Employment in Crisis : The Path to Better Jobs in a Post-COVID-19 Latin America
A region known for its volatility, Latin America and the Caribbean (LAC) has suffered severe economic and social setbacks from crises—including the COVID-19 pandemic. These crises have taken their toll on careers, wage growth, and productivity. Employment in Crisis: The Path to Better Jobs in a...
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| Format: | Book |
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Washington, DC: World Bank
2021
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| Online Access: | https://documents.worldbank.org/en/publication/documents-reports/documentdetail/202971624006966893/employment-in-crisis-the-path-to-better-jobs-in-a-post-covid-19-latin-america http://hdl.handle.net/10986/35549 |
| Summary: | A region known for its volatility, Latin America and the Caribbean (LAC) has
suffered severe economic and social setbacks from crises—including the
COVID-19 pandemic. These crises have taken their toll on careers, wage
growth, and productivity. Employment in Crisis: The Path to Better Jobs
in a Post-COVID-19 Latin America provides new evidence on the effects
of crises on the region’s workers and firms and suggests several policy
responses that can bolster long-term and inclusive economic growth.
This report has three key findings. First, crises lead to persistent employment
losses and accelerate structural changes away from the formal
sector. This change occurs more through reductions in the creation of
formal jobs than through job destruction. Second, some workers recover from crises, while others are permanently
scarred by them. Low-skilled workers can suffer up to a decade of lower
earnings caused by crises, while high-skilled workers rebound fast, exacerbating
the LAC region’s high level of inequality. Formal workers suffer
smaller employment and wage losses in localities with higher rates of
informality. And the reduced job flows caused by crises decrease welfare,
but workers in localities with more job opportunities, whether formal or
informal, bounce back better. Third, crises’ cleansing effects can increase efficiency and productivity,
but these effects are dampened by the LAC region’s less competitive
market structure. Rather than becoming more agile and productive during
economic downturns, protected sectors and firms gain market share and
crowd out others, trapping valuable resources.
This report proposes a three-pronged mix of policies to improve the LAC
region’s responses to crises: • Create a more stable macroeconomic environment to smooth the
impacts of crises, including automatic stabilizers such as unemployment
insurance and short-term compensation programs; • Increase the capacity of social protection and labor programs to
respond to crises and coalesce these programs into systems that complement
income support with reemployment assistance and reskilling
opportunities; and • Tackle structural issues, including the lack of product market competition
and the spatial dimension behind poor labor market adjustment—a
“good jobs and good firms” agenda. |
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