ILO indicates that the region recovered pre-pandemic labor levels but recommends fostering inclusion and formal employment
11 julio 2023


Labor market. On July 11, the International Labor Organization (ILO), in collaboration with the Economic Commission for Latin America and the Caribbean (ECLAC), published the report “Labor Situation in Latin America and the Caribbean: Towards Better Job Creation in the Post-Pandemic”. The document highlights that, although unevenly, part of the region has returned to pre-pandemic employment levels. However, it points out that structural problems such as informality, the lack of young people in the labor market and the gender gap still persist. To reverse the situation, both organizations agree that countries should have active labor policies that promote greater job creation, greater formalization and greater inclusion of women and young people.

Thus, the report explains that three years after the COVID-19 crisis, the main labor indicators have returned to the values prevailing in 2019. Thus, in 2022, the average unemployment rate in the economies of Latin America and the Caribbean fell by 2.3 percentage points, from 9.3% in 2021 to 7.0% in 2022, this value being close to the 2014-2019 average recorded for unemployment in the region, which was 7.4%.

As for labor market participation, the report highlights that this grew from 58.9% in 2020 to 62.6% in 2022. The participation rate of men and women also returned to pre-pandemic levels. In the case of men, they reached a rate of 74.4%, slightly below the pre-pandemic average. Different is the case of women, who went from 47.8% in 2020 to 51.8% in 2022, surpassing previous levels of participation. Despite this, the gender gap persists, due to women’s lower participation in the labor market. 

In some countries, such as Guatemala, Honduras and Paraguay, some indicators have not yet reached pre-pandemic levels. Likewise, at a general level, labor informality grew relative to the increase in employment: by 2022 it already represented 50.7% within the share of employment, this value being almost identical to that of 2019, which was 50.6%. The value of this indicator, the report sentences, reflects that the high rate of informal employment persists structurally despite the post-pandemic recovery.

The ILO also reports other factors that impacted the labor market, such as the increase in inflation during 2022, which had an impact on purchasing power in Latin America. Thus, there was stagnation in real average wages and a fall in average labor productivity in the region, with contractions in sectors such as industry and commerce. However, despite the progress made in recent years, this recovery is not sustainable over time, according to the ILO, and although ECLAC projects growth in the regional economy in the coming years, employment growth levels will not reach those achieved in 2022.

Next steps

According to ECLAC and ILO, in order to reverse this situation, the region needs active labor policies that promote greater job creation, greater formalization and greater inclusion of women and young people in the labor market. To this end, the organizations argue, it is necessary to expand labor policy instruments and improve coordination among them in order to avoid employment contractions. They also indicate that more emphasis should be placed on economic reactivation, including sectors that drive and stimulate economic growth and employment.