The Caribbean’s labour market is in its worst ever crisis and states are entering into 2021 with employment in intensive care.

That declaration came from International Labour Organization (ILO) Regional Director Vinícius Pinheiro as he launched the main findings of the 2020 Labour Overview for Latin America and the Caribbean.

Over the last 10 months, the labour markets in Latin America and the Caribbean have regressed at least a decade.

Pinheiro pointed out that, “this is the largest crisis that this report has ever recorded in its entire existence”.

The annual Labour Overview Report was first published in 1994.

Confronted with this scenario, the ILO Regional Director commented that countries of the region now face the challenge of laying the foundations for a new and better normal. This would mean adopting strategies to generate more and better jobs as production reactivates and the health emergency diminishes.

“Now it is essential to achieve economic growth with employment. Employment is crucial to reduce poverty and decrease the growing inequalities that this pandemic is leaving in the aftermath,” Pinheiro explained.

Strong increases in unemployment in 2020

The 2020 Labour Overview registers a strong increase in the unemployment rate that rose by 2.5 percentage points compared to the previous year, moving up from 8.1 per cent in 2019 to 10.6 per cent for 2020. This means that the number of job seekers who cannot find work increased by 5.4 million and reached 30.1 million in 2020.

However, the ILO report warns that in such an abrupt crisis scenario, the unemployment rate tells only part of the story. In 2020 there was an unprecedented transition towards inactivity by people who gave up looking for work due to the lack of opportunities.

The participation rate plummeted by 5.4 percentage points to 57.2 per cent based on data available at the end of the third quarter of 2020. This means that some 23 million people were temporarily removed from the workforce and have lost their jobs and their income.

Prediction for 2020 is even worse

The report predicts that next year the unemployment rate could rise again to 11.2 per cent based on factors such as moderate economic growth of around 3.5 per cent, which is insufficient to recover the lost ground caused by the crisis.

This is compounded by uncertainty surrounding the future of the COVID-19 pandemic, including fears about outbreaks and the effectiveness of vaccination processes. The report adds that before the health crisis, what sustained regional participation and occupation has been the inclusion of women in the labour market.

However, due to the pandemic, this process is clearly facing a setback as the reduction in the participation rate was proportionally higher among women at minus 10.4 per cent compared to men at minus 7.4 per cent. The health crisis in 2020 has had an even more significant impact on the performance of women’s employment indicators.

The contraction in employment was particularly significant in service sectors such as hotels, down 17.6 per cent and commerce, down 12.0 per cent. It was observed that the health crisis strongly affected employment in construction, which went down by 13.6 per cent and industry registered a decline of 8.9 per cent.

The smallest drop in employment was observed in agriculture, which registered minus 2.7 per cent. According to Pinheiro, for the future it will be important to consider the lessons learned from this pandemic.

He argued that there is no dilemma between preserving health and economic activity because, without health, there is neither production nor consumption.