Following the economic growth of recent years, which had been characterized by an expansion in job creation and falling unemployment, the contraction observed in 2015 and 2016 corresponded to a phase of contraction in the labor market. While the economy resumed its rapid growth rate following the recent financial crisis, thanks mainly to the recovery of commodity prices, the current market scenario does not foresee a rapid increase in prices— while there was a slight rebound this year, no major improvement is expected in the short or medium term due to China’s moderate growth and a more uncertain international environment.
According to the report, between 2006 and 2014, with the exception of 2009, employment rates either grew more or fell less than participation rates, which was reflected in a decreasing trend in the unemployment rate. The effect of the economic slowdown was lessened by the fact that a procyclical effect was registered in participation rates. But in 2015, and especially in 2016, this trend changed; as the employment rate continued to fall, the regional participation rate fell less than the employment rate in 2015, and then grew in 2016.
At the country level, there are differences in the performance of the region’s respective labor markets. In 2015, of the 33 countries included in the report, 8 saw an increase in unemployment, while in 2016 the number grew to 13 countries. In addition, most are South American countries and have proportionally much more weight than those of the Caribbean, both in terms of their economies as well as the regional labor market.
Not only was last year characterized by an increase in regional unemployment, Latam also saw a deterioration in general labor market conditions. This, according to the report, “was expressed in a readjustment in employment composition toward more informal categories with more structurally-precarious working conditions, such as self-employed workers.” This type of work, therefore, became an alternative for income generation for many wage earners who would had lost their jobs. This countercyclical behavior, to a certain extent, cushioned the loss of higher-quality jobs.
*Guest blog post from Latinoamerica21.
Jeronimo Giorgi is an Uruguayan journalist dedicated to international issues. He has collaborated with various media in Latin America and Europe, and has received distinctions such as the 2016 King of Spain International Journalism Award. Giorgi is currently pursuing a master’s degree in Latin American Studies.
Latinoamerica21 is a blog about current economic, political and social topics in Latin America that is currently published within the newspaper El Observador de Uruguay and will soon be published in other media outlets within the region. The original version of this blog post is available in Spanish: ¿De dónde provendrá el crecimiento en América Latina? Retos y prioridades
*Guest blog posts do not reflect the views of FocusEconomics.
5-year economic forecasts on 30+ economic indicators for 127 countries & 33 commodities.