In Latin America and the Caribbean, the unemployment rate has seen a slight decrease, moving from 6.9% in 2022 to 6.2% in 2023.
Despite this modest improvement, 19.8 million people remain unemployed. This rate is still higher than the global average of 5.1% during the same period.
The International Labour Organization (ILO) highlighted these figures in its ‘World Employment and Social Outlook: Trends 2024’ report.
The region’s job market improvement is largely due to employment growth and job creation.
However, the ILO warns that the subregion’s slowing economy may hinder further advances in the coming years.
Since a peak unemployment rate of 8% in 2019, the region has seen a steady decline. Projections suggest a further slight decrease to 6.1% in 2024 and 6% in 2025.
Youth unemployment
This a particular concern, standing at 13.6% in 2023, closely aligned with the global average of 13.3%.
It is expected to rise slightly in 2025. In terms of labor force participation, the active population rate was 62.6% in 2023, a slight decrease from 63.5% in 2019.
The gender gap in participation rates remains wide, with women’s participation at 51.1% compared to men’s at 74.6%.
The average weekly working hours per employed person have changed slightly over the years, indicating a shift in work patterns post-pandemic.
The report notes that people returning to the labor market tend to work fewer hours than before, and days off due to illness have increased.
A significant concern is the stagnation of labor productivity in the region. This is attributed to factors like regulatory regimes, infrastructure investment, and tax systems.
The persistence of the informal sector, especially in services and rural areas, further hampers productivity growth.
Despite technological advancements and increased investment, productivity growth has continued to slow.
Partly due to significant investments in less productive sectors like services and construction.
Lower productivity growth
The predominance of micro and small enterprises, which typically have lower productivity growth, also contributes to this stagnation.
High-productivity economies usually have a higher proportion of large and medium-sized businesses.
The report explains that labor productivity in the region declined by 0.5% annually between 2015 and 2023.
For instance, Argentina and Mexico saw annual contractions in labor productivity, while Brazil reported minimal growth, lagging behind North American countries.
The ILO also projects that the global unemployment rate will rise in 2024, with two million more workers seeking employment.
This, combined with decreasing disposable incomes and persistent inflation, is likely to erode living standards further.
Informal work rates are expected to remain static, representing about 58% of the global workforce in 2024.
In conclusion, while there are signs of improvement in the labor market in Latin America and the Caribbean, the region faces significant challenges.
These include slow economic growth, stagnating productivity, and a persistent gender gap in workforce participation.
The ongoing changes in the labor landscape underscore the need for sustained efforts to enhance employment opportunities and address productivity challenges for more robust and equitable economic growth.