The employment situation in Latin America and the Caribbean: Labour productivity and distribution issues

Although the economies of Latin America and the Caribbean grew more slowly in 2011 than in 2010, there were some improvements on the employment front. Workers benefited from the region’s satisfactory economic performance in an increasingly complex international setting. The unemployment rate fell from 7.3% in 2010 to 6.7% in 2011 thanks to a halfpercentage- point gain in the urban employment rate. Both rates are at levels that have not been seen for a long time. The proportion of formal jobs with social benefits rose as well, and underemployment declined. The average wage and the minimum wage both increased in real terms, albeit only moderately. Economic performance and the employment situation varied widely among the subregions. The unemployment rate dropped by 0.6 percentage points in South America but 0.4 percentage points in the countries of the northern part of Latin America. In the countries of the Caribbean, the employment rate was up by 0.2 percentage points. The data show that substantial labour market gaps and serious labour-market insertion issues remain. This is especially the case for women and young people, for whom unemployment rates and other labour indicators are still unfavourable. The second part of this report looks at whether the fruits of economic growth and rising productivity have been distributed equitably between workers and companies. Between 2002 and 2008 (the most recent expansionary economic cycle), wages as a percentage of GDP fell in 13 of the 21 countries of the region for which data are available and rose in just 8. This points to redistribution that is unfavourable to workers, which is worrying in a region which already has the most unequal distribution of income in the world. Underlying this trend is the fact that, worldwide, wages have grown less than productivity. Beyond the ethical dimension of this issue, it jeopardizes the social and economic sustainability of growth. For example, one of the root causes of the recent financial crisis was that households in the United States responded to declining wage income by borrowing more to pay for consumption and housing. This turned out to be unsustainable in the long run. Over time, it undermines the labour market’s contribution to the efficient allocation of resources and its distributive function, too, with negative consequences for democratic governance. Among the triggers of this distributive worsening most often cited in the global debate are market deregulation and its impact on financial globalization, technological change that favours capital over labour, and the weakening of labour institutions. What is needed here is a public policy effort to help keep wage increases from lagging behind increases in productivity. Some countries of the region, especially in South America, saw promising developments during the second half of the 2000s in the form of a positive trend reversal in wages as a percentage of GDP. One example is Brazil, where a minimum wage policy tailored to the dynamics of the domestic market is considered to be one of the factors behind an upturn in the wage share of GDP. The region needs to grow more and better. Productivity must grow at a steady pace, to serve as the basis for sustained improvements in the well-being of the populace and to narrow the gap between the economies of Latin America and the Caribbean and the more advanced economies. And inequality must be decreased; this could be achieved by closing the productivity gap between upgraded companies and the many firms whose productivity is low. As set out in this report, the region made some progress between 2002 and 2010, with labour productivity rising at the rate of 1.5% a year. But this progress falls short of that seen in other regions such as Sub-Saharan Africa (2.1%) and, above all, East Asia (8.3%, not counting Japan and the Republic of Korea). Moreover, in many of the countries of the region these gains have not been distributed equitably. Therein lies a dual challenge that must be addressed: continue to increase productivity while enhancing the mechanisms for distributing gains in a way that will encourage investment and boost worker and household income. The Economic Commission for Latin America and the Caribbean (ECLAC) and the International Labour Organization (ILO) estimate that the pace of economic growth in the region will be slightly slower in 2012 than in 2011, in a global economic scenario marked by the cooling of several of the main economic engines and a high degree of uncertainty concerning, above all, prospects for the euro zone. The region is expected to continue to hold up well to this worsening scenario, thanks to policies that leveraged more favourable conditions in the past. This will be felt in the labour markets, as well, so expectations are that unemployment will edge down by as much as two tenths of a decimal point.

The earnings share of total income in Latin America, 1990-2010

This article analyses the share of total income represented by employment earnings in the countries of Latin America over the last two decades. It first considers the wage share of gross domestic product (gdp) and then adds in the earnings of self-employed workers. The findings indicate that both total wages and total earnings declined as a share of gdp in most of the region’s countries over the period, although there were some exceptions. The reduction in earnings inequality seen over the past decade was not usually accompanied by an increase in the gdp share of earnings. This means that the improvement in personal income distribution was not matched by an improvement in functional distribution.

Growth, Poverty and Inequality in the Caribbean

.--Director’s Desk: Growth, Poverty and Inequality in the Caribbean.--Non-Comunicable Diseases: A Growing Epidemic.--Policies and Programmes for an Ageing Population.--Sexual and Reproductive Health and HIV in the Caribbean.--International Migration and Development: Challenges and Opportunites.--Gender Based Violence

Report of the AD HOC Expert Group meeting on social exclusion, poverty, inequality, crime and violence: Towardsa research agenda for informed public policy for Caribbean SIDS

The Economic Commission for Latin America and the Caribbean (ECLAC), Subregional Headquarters for the Caribbean convened an expert group meeting on Social Exclusion, Poverty, Inequality – Crime and Violence: Towards a Research Agenda for informed Public Policy for Caribbean SIDS on Friday 4 April 2008, at its conference room in Port of Spain. The meeting was attended by 14 experts drawn from, the University of the West Indies (UWI), St. Augustine, Trinidad and Tobago; and Mona Campus, Jamaica; the St. Georges University, Grenada; the Trinidad and Tobago Crime Commission and the Ministry of Social Development, Government of Trinidad and Tobago and representative of Civil Society from Guyana. Experts from the United Nations System included representatives from the United Nations Fund for Women (UNIFEM), Barbados; the United Nations Development Programme (UNDP), Port of Spain and UNDP Barbados/SRO and the Organisation of Eastern Caribbean States (OECS). The list of participants appears as an annex to this report. The purpose of the meeting was to provide a forum in which differing theories and methodologies useful to addressing the issues of social exclusion, poverty, inequality, crime and violence could be explored. It was expected that at the end of the meeting there would be consensus on areas of research which could be pursued over a two to four-year period by the ECLAC Subregional Headquarters for the Caribbean and its partners, which would lead to informed public policy in support of the reduction of the growing violence in Caribbean society.

Inclusive social development: The next generation of policies for overcoming poverty and reducing inequality in Latin America and the Caribbean

Foreword by Alicia Bárcena