LIMA – The job market in Latin America has begun to weaken after four straight years of an economic downturn, according to the report “Jobs, Wages, and the Latin American Slowdown,” presented Tuesday by the World Bank in Peru.
The World Bank Group’s chief economist for Latin America and the Caribbean, Augusto de la Torre, said his department found that workers have been leaving the labor market in recent years, “a trend particularly marked among young men and the less educated.”
The report noted that the slowdown has not significantly increased the rate of unemployment in the region as yet, but has caused the rate of participation in the work force to drop, “above all when young people stop looking for jobs.”
“The more they go back home to live or return to school without earning any wages, the more the incomes of poor households suffer,” De la Torre said.
The report says the loss of employment among unqualified workers is “much higher” than among qualified workers, while the latter are seeing more of a drop in their salaries than the former.
The economist warned that job quality in Latin America is deteriorating as wage earners become self-employed or move from bigger corporations to smaller companies.
“Most of the countries in the region are adjusting to the new reality of lower revenues from exports, and the key will be to make the adjustment as smoothly as possible in order to avoid excessive losses in terms of business and employment,” De la Torre said.
The report says that these consequences have significant political repercussions and recommends establishing social safety nets to ease the impact of the economic slowdown among the poorer sectors.
The International Monetary Fund estimated Tuesday in its projections that Latin America will experience a recession this year, with a 0.3 percent drop in GDP.
The IMF/World Bank annual meeting is taking place this week in the Peruvian capital.