0%, and greater in the case of young workers corresponding to 8.7%, both for 2020.

II. Changes generated in labor dynamics in Latin America and the Caribbean

The seventh edition of the ILO Observatory: COVID-19 and the world of work exposes the four main effects generated in the labor markets in 2020. Some of the effects cited by the report and experienced within the labor dynamics of Latin America and the Caribbean are as follows:

1. Closure of workplaces. 90% of the number of jobs in the region were affected by the application of some type of measure to close offices. These effects were generated because most of the restrictions cover cities with a high concentration of people or specific sectors such as the tourism sector, which were directly affected by limitations in interactions and the closure of borders.
2. Loss of working hours. In America, the total loss of working hours in 2020 was 13.7%. The greatest losses occurred in Latin America and the Caribbean equivalent to 16.2%, with Brazil and Mexico being the countries with the highest loss of working hours, 15.0% and 12.5% ​​respectively during the year. Finally, according to ILO records (2021), for the fourth quarter of 2020, the number of working hours only decreased 4.6%, 130 million full-time equivalent jobs.
3. Occupation, unemployment and departure from the workforce. According to the ILO (2021), the decline in employment was more pronounced in America. According to the ILOSTAT database, based on estimates based on ILO models at the end of 2020, the 13.7% that represents the loss of working hours in America, is disaggregated as follows: 2.7% unemployment, 6.3% in non-participation in the workforce and 4.7% in the total or partial reduction in the number of working hours. In this context, many people who wanted to have a job left the workforce because they did not see any opportunity to find employment due to restrictions associated with COVID-19.
4. Loss of income from work. As a result of the loss of working hours, in Latin America and the Caribbean, income from work represents a fall of 10.3% compared to 2020, without taking into account any support measures subsequently adopted to guarantee income (Observatory ILO, 2021).

It is evident that this generalized decline in people’s employability conditions has a negative effect on the fulfillment of the general characteristics of decent employment. But it not only affects this important component of sustainable development, but also other aspects that were prioritized so as not to leave no one behind: Multidimensional poverty (SDG 1), food (SDG 2), health (SDG 3), education (SDG 4), gender equality, (SDG 5) and conditions of democratic peace (SDG 16).

How should the region move forward? What elements should be taken into account for the design of policies?

Projections from both the ILO and other international organizations indicate that from the second half of 2021 there will be a positive recovery of employability conditions in the region. These improvement conditions imply some level of uncertainty for decision makers in public policy, for the private sector and for society in general, since the effectiveness of the recovery will depend on a series of political, economic and health factors. In particular, vaccination processes in the region, the way in which countries continue to control the pandemic, and the ability to maintain policy measures that promote economic recovery by strengthening the labor market.

Whatever the situation and the conditions that generate it, there will be a decrease in the number of working hours, as a result of the changes in employability during the last year. According to projections, these decreases will be less than those experienced during 2020; However, some relevant aspects of public policy must be taken into account, among which are: (ILO,2021):

1. Preserve and make flexible macroeconomic measures for the coming years, which ensure inclusive economic sustainability, through tax incentives and promoting investment.
2. Design and implement actions that improve the situation of vulnerable groups, including women, youth, low-skilled workers, and other groups that receive low pay.
3. Explore and adopt measures that specifically support the needs of sectors that have been most affected by the COVID-19 crisis.
4. Encourage policies and mechanisms that boost job growth in sectors where progress is being made at a faster pace, such as tourism and digital services.
5. Promotion of social dialogue and intersectoral collaboration to apply the necessary recovery strategies to achieve more inclusive, just and sustainable economies.

These measures can prevent an uneven and unsustainable recovery, since it is necessary to design and execute actions focused on people, in order to reduce the effects of the crisis and promote better employment conditions, income, social protection, rights of workers and a healthy social dialogue, which allows the fulfillment of Sustainable Development Goal 8 – Decent work and economic growth from all its dimensions.

IV. Conclusions

The crisis generated by the COVID-19 pandemic had a negative impact on the occupation and working conditions of the entire population, especially the most vulnerable population groups such as women and youth, implying setbacks in progress achieved in terms of labor participation in recent decades. An example of this is paid domestic work characterized by high precariousness and the impossibility of being carried out remotely.

By decreasing the income of families, as a result of the contraction of employment and the economy, the income inequality gaps have widened, which directly affects opportunities and reduces social mobility. Reduced social mobility limits, in turn, the progress of society by increasing inequality, contracting economic growth and social cohesion over time.

On the other hand, a considerable number of people had to start working remotely, in many cases without the necessary skills, devices or connectivity. In addition, without adequate conditions to work at home, with difficulties in managing work times and compatibility with care tasks. This situation further increased the gender and technology gap.

Finally, it is clear that present and future changes will come that will generate a transformation in employment conditions. Among them are:

• The technological revolution will bring new jobs and with it new opportunities will also arise. Emerging occupations span a wide range of sectors such as the green economy, data analytics, or artificial intelligence. This will imply an improvement in the skills of your collaborators.
• The COVID-19 pandemic promoted home working as a flexible work mechanism. These changes will impact the workforce by allowing employees to perform their duties by connecting through the Internet. However, many workers, especially in less developed countries, will remain completely outside the new paradigm of virtual connectivity due to limited technological conditions.
• Finally, according to employment trends, the most required skills will be analytical thinking, creativity and flexibility, characteristics that cross different professional and technical profiles, which will become increasingly important. The need for skills such as self-management, active learning, resilience and stress tolerance has also been detected.

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References

OECD (2021). OECD Economic Outlook, Interim Report March 2021, OECD Publishing, Paris. Available at: https://bit.ly/2RdJZKY

Organización Internacional del Trabajo (2021). Observatorio de la OIT: La COVID‑19 y el mundo del trabajo. 7ª edición. Available at: https://bit.ly/3vstCsR

Organización Internacional del Trabajo (2020). Panorama Laboral 2020. Lima: OIT / Oficina Regional para América Latina y el Caribe, p. 204. Available at: https://bit.ly/3sXCyVG

Organización Internacional del Trabajo (2020). Observatorio de la OIT: La COVID‑19 y el mundo del trabajo. 6ª edición. Available at: https://bit.ly/32YYMvN