Latin America and the Caribbean – Urban unemployment fell to historic lows in 2013 ILO reports

In 2013, the urban unemployment rate in Latin America and the Caribbean once again fell to historic lows. The ILO estimates that the rate will reach 6.3% at the end of the year. This is good news for a region that had a double-digit unemployment rate a decade ago (11.1% in 2003).

However, the impact of the loss of economic dynamism on the labour market became evident in 2013.

Some labour indicators have stagnated while others changed only slightly. If this situation expands and worsens, there is a risk that unemployment will increase and the gaps in decent work and informality will widen.

The decline in unemployment also poses an important political challenge for the countries of the region: it is now necessary to focus on improving the quality of employment. At least 130 million workers are employed in conditions of informality in Latin America and the Caribbean…

… If the region continues to reduce its growth expectations, it is likely that unemployment will not continue to decline and could even experience a reversal in the downward trend of recent years.

The slight decrease in urban unemployment in 2013 occurred as a consequence of the fall in the labour force participation rate more than for reasons of labour demand or job creation since the occupation rate stagnated.

The labour force participation rate declined only slightly in 2013 with respect to 2012, from 59.6% to 59.5%. The occupation rate remained unchanged this year at 55.7%.

Growth of wages experienced a slowdown following notable improvements in the period 2006-2011.

For the nine countries with available information through the third quarter of 2013, the simple average for average real wages recorded a modest increase of 1.0%, below the 2.1% observed for the same period of 2012.

The loss of economic dynamism and, in part, the slower growth of minimum wages, contributed to this slowdown. Through the third quarter of 2013, the weighted average of the real minimum wage rose 2.6%, less than the 6.9% increase in the same period of 2012. This largely reflects the fact that wage adjustments were made in fewer countries and in most cases, the increases were smaller in the period December 2012 to October 2013.

During the crisis of 2008-2009, several governments of the region complemented monetary and fiscal policies to stimulate their economies with the effective use of minimum wages and the recovery of the purchasing power of workers.

With respect to social protection, the latest available figures indicate that the upward trend in coverage has been quite modest. Health and/or pension coverage of the employed population was 66.5% in 2011 (65.8% men and 67.5% women) and 67.0% in 2012 (66.1% men and 68.3% women). This means that approximately 2.2 million additional workers now have social security.

2013 Labour Overview. Latin America and the Caribbean

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