Let the jobs grow, but make them good jobs

How do we create quality jobs in a region where inequality and working poverty prevail?

2022 saw the recovery of employment in Latin America and the Caribbean after the labor crisis caused by Covid-19.

By February 2023, the IDB Labor Observatory registered 9 million jobs above the pre-pandemic level.

This growth is encouraging but insufficient. Many workers in Latin America and the Caribbean do not earn what is necessary to live, especially in countries that face high levels of inflation, and are in conditions of working poverty. In addition, significant percentages of adults over the age of 65 in the region do not have the resources to retire and need to continue working and generating income.

Today, faced with a scenario for which economic growth is predicted to be less than what we have seen in recent years, we need not only to stimulate the generation of new jobs, but also to ensure that they are of good quality.

The reality is that labor informality still represents 58% of employment in the region. And although on average it is similar for men and women, it hides differences between countries. For example, in the Dominican Republic, women have lower rates of informality, while in Bolivia, El Salvador, and Peru, they have substantially higher rates of informality than men.

Having 58% of labor informality means that the majority of workers in Latin America and the Caribbean do not have income and salary stability, they do not have the possibility of saving for contingencies, and they do not have insurance against risks. It also means that these people are not saving or contributing to have enough income at the time of retirement.

How can we promote productive, well-paid jobs with good social security benefits?

• First, we need to equip workers with the skills in demand for the jobs and industries of the 21st century and the future of work in Latin America and the Caribbean. For example, the digital and technological future is something we can prepare for in a region that will need an additional 2.5 million professionals for the information and communication technology sector by 2026. • Second, governments must modernize and expand services public employment and labor intermediation, leveraged on new technologies to improve their scope and efficiency. • Third, we can introduce novel mechanisms to expand coverage and contribution to social security, such as voluntary savings pilots, or flexible benefit funds and active contributions for workers who do not fall into traditional employment categories, such as those on digital platforms. and the gig economy. • Finally, it is vital to harness the employment potential of the green transition. It is estimated that by 2030, 15 million net jobs related to action against climate change will be created in the region. This job creation must be part of a just transition in which no worker is left behind.

The traditional challenges in the labor market persist, and new challenges and opportunities are added. It is impossible to think of a region that is more productive, egalitarian, and with a higher level of development without a substantial improvement in the rate of generation of quality jobs. The pandemic was undoubtedly a catalyst for alternative and flexible forms of income generation such as those associated with the gig economy, and independent or freelance work. But this brings the challenge of making sure that this phenomenon translates into jobs with social security coverage, savings options, and security of a reasonable income in old age.

*Head of the IDB Labor Markets Division. She specializes in the area of ​​the future of work, with a particular interest in improving quality employment opportunities for young people.

@Laura_Ripani