LABOR

Employment. On May 8, the International Labor Organization (ILO) published the report ‘World Employment and Social Outlook: Trends 2023’. The document explains that as a result of a “polycrisis” formal labor in Latin America has suffered substantial impacts and that its recovery will be slower than expected. In view of this, it recommends that the governments of the region promote measures that encourage the adoption of solutions focused on investment in training and development of people in their countries, mainly centered on technological solutions. These recommendations could be taken into account by different governments in the region in the medium term. 

According to the ILO, decent employment was reached in 2022 due to a “polycrisis” composed of three factors. First, the restrictions and containment measures carried out in the context of the Covid-19 pandemic caused a contraction in labor demand. Second, the cost-of-living crisis that has contributed to stalling employment growth, causing widespread price increases and inflation problems. Finally, the geopolitical crisis caused by the war in Ukraine that interrupted the supply chain, generating instability and tension between countries. This had a particular impact on Latin America. Here the macroeconomic situation of the countries in the region has been particularly affected by high inflation, which has led to a decrease in consumer and business confidence, reducing aggregate demand and investment, with its consequent impact on the labor market.

In response to this, the ILO proposes “improving the productivity of enterprises by transforming the work environment and production processes”. Specifically, it points to the need for States to generate favorable environments for competition, punishing corruption and ensuring property rights. It also stresses the need to promote public-private articulation in the area of investment. According to the entity, private investment should be oriented towards the means of production, with emphasis on the incorporation of new technologies, while public investment should be oriented towards public and digital infrastructure. Experiences such as those of Chile, with the adoption of the so-called ‘social dialogues’ for the development of public policies such as the 40-hour working week, are in line with the proposals of this organization. 

Finally, it also broadly recommends adopting vocational and workforce training measures for developing industries; targeting compulsory formal education for skills development for the world of work; using sovereign wealth funds for research and development (R&D) to transition to greener and redistributive economies; and reducing the incidence of informal employment, through incentives to companies for formal hiring, as well as productivity-enhancing loans.

Next steps

The ILO report recommends a series of policies and paths to be taken by governments around the world, and particularly in the Latin American region, to overcome the “polycrisis” that has impacted the development of labor markets. In view of this, Chile’s path in terms of building solutions through dialogue is the ideal option to follow. Such dialogues should encourage the adoption of measures to train and invest in a more knowledgeable and skilled workforce. Governments in the region could move in this direction in the medium term.