(01 October 2009) Urban unemployment rates in Latin America and the Caribbean reached 8.5% in the second quarter of the year and could average the same at the end of the year, estimated ECLAC and ILO in a joint bulletin.
This means that 2.5 million additional people will join the ranks of the urban unemployed, which would then reach 18.4 million, say the organizations in their second joint bulletin The Employment Situation in Latin America and the Caribbean. Crisis in Labour Markets and Countercyclical Responses.
The 8.5% estimate for 2009, calculated on the basis of a 1.9% drop in GDP this year, is slightly more optimistic than the forecast published in the first bulletin in June (between 8.7% and 9.1%) and is one percentage point higher than the unemployment rate in 2008 (7.5%).
The adjustment of the estimate is due mainly to the fall in the participation rate during the first half of 2009 and which is expected to maintain throughout the year. This could be largely due "to a sense of discouragement as a result of scarce job opportunities in the context of the crisis".
In this second bulletin, ECLAC and ILO analyze how the impact of the crisis has deepened in labor markets in the region during the first semester of this year and examine the progress made in public investment in infrastructure and emergency employment programs implemented to counteract its effects.
They conclude that labor markets in the region continue suffering the impact of the international crisis and deteriorated even further in terms of employment levels during the second quarter of 2009, according to the latest available indicators from countries in the region.
The bulletin asserts that regional unemployment reached 8.5% in the second quarter of 2009, up from the 7.7% registered during the same quarter last year.
In addition, some indicators reveal a rise in labor informality, a weakening of social-security protected employment and a contraction of full-time jobs. "Youths have paid a high cost for the crisis or economic slowdown, given that unemployment among youths has increased significantly," says the bulletin.
Nevertheless, both organizations see signs that the economic crisis already reached bottom in mid-year.
In many countries, production has stopped declining and there are signs of an incipient recovery, partly due to the impact of countercyclical policies implemented there, which could prop up labor markets in the region during the fourth quarter.
However, they stress that greater economic growth will not solve labor problems immediately. Recovering employment levels will lag behind economic activity, and will be gradual and heterogeneous in the different countries in the region.
Labor demand and job creation will continue weak as well.
ECLAC and ILO call on countries to redouble their efforts to stimulate decent job creation, strengthening the effectiveness of available instruments. Through this, they may advance in social inclusion and towards compliance of the Millennium Development Goals.
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