Latin American economies will take years to recover from a fall in formal employment stemming from the economic shock of the pandemic, and the impact on the region could cause deeper income losses than previously thought, the World Bank said in a report on Thursday. .
In a study on medium and long-term upheavals in the labor market in Latin America and the Caribbean, in which the COVID-19 scenario affects, the agency identified previous crises in countries such as Mexico, Brazil and Chile, which resulted in substantial job losses and deterioration of employment conditions.
In Mexico, the coronavirus caused about 10.6 million people to go into poverty and 9.2 million into extreme poverty, according to figures released by the Research Institute for Development with Equity (EQUIDE) of the Ibero-American University.
He went from 52% to 54% between May 2020 and March of the current year. “There will be large effects on poverty that will continue throughout 2021. The impacts and consequences of this crisis are yet to be seen, we have time to intervene,” said Graciela Teruel, EQUIDE director at the presentation of the Monitoring survey of the effects of COVID-19 on the well-being of Mexican households (ENCOVID).
In May 2020, the unemployment rate was 15.5%. For December there was a decrease to 7.1%. However, in March of this year there was a slight rebound, to stand at 7.3%. When looking at the photograph by formal and informal sector, these were 6.2% and 8.1%, respectively, added Teruel.
The report analyzed the recessions of the last decades to determine the structures of the labor market.
“It is essential to focus on workers because the long-term impacts of crises on labor markets can lead to deeper income losses than previously believed,” the research said.
“For 20 months after the start of a recession, overall employment tends to remain lower, and formal employment remains below pre-crisis levels for more than 30 months.”
In addition to the urgency of a solid framework of countercyclical macroeconomic policies, the World Bank added that more studies are necessary to understand the informal and formal work patterns in the region and the transitions that are generated between both fronts when an economic shock occurs.
“Many workers do not completely overcome, not even in the long term; incomes remain low and their careers deteriorate. Those who lose the most, lose a lot,” he said.
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Reflecting the stark global disparity, less-skilled workers suffer more permanent effects in Latin America, while employees with more education and income tend to see smaller and shorter adjustments after recessions, the report said.
With information from Reuters
