Dec 2014 Financial News

ILO: Region's unemployment to rise from 2015

Dec 15, 2014

MEXICO CITY—The International Labour Organization (ILO) has reported an unusual pattern in the urban unemployment rate in Latin America and the Caribbean during 2014, which continued to fall despite the economic slowdown. However, the organisation warned that slow growth has begun to impact the labour market. 

“There are warning signs,” said Elizabeth Tinoco, ILO regional director for Latin America and the Caribbean, who presented the report in Mexico. “The concern is that we are creating fewer jobs despite unemployment remaining at a low level.” 

Tinoco launched the 2014 edition of the Labour Overview for Latin America and the Caribbean in Mexico City, highlighting the region’s urban unemployment rate of 6.2 per cent for the third quarter of 2014, which is expected to reach 6.1 per cent at the end of this year—0.1 per cent below the rate for 2013. “We are talking about almost 15 million people unemployed,” she said.

The annual ILO report stresses that economic growth forecasts for this year have been revised downwards to 1.3 per cent by the International Monetary Fund (IMF), which expects them to rise moderately to 2.2 per cent in 2015. 

Although unemployment has not risen due to this slowdown in growth, there has been a sharp reduction of  new jobs reflected in the employment rate, which fell by 0.4 percentage points to 55.7 per cent in the third quarter of 2014. “This means that at least one million less jobs have been created,” Tinoco said.

The ILO report explains that this unusual unemployment trend is a result of people dropping out of the labour market, reflected by a decline in the labour force participation rate, which masks the effects of the fall in employment generation. This low rate of labour market participation means that “many people, mostly women and young people, stopped receiving household income.”

The labour force participation rate appears to have reached its lowest level. The ILO report predicts that next year, with increased participation in a context of weak growth, unemployment could rise. According to the ILO, the urban unemployment rate may reach 6.3 per cent in 2015, which means that there will be some 500,000 more unemployed in the region.

“Many people who temporarily left the workforce in 2014 will return to search for a job next year, together with young people entering the labour market. The region will have to create nearly 50 million jobs over the coming decade, just to offset demographic growth,” Tinoco said. Wage growth also decelerated in 2014, while the number of employed went down.

This scenario of uncertainty comes after a decade in which the region enjoyed significant economic growth. The unemployment rate dipped to record lows and allowed for a higher quality of jobs. According to the report, current forecasts that growth could be weak for several years raised “concern that we cannot make further progress or that the trend may be even reversed.”

Moreover, in a context of moderate growth, it would be even more difficult to address the remaining challenges, especially in terms of the quality of employment, in a region where 47 per cent of urban workers work in the informal economy. “So we have to face the huge challenge of rethinking strategies to push growth and a productive transformation of the economy to foster economic and social inclusion through the labour market,” Tinoco said.

The ILO called on countries in the region to prepare for the possibility of a labour market which has to take specific measures to stimulate employment and protect individual  incomes.

Source:
Trinidad Guardian
Monday December 15, 2014

http://www.guardian.co.tt/business/2014-12-15/ilo-region%E2%80%99s-unemployment-rise-2015