Current Labor Conditions in the Hemisphere: Present Challenges

XIII Inter-American Conference of Ministers of Labor

Salvador de Bahía, Sept. 2003

Jürgen Weller, ECLAC

Issues

General tendencies on the labor markets in LAC

Specific challenges

Areas of policy intervention

Latin America and the Caribbean: Labour market participation and

employment

46

48

50

52

54

56

58

60

Employment rate

Participación rate

Unemployment gap

Evolution of the structure of urban employment

0

10

20

30

40

50

(% of

urba

n emp

loyme

nt)

Indep.w orkers Household services Microenterprises Public Sector SM+L enterprises

1990 2000

Urban Informal Sector Formal Sector

Latin America and the Caribbean: Economic growth and employment

-10123456

Eco

nom

ic g

row

th (%

)

-1,0

-0,5

0,0

0,5

1,0

Chan

ge o

f em

ploy

men

t ra

te (p

tos

porc

entu

ales

)

GDP Employment rate

Latin America and the Caribbean: Economic growth and the urban informal

sector, 1990-2000

-5,0

0,0

5,0

10,0

15,0

2,0 2,5 3,0 3,5 4,0 4,5 5,0 5,5 6,0

GDP grow th p.a (%).

ALC

Specific challenges on the labor markets - 1

Important challenges “at both extremes”:

• Compete with quality and productivity: growing demand for highly qualified staff

• Weak demand for workers with low formal education (especially women): sector and technological changes

Higher instability, less protection• Macroeconomic volatility • The challenges of open markets• Less stable contractual relationsships

Specific challenges on the labor markets - 2

Productive integration of youth • Starting-point seems favorable

(demographics, education)• But results cannot satisfy (youth

unemployment, informality)• Impact of economic crisis • Multiple negative consequences

Specific challenges on the labor markets - 3

Agents and relations on the labor market

Public Sector Labor Market Institutions Rights and duties Rights and duties (influence productivity, (influence ability, income, costs etc.) etc.)

Terms of employment relationsship (formal, informal) Labor demand, job creation Enterprises Workers Labor as a factor of production

Some origins of labor market problems

General conditions: Adverse macroeconomic or political environment => low growth, low labor demand 

Enterprises: Low productive development, low competitiveness => low productivity, low wages

Workers: Low level of education and ability => low productivity, low wages

Labor market instituciones: Disequilibrium between objectives of efficiency and equity => rigidities, employment of low quality, mistrust

Policy challenges: Employment policy on the

macro level Macroeconomic policy for long-term

growth and smoothening of volatility Relative prices favorable for productive

development

=> Seek for coalition, not confrontation with the Minister of Finance!

Long-range sector policies: education, regional development, promotion of productive activities

Labor demand incentives in specific sectors

=> Macro conditions are fundamental, but require complements

Policy challenges: Employment policy on the

meso level

Policy challenges:Labor market institutions

Re-regulate labor institutions amidst tensions:

• Between flexibility and stability • Between efficiency and protection• Between costs and income• Between internal and external (national

and supranational) regulations => No “first best” exists – need for a

negotiated, country specific search!

Improve productivity: continuous training

Improve employability, no discrimination Improve integration of youth into the

labor market Promotion of microenterprises Unemployment insurance

Policy challenges:Labor market policies