The employment situation in Latin America and the Caribbean: Recovery of employment: towards a sustainable model

The adverse effects on Latin America and the Caribbean of the global economic and financial crisis, the worst since the 1930s, have been considerably less than was once feared. Although a run of growth was cut short in 2009 and regional output shrank by 1.9%, the impact of the crisis was limited by the application of countercyclical fiscal and monetary policies by many of the region’s governments. The recovery in the economies, particularly in South America, has gone hand-in-hand with the rapid resurgence of the emerging economies of Asia, with all the favourable consequences this has had for global trade. A similar pattern may be observed regarding the impact of the crisis on labour markets in Latin America and the Caribbean. Although millions of people lost their jobs or had to trade down to lower-quality work, levels of employment (including formal employment) fell by less than originally foreseen. At the same time, real wages rose slightly in a context of falling inflation. The labour market thus stabilized domestic demand, and this contributed to the recovery that began in many countries in late 2009. Improved international trade and financing conditions, and the pick-up in domestic demand driven by macroeconomic policies, have led different commentators to estimate growth in the region’s economy at some 6% in 2010. As detailed in the first part of this edition of the Bulletin, the upturn has been manifested at the regional level by the creation of formal employment, a rise in the employment rate, a decline in joblessness and a moderate increase in real wages. Specifically, it is estimatedthat the regional unemployment rate will have dropped by 0.6 percentage points, from 8.1% in 2009 to 7.5% in 2010. The performance of different countries and subregions has been very uneven, however. On the one hand, there is Brazil, where high economic growth has been accompanied by vigorous creation of formal jobs and the unemployment rate has dropped to levels not seen in a long time. Other countries in South America have benefited from strong demand for natural resources from the Asian countries. Combined with higher domestic demand, this has raised their economic growth rates and had a positive impact on employment indicators. On the other hand, the recovery is still very weak in certain countries and subregions, particularly in the Caribbean, with employment indicators continuing to worsen.Thus, the recovery in the region’s economy in 2010 may be characterized as dynamic but uneven. Growth estimates for 2011 are less favourable. The risks associated with the imbalances in the world economy and the withdrawal of countercyclical fiscal packages are likely to cause the region to grow more slowly in 2011. Accordingly, a small further reduction of between 0.2 and 0.4 percentage points in the unemployment rate is projected for 2011. However, these indicators of recovery do not guarantee growth with decent work in the long term. To bolster the improvement in labour market indicators and generate more productive employment and decent work, the region’s countries need to strengthen their macroeconomic policies, improve regional and global policy coordination, identify and remove bottlenecks in the labour market itself and enhance instruments designed to promote greater equality. Like the rest of the world, the Latin American and Caribbean region is also confronted with the challenge of transforming the way it produces so that its economies can develop along tracks that are sustainable in the long term. Climate change and the consequent challenge of developing and strengthening low-carbon production and consumption patterns will also affect the way people work. A great challenge ahead is to create green jobs that combine decent work with environmentally sustainable production patterns. From this perspective, the second part of this Bulletin discusses the green jobs approach, offering some information on the challenges and opportunities involved in moving towards a sustainable economy in the region and presenting a set of options for addressing environmental issues and the repercussions of climate change in the world of work. Although the debate about the green jobs concept is fairly new in the region, examples already exist and a number of countries have moved ahead with the application of policies and programmes in this area. Costa Rica has formulated a National Climate Change Strategy, for example, whose foremost achievements include professional training in natural-resource management. In Brazil, fuel production from biomass has increased and social housing with solar panelling is being built. A number of other countries in the region are making progress in areas such as ecotourism, sustainable agriculture and infrastructure for climate change adaptation, and in formalizing the work of people who recycle household waste. The shift towards a more environmentally sustainable economy may cause jobs to be destroyed in some economic sectors and created in others. The working world will inevitably undergo major changes. If the issue is approached by way of social dialogue and appropriate public policies, there is a chance to use this shift to create more decent jobs, thereby contributing to growth in the economy, the construction of higher levels of equality and protection for the environment.

Latin America and the Caribbean in the World Economy 2009-2010: A crisis generated in the centre and a recovery driven by the emerging economies

Incluye Bibliografía

Economic Survey of the Caribbean 2010-2011: improving economic prospects amid global recovery

Includes bibliography

Enterprise creation and economic recovery: the case of Rio Grande do Sul

Includes bibliography

Economic survey of the Caribbean 2014: Reduced downside risks and better prospects for a recovery

The current survey provides an overview of the economic performance for 2013 of the Bahamas, Barbados, Belize, Guyana, Jamaica, Suriname, Trinidad and Tobago plus the eight member states of the Eastern Caribbean Currency Union (ECCU) and the outlook for 2014 and 2015. Data were collected from a review of reports from national governments and through interviews with government officials in each of the countries analyzed.

The employment situation in Latin America and the Caribbean: Countercyclical policies for a sustained recovery in employment

Latin America and the Caribbean experienced an unexpectedly vigorous economic recovery in 2010 after the output contraction of 2009. This upturn was reflected in the region’s employment and unemployment rates, which resumed the positive trends that had been broken by the crisis, and formal wages rose slightly. The strength of the recovery and labour-market performance varied markedly across subregions and countries, however. The first part of this joint ECLAC/ILO publication on the employment situation in Latin America and the Caribbean looks at how labour markets have responded to the rapid economic upswing in 2010 and early 2011, highlighting both the significant advances achieved in the post-crisis period and the sharp differences evident across subregions and countries. As well as tapping into the improved external conditions which followed upon the Asianled global economic upturn, several Latin American countries were also able to contain the impacts of the crisis and underpin their own recovery with countercyclical policies, thanks to the leeway gained by their macroeconomic management during the run of growth from 2003 to 2008. These countries were in a position to implement expansionary fiscal and monetary policies, some of which channelled higher fiscal spending through labour-market policies or softened the impact of the crisis on employment and income, as discussed in previous ECLAC/ILO bulletins. Since the region is fairly new to the use of countercyclical policies, the second part of this document reviews the experiences arising from those policies and considers lessons for institutionalizing them. Economic growth in the Latin American and Caribbean region has historically been marked by the volatility of its economic cycles, with high-growth periods being succeeded by deep crises. Volatility has conspired against the use of production resources over extended periods and short growth horizons have impeded investment in capital and labour. In the recent international crisis, the deployment of countercyclical macroeconomic policy helped to reduce the depth and duration of the impact and to leverage a more rapid recovery. It is therefore worth looking at the fundamentals of a long-term countercyclical macroeconomic policy which would provide the tools needed to deal with future crises and pave the way for economic growth that may be sustained over time. A special factor during this crisis was that a greater effort was made to support employment and income. Several of the labour-market policy measures taken acted as vehicles for conveying increased fiscal spending to individuals, reflecting greater consideration for equality concerns. Indeed, these measures were aimed not only at stabilizing andstrengthening domestic demand per se, but also at preventing the crisis from hitting lowest-income households the hardest, as had occurred in previous episodes. And —again unlike the pattern seen in previous episodes— inflation actually fell during the crisis as the high food and fuel prices seen in the run-up to it eased as a result of both existing macroeconomic policies and global conditions. This averted the surge in inequality so often seen in previous crises. Two caveats must be added, however. First, not all the countries were in a position to deploy strong countercyclical policies. Many simply lacked the fiscal space to do so. Second, some countries took this sort of measure more as an ad hoc response to the crisis than as part of a clearly established countercyclical policy strategy. The challenge, then, is to institutionalize a countercyclical approach throughout the economic cycle. Taking up this challenge is part of making economic growth more sustainable. This year —2011— was ushered in by rapid economic growth and substantial improvements in labour indicators. With the region’s GDP projected to grow well over 4% this year, ECLAC and ILO estimate that the regional unemployment rate will fall substantially again, from 7.3% in 2010 to between 6.7% and 7.0% in 2011.

The employment situation in Latin America and the Caribbean: Crisis, stabilization and reactivation: performance of the labour market in 2009

Following a five-year period during which economic and social performance in Latin America and the Caribbean surpassed anything seen in recent decades, the global economic and financial crisis not only hurt macroeconomic variables but also impacted heavily on labour markets in the region’s countries. Between 2003 and 2008 employment rates had risen considerably, especially in the formal sector, but the crisis spelled a reversal of this trend. Nevertheless, the region was better prepared than it had been in previous crises, since it had achieved a sound fiscal footing, a good level of international reserves and low rates of inflation. This meant that the authorities had the space to implement countercyclical policies on both fiscal and monetary levels. Be this as it may, faced with the worst global crisis since the Great Depression of the 1930s, these measures could only attenuate the impact on the region’s economies —they could not prevent it altogether. Furthermore, the crisis struck with notable differences among subregions and countries depending on the nature of their trade integration, and not all the countries had the fiscal space to implement vigorous countercyclical policies. As discussed in this third ECLAC/ILO bulletin, the crisis did less damage to the region’s labour markets than had been feared at the beginning of last year, thanks to the implementation of public policies geared towards employment, as reviewed in the two previous bulletins. This bulletin offers an additional analysis from the perspective of gender equality. Moreover, some countries in the region, notably Brazil, managed to rapidly stabilize and revive economic growth, with positive effects on labour variables. The fact remains, however, that millions in Latin America and the Caribbean lost their jobs or were obliged to accept more poorly paid employment in more precarious conditions. The macroeconomic data indicate that recovery is under way and is stronger and occurring more rapidly than foreseen one year ago. In fact, regional growth in 2010 may well exceed the 4.1% forecast at the end of 2009. Consequently, although the unemployment rate may be expected to record a modest drop, it may not return to pre-crisis levels. The upturn is taking many different forms in the countries of the region. In some, especially in South America, recovery has benefited from the buoyancy of the Asian economies, whose demand for natural resources has driven large increases in exports, in terms of both volume and price. Countries whose economies are closely tied to the United States economy are benefiting from the recovery there, albeit more slowly and with a certain lag. Conversely, some countries are still suffering from major disequilibria, which are hampering their economic reactivation. Lastly, Chile and Haiti were both victims of devastating earthquakes early in the year and are therefore facing additional challenges associated with reconstruction, on top of their efforts to sustain an economic upturn. Despite the relatively favourable outlook for regional growth in 2010, great uncertainty still surrounds the global economy’s recovery, which affects the region’s economic prospects over the longer term. The weakness of the recovery in some regions and the doubts about its sustainability in others, as well as shocks that have occurred in international financial markets, are warning signs which authorities need to monitor continuously because of the region’s close integration with the global economy. In addition, a return to growth does not directly or automatically mean higher employment rates —still less decent working conditions. Although some labour indicators have performed reasonably favourably since the end of last year, the countries still face daunting challenges in improving the labour market integration of millions in Latin America and the Caribbean who are not seeing the fruits of renewed growth. This is why it is important to learn the lessons arising from the policies implemented during the crisis to offset its impact on labour markets. With this third joint bulletin, ECLAC and ILO continue to pursue their objective of affording the region the information and analyses needed to face these challenges, as regards both trends in the region’s labour markets and the corresponding policy options.

An assessment of the economic impact of climate change on the Agriculture, Coastal and Human Settlements and Health Sectors in Guyana

This report analyses the agriculture, coastal and human settlements and health sectors in Guyana to assess the potential economic impacts of climate change. The fundamental aim of this report is to assist with the development of strategies to deal with the potential impact of climate change on Guyana. It also has the potential to provide essential input for identifying and preparing policies and strategies to help bring the Caribbean sub-region closer to solving problems associated with climate change and attaining national and regional sustainable development goals. Some of the key anticipated manifestations of climate change for the Caribbean include elevated air and sea-surface temperatures, sea-level rise, possible changes in extreme events and a reduction in freshwater resources. The economic impact of climate change on the three sectors was estimated for the A2 and B2 IPCC scenarios until 2050 (agriculture and health sectors) and 2100 (coastal and human settlements sector). An exploration of various adaptation strategies was also undertaken for each sector using standard evaluation techniques. The study of the impact of climate change on the agriculture sector focused on three leading sub-sectors namely: sugar-cane, rice-paddy and fisheries. In estimating costs, the sugar sub-sector is projected to experience losses under A2 between US$ 144 million (at 4% discount rate) and US$300 million (1% rate); comparative statistics for rice are US$795 million and US$1577 million, respectively; while for fisheries, the results show that losses range from US$15 million (4% rate) and US$34 million (1% rate). In general, under the B2 scenarios, there are gains for sugar up to 2030 under all three discount rates while for rice the performance is somewhat better with gains realized under all three discount rates up to 2040. For fisheries, gains are forecasted under all three rates up to 2050, following marginal losses to 2020. In terms of the benefit-cost analysis conducted on selected adaptation measures under the A2 scenario, there were net benefits for all three commodities under all three discount rates. For the sugar-cane sub-sector these are: drainage and irrigation upgrade, purchase of new machinery for planting and harvesting, developing and replanting climate tolerant sugar-cane. The rice-paddy sub-sector will benefit from adaptive strategies, which include maintenance of drainage and irrigation systems, research and development, as well as education and training. Adaptation in the fisheries sub-sector must include measures such as, mangrove development and restoration and public education. The analysis of the coastal and human settlements sector has shown that based upon exposed assets and population, SLR can be classified as having the potential to create catastrophic conditions in Guyana. The main contributing factor is the concentration of socioeconomic infrastructure along the coastline in vulnerable areas.

An assessment of the economic impact of climate change on the agriculture sector in Trinidad And Tobago

The economic impact of climate change on root crop, fisheries and vegetable production for Trinidad and Tobago under the A2 and B2 scenarios were modeled, relative to a baseline ―no climate change‖ case, where the mean temperature and rainfall for a base period of 1980 – 2000 was assumed for the years up to 2050. Production functions were used, using ARMA specifications to correct for serial autocorrelation. For the A2 scenarios, rainfall is expected to fall by approximately 10% relative to the baseline case in the 2020s, but is expected to rise thereafter, until by the 2040s rainfall rises slightly above the mean for the baseline case. For the B2 scenario, rainfall rose slightly above the mean for the baseline case in the current decade, but falls steadily thereafter to approximately 15% by the 2040s. Over the same period, temperature is expected to increase by 1.34C and 1.37C under A2 and B2 respectively. It is expected that any further increase in rainfall should have a deleterious effect on root crop production as a whole, since the above mentioned crops represent the majority of the root crops included in the study. Further expected increases in temperature will result in the ambient temperature being very close to the optimal end of the range for most of these crops. By 2050, the value of yield cumulative losses (2008$) for root crops is expected to be approximately 248.8 million USD under the A2 scenario and approximately 239.4 million USD under the B2 scenario. Relative to the 2005 catch for fish, there will be a decrease in catch potential of 10 - 20% by 2050 relative to 2005 catch potentials, other things remaining constant. By 2050 under the A2 and B2 scenarios, losses in real terms were estimated to be 160.2 million USD and 80.1 million USD respectively, at a 1% discount rate. For vegetables, the mean rainfall exceeds the optimal rainfall range for sweet peppers, hot peppers and melongene. However, while the optimal rainfall level for tomatoes is 3000mm/yr, other vegetables such as sweet peppers, hot peppers and ochroes have very low rainfall requirements (as low as 300 mm/yr). Therefore it is expected that any further decrease in rainfall should have a mixed effect on individual vegetable production. It is expected that any further increase in temperature should have a mixed effect on individual vegetable production, though model results indicated that as a group, an increase in temperature should have a positive impact on vegetable production. By 2050, the value of yield cumulative gains (2008$) for vegetables is expected to be approximately 54.9 million USD under the A2 scenario and approximately 49.1 million USD under the B2 scenario, given a 1% discount rate. For root crops, fisheries and vegetables combined, the cumulative loss under A2 is calculated as approximately 352.8 million USD and approximately 270.8 million USD under B2 by 2050. This is equivalent to 1.37% and 1.05% of the 2008 GDP under the A2 and B2 scenarios respectively by 2050. Sea Level Rise (SLR) by 2050 is estimated to be 0.255 m under A2 and 0.215 m under B2. GIS estimation indicated that for a 0.255 m sea level rise, combined with a 0.5 m high tide, there would be no permanent inundation of agricultural land in Trinidad. The total inundation area is 1.18 km2. This occurs only in the Caroni Watershed, on the western coast of Trinidad, and the areas are outside the Caroni Swamp. Even with an additional rise of 0.5 m to simulate a high rainfall event, the estimated inundated area is 4.67 km2, but with no permanent inundation, though likely to be subject to flooding. Based on eleven (11) evaluation criteria, the top potential adaptation options were identified: 1. Use of water saving irrigation systems and water management systems e.g. drip irrigation; 2. Mainstream climate change issues into agricultural management; 3. Repair/maintain existing dams; 4. Alter crop calendar for short-term crops; 5. Adopt improved technologies for soil conservation; 6. Establish systems of food storage; 7. Promote water conservation – install on-farm water harvesting off roof tops; 8. Design and implement holistic water management plans for all competing uses; 9. Build on- farm water storage (ponds and tanks); 10. Agricultural drainage; and 11. Installation of greenhouses. The most attractive adaptation options, based on the Benefit-Cost Ratio are: (1) Build on- farm water storage such as ponds and tanks (2) Mainstreaming climate change issues into agricultural management and (3) Water Harvesting. However, the options with the highest net benefits are, (in order of priority): (1) Build on- farm water storage such as ponds and tanks, (2) Mainstreaming climate change issues into agricultural management and (3) Use of drip irrigation. Based on the area burnt in Trinidad and Tobago between 2005 and 2009, the average annual loss due to fires is 1717.3 ha. At US$17.41 per carbon credit, this implies that for the total land lost to forest fires on average each year, the opportunity cost of carbon credit revenue is 74.3 million USD. If a teak reforestation programme is undertaken in Trinidad and Tobago, the net benefit of reforestation under a carbon credit programme would be 69 million USD cumulatively to 2050.

An assessment of the economic impact of climate change on the tourism sector in Montserrat

This report provides an analysis and evaluation of the likely effects of climate change on the tourism sector in Montserrat. Clayton (2009) identifies three reasons why the Caribbean should be concerned about the potential effects of climate change on tourism: (a) the relatively high dependence on tourism as a source of foreign exchange and employment; (b) the intrinsic vulnerability of small islands and their infrastructure (e.g. hotels and resorts) to sea level rise and extreme climatic events (e.g. hurricanes and floods); and, (c) the high dependence of the regional tourist industry on carbon-based fuels (both to bring tourist to the region as well as to provide support services in the region). The effects of climate change are already being felt on the island. Between 1970 and 2009, there was a rise in the number of relatively hot days experienced on the island. Added to this, there was also a decline in mean precipitation over the period. Besides temperature, there is also the threat of wind speeds. Since the early 20th century, the number of hurricanes passing through the Caribbean has risen from about 5-6 per year to more than 25 in some years of the twenty-first century. In Montserrat, the estimated damage from four windstorms (including hurricanes) affecting the island was US$260 million or almost five times 2009 gross domestic product (GDP). Climate change is also likely to significantly affect coral reefs. Hoegh-Guldberg (2007) estimates that should current concentrations of carbon dioxide in the Earth’s atmosphere rise from 380ppm to 560ppm, decreases in coral calcification and growth by 40% are likely. The report attempted to quantify the likely effects of the changes in the climatic factors mentioned above. As it relates to temperature and other climatic variables, a tourism climatic index that captures the elements of climate that impact on a destination’s experience was constructed. The index was calculated using historical observations as well as those under two likely climate scenarios: A2 and B2. The results suggest that under both scenarios, the island’s key tourism climatic features will likely decline and therefore negatively impact on the destination experience of visitors. Including this tourism climatic index in a tourism demand model suggests that this would translate into losses of around 145% of GDP. As it relates to coral reefs, the value of the damage due to the loss of coral reefs was estimated at 7.6 times GDP, while the damage due to land loss for the tourism industry was 45% of GDP. The total cost of climate change for the tourism industry was therefore projected to be 9.6 times 2009 GDP over a 40-year horizon. Given the potential for significant damage to the industry, a large number of potential adaptation measures were considered. Out of these, a short-list of 9 potential options was selected using 10 evaluation criteria. These included: (a) Increasing recommended design wind speeds for new tourism-related structures; (b) Construction of water storage tanks; (c) Irrigation network that allows for the recycling of waste water; (d) Enhanced reef monitoring systems to provide early warning alerts of bleaching events; (e) Deployment of artificial reefs and fish-aggregating devices; (f) Developing national evacuation and rescue plans; (g) Introduction of alternative attractions; (h) Providing re-training for displaced tourism workers, and; (i) Revised policies related to financing national tourism offices to accommodate the new climatic realities Using cost-benefit analysis, three options were put forward as being financially viable and ready for immediate implementation: (a) Increase recommended design speeds for new tourism-related structures; (b) Enhance reef monitoring systems to provide early warning alerts of bleaching events, and; (c) Deploy artificial reefs or fish-aggregating devices. While these options had positive benefit cost ratios, other options were also recommended based on their non-tangible benefits: an irrigation network that allows for the recycling of waste water, development of national evacuation and rescue plans, providing retraining for displaced tourism workers and the revision of policies related to financing national tourism offices to accommodate the new climatic realities.

An assessment of the economic impact of climate change on the tourism sector in Saint Lucia

This report provides an analysis and evaluation of the likely effects of climate change on the tourism sector in Saint Lucia. Clayton (2009) identifies three reasons why the Caribbean should be concerned about the potential effects of climate change on tourism: (a) the relatively high dependence on tourism as a source of foreign exchange and employment; (b) the intrinsic vulnerability of small islands and their infrastructure (e.g. hotels and resorts) to sea level rise and extreme climatic events (e.g. hurricanes and floods); and, (c) the high dependence of the regional tourist industry on carbon-based fuels (both to bring tourist to the region as well as to provide support services in the region). The effects of climate change are already being felt on the island. Between 1970 and 2009 there was a rise in the number of relatively hot days experienced on the island. Added to this, there was also a decline in mean precipitation over the period. In addition to temperature, there is also the threat of increased wind speeds. Since the early twentieth century, the number of hurricanes passing through the Caribbean has risen from about 5-6 per year to more than 25 in some years of the twenty-first century. In Saint Lucia, the estimated damage from 12 windstorms (including hurricanes) affecting the island was US$1 billion or about 106% of 2009 GDP. Climate change is also likely to significantly affect coral reefs. Hoegh-Guldberg (2007) estimates that should current concentrations of carbon dioxide in the Earth’s atmosphere rise from 380ppm to 560ppm, decreases in coral calcification and growth by 40% are likely. This report attempted to quantify the likely effects of the changes in the climatic factors mentioned above on the economy of Saint Lucia. As it relates to temperature and other climatic variables, a tourism climatic index that captures the elements of climate that impact on a destination’s experience was constructed. The index was calculated using historical observations, as well as those under two, likely, Special Report on Emissions Scenarios (SRES) climate scenarios: A2 and B2.

Economic Survey of the Caribbean 2015: Balancing economic recovery and high debt in the Caribbean

The survey provides an overview of the economic performance for 2014 of the Bahamas, Barbados, Belize, Guyana, Jamaica, Suriname, Trinidad and Tobago plus the eight member states of the Eastern Caribbean Currency Union (ECCU) and the outlook for 2015. Data were collected from a review of reports from national governments and through interviews with government officials in each of the countries analyzed.