1. GOOD JOBS WANTED : Labor Markets in América Latina GOOD JOBS WANTED : Labor Markets in América Latina Inter-American Development Bank Inter-American Development Bank 2004 Economic and Social Progress Report

2. SOMETHING IS WRONG…

3. Unemployment has reached the level of the crisis of the 1980s Urban unemployment in Latin America Unemployment rateGDP growth rate 5 6 7 8 9 10 11 1980198119821983198419851986198719881989199019911992199319941995199619971998199920002001 -4 -3 -2 0 1 2 3 4 5 6 Median unemployment rate Median GDP growth rate

4. Slow Growth in Wages Percentage change in real wages, 1990s -6-4-202468 Latin America average Guatemala Peru El Salvador Brazil Chile Panama Costa Rica Colombia Ecuador Paraguay Argentina Honduras Uruguay Dominican Rep. Bolivia Mexico Nicaragua Venezuela

5. One in Two Workers Earns “Poverty Wages” Percentage of workers age 15-65 earning less than PPP $1 an hour Late 1990s, national data 0102030405060708090 Honduras Nicaragua Paraguay El Salvador Bolivia Peru Guatemala Brazil Ecuador Colombia Dominican Rep. Costa Rica Uruguay Mexico Chile Panama Venezuela Argentina

6. Unemployment, Low Wages and Job Instability Are the Main Problems for Latin Americans Most pressing problems in the country 0%5%10%15%20%25% Unemployment Corruption Poverty Delinquency/insecurity Job instability Low wages Terrorism/political violence Poor quality education Inflation Lack of opportunities for youth Drug abuse Human rights violations Health problems Drug trafficking Housing problems Transportation Environment Racial discrimination

7. LESSONS

8. 1. Growth in the supply of labor is not the cause of worsening labor market conditions.......it is a source of economic growth

9. 2. Liberalization and privatization are not the cause of unemployment or other labor market problems

10. 3. The labor market in the region has adjusted through wages....... but that seems to be changing

11. ...which explains the growth in unemployment in some countries

12. 4. The problem is not technology.......but lack of technology

13. Technology does not cause loss of jobs...

14. ...lack of technology leads to low growth in employment and wages...lack of technology leads to low growth in employment and wages

15. 5. Many workers are poor, but focusing on informal work is misleading

16. It is more useful to increase productivity and social security coverage

17. 6. Improving educational performance is a necessary condition....... but it is not sufficient for reducing poverty

18. Education significantly improves earnings, but many educated workers are poor Percentage of workers who have completed secondary education and earn less than PPP $1 an hour 01020304050607080 Honduras Bolivia Nicaragua El Salvador Dominican Rep. Ecuador Colombia Brazil Panama Costa Rica Uruguay Chile Mexico Venezuela

19. 7. Job churning is very high : One in four jobs is created or destroyed each year

20. Job churning results in productivity growth but has costs for workers

21. Problem: How to preserve the engine of economic growth and protect the earnings and well-being of workers

22. 8. The current system of regulation and protection does not solve this problem

23. Labor Laws in Latin America Are Too Rigid... Job protection index (0-1) 00.10.20.30.40.50.60.70.8 Latin America and the Caribbean Eastern Europe and Central Asia Middle East and North Africa Continental Europe Sub-Saharan Africa East Asia and the Pacific Islands South Asia English-speaking developed countries Mexico Peru Brazil Panama Ecuador Venezuela Colombia Bolivia Argentina Dominican Rep. Chile Jamaica Uruguay

24. ...and Do Not Cover the Majority 56% of workers in the region are not covered by labor regulations Percentage of salaried workers without social security benefits 01020304050607080 Nicaragua 2001 Peru 2000 Bolivia 1999 Dominican Rep. 1998 El Salvador 1998 Venezuela 1998 Argentina 2001 Brazil 1999 Mexico 1999 Colombia 1999 Chile 1998 Costa Rica 2000

25. RECOMMENDATIONS

26. Regulate to increase productivity, not to reduce job churning

27. Help workers find good jobs

28. Ensure income for unemployed workers

29. Create incentives for training and adult education

30. Strengthen the Labor Ministries so that... < The laws will be enforceable <...and evasion will be punished < The ministries can evaluate which policies work and which need to be changed

31. 2004 Economic and Social Progress Report Inter-American Development Bank www.iadb.org