Latin America to hit half of EU’s unemployment rate

ECLAC and ILO warn in their report that, despite of the numbers, the first half of the year “has not been an easy period” for the region, which has seen both demand and prices fall down following the low dynamism of world economy. Fortunately for Latin American countries, the sustained increase of local purchasing power helped balance the situation. The rather moderate household consumption increase resulted in a modest economic growth of 2.5% compared to the first half of 2012, according to ECLAC.

The global slowdown did actually impact on Latin America’s labor market, which recorded a deceleration in employment generation, the report points out. However, ECLAC and ILO highlights the slowdown in job creation did not translate into an increase in the unemployment rate in the region because the increase in the labor force was also attenuated.

Ecuador is the country that ended the first half of 2013 with the lowest urban unemployment at 4.8%, a 0.2% less than the same period last year. In Brazil it also decreased from 5.9 to 5.7%, while in Chile unemployment fell a 0.4% and ended the first six months of this year at 6.2%. Unemployment dropped also in Peru (6.1%), Venezuela (8.1%), Paraguay (8.2%) and Colombia (11.6%). This last country got a major achievement it couldn’t have imagined – to surpass the EU in job rate. In Argentina, Mexico and Uruguay unemployment in the first half rose, albeit at very moderate rates which in no case exceeded a 0.5%.

The report also assesses a sustained reduction in gender gap in labor force participation, although the situation varies greatly among countries. ECLAC and ILO consider that Latin American and the Caribbean countries need to strengthen investment and productivity to meet the difficulties of international economic crisis. To achieve it will require a workforce “with abilities, skills and knowledge that meet business demand,” which urges a good network of vocational training systems in the region, the document highlights.
“In the first half of the year many countries continued with the recent trend of improving the quality of employment – characterized by strong wage employment generation-, significant increases in formal employment and the reduction of underemployment,” head of ECLAC Alicia Barcena, said during the presentation of the report in Santiago de Chile.

According to Franbur analyst consultancy Francisco Soledispa, those good rates are circumstantial. “China holds the raw material prices higher than expected which is used by Latin America and hence their positive indicators for this year,” said Soledispa.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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