Policy response to face the international crisis en Latin America

1
Policy response to face the international crisis
en Latin America Andrés Marinakis,
ILO Cartagena, October 19, 2009
2
Structure of the Presentation

• Regional Conservatorium on the Crisis
• Indicators ILO - ECLAC Bulletin
• Policy responses ILO Notes on the crisis
• Final Considerations the need to
  institutionalize the progress made so far

3
Economic deceleration results in an increase on
unemployment

• The Labor Panorama in LA (January) estimated an
  increase of unemployment from 7.3 in 2008 to
  7.9 and up to 8.3 in 2009, as the worst case
  scenario. This implied between 1.5 and 2.4 new
  unemployed. s
• Updated estimates (April) show that the number of
  new employed people increased between 2.3 and 3.2
  millions
• The data of the first semester of 2009, according
  to the ILO-ECLAC Bulleting, show unemployment at
  8.5 .
• Dominant characteristic of this new unemployed
  heads of household, increasing men unemployment

4
LATIN AMERICANA (9 COUNTRIES) EMPLOYMENT AND
UNEMPLOYMENT RATE , FIRST TRIMESTER 2006 TO
SECOND TRIMESTER 2009 (Porcentages)
Source ECLAC and ILO, based on official country
information.
5
LATINA AMERICA AND THE CARIBBEAN URBAN
UNEMPLOYMENT RATE FIRST SEMESTER 2008 AND
2009 (Porcentages)
Source ECLAC and ILO, based on official country
information.
6
LATIN AMERICANA URBAN UNEMPLOYMENT RATE, MEN
AND WOMEN, FIRST TRIMESTER 2008 AND
2009 (Porcentages)
Source ECLAC and ILO, based on official country
information.
7
Attention Recuperation sequence

• First, it must happen in the economy
• Reestablishment of normalization of financial
  system
• Reduction of stocks (houses, offices, capital
  goods)
• Recuperation of investment, credit
• Recuperation of product
• With a delay in the labor market
• Increase of working hours
• Increase in precarious jobs
• Increase in de-motivated labor participation
• Increase in formal employment
• Recuperation of wages

8
ILO Notes on the crisis

• Goal
• Highlight specific characteristics that make them
  adequate to face the crisis
• Identify new policies introduced in this crisis
• Identify lessons from general trends, built on
  what is learned
• Make these best practices known and promote
  exchange among countries

9
ILO Notes on the crisis

• Thematic Areas
• Employment policies
• Public investments with impact on employment
• Employment retention with reduction of workin\g
  day
• Other active policies
• Protection policies
• Unemployment insurance
• Conditional transfers
• Wage Policy

10
General trends on active employment policies

• Countries have made important increases in public
  investment,
• But these have not always ensured increased
  impact in employment,
• During this crisis, there has been a moderate use
  of emergency employment programs,
• At the same time, there has been significant
  efforts in training workers to more demanded jobs
• And strengthen networks of Public Employment
  Offices

11
Innovation Retention of employment with
reduction on working day

• Crisis has affected specific sectors
• It is presumed that the drop in demand is
  temporal (short term)
• It is concluded that massive employment losses
  should be avoided which may endanger economic and
  employment recuperation (it benefits workers and
  businesses)
• Condition agreement among parties
• Countries Argentina, Chile, México, Uruguay

12
Protection Unemployment Insurance

• Recent modifications to
• Increase coverage (reducing requirements,
  including short term contracts, etc)
• Improvement in benefits
• During periods of crises, unemployment tends to
  last longer and re-insertion opportunities
  decrease
• Insurances have extended the duration of the
  benefit during moments of crisis, but in
  different ways
• Brazil specific sectors affected by the crisis
• Uruguay when there is an economic recession
• Chile when unemployment is higher than the last
  four years average

13
Protection Conditional transfers

• In the sphere of social protection, it is
  understood that these programs can
• Sustain income in the most poor families
• Control the increase in the labor market of young
  people due to school drop out
• Goal avoid youth from dropping out of formal
  education in search of a precarious job
• Long term strategy strengthened during a period
  of crisis with greater coverage
• Costa Rica, Avancemos Program
• Brazil Bolsa Familia/Bolsa Escola

14
Wage policy implemented in 2009

• in general, limited to setting a minimum wage,
  given the low coverage of collective bargaining
• Recuperation of real minimum wage generalized in
  LA, although at insufficient levels to cover
  basic needs
• In general, increase in minimum wage try to
  sustain purchasing power, which is favored by a
  decreasing trend in prices in 2009
• Relevance of employment and wages to sustain
  internal consumption during this crisis

15
Increase in Minimum Wage
Source MG and Inflation, ILO, PIB, ECLAC
16
Progress and lessons learned from this crisis

• Consensus on the use of anti-cyclical fiscal
  policies
• There is a broad menu of policies being
  implemented in the region, among which best
  practices can be found
• Capitalize from learnings from this crisis and
  institutionalize changes and policies
• Provide Ministers of Labor with resources for
  employment policies during normal times, and
  extraordinary resources during moments of
  economic crisis
• Strengthen labor institution for employment and
  social protection with capacity to serve during
  periods of growth, as well as crisis

17
(No Transcript)