Creating more and better jobs, the challenge of the hour in Latin America and the Caribbean

Latin America and the Caribbean is the region of the world most affected by the covid-19 pandemic, with a health impact as strong as in advanced countries, but without comparable means to mitigate its effects on economic activity and employment.

It is a complex and painful scenario, in which millions of people suffer every day the difficulties that the region is going through and its devastating consequences on the world of work.

Informal workers have been the hardest hit: if they cannot leave because of quarantines, they cannot generate income for their families, and since they are not covered by unemployment insurance and other social programs, it is difficult to help them.

Formal jobs have held up better so far, but are likely to be hit hard in the coming months, as companies' liquidity problems hamper their solvency and many have to close.

However, you cannot hope to solve these problems by going back to the past.

The World Bank report 'Viral effect: Covid-19 and the accelerated transformation of employment in Latin America and the Caribbean', presented this month, shows that in the region employment in the industrial sector stagnated at levels below those of advanced economies and emerging East Asian countries.

It also shows that most of the employment is in services, a typically more informal sector with a greater share of self-employment.

Technological transformation amplifies these trends.

In the midst of the pandemic, the need to adopt digital platforms that reduce social interaction is widening the gap between those who can telecommute and those who cannot.

The creation of more and better jobs is vital for the region.

Investing to create the human capital needed for the less routine and simple jobs of the future will be crucial.

Education and vocational training programs open up opportunities and that key must be available to everyone.

The countries of Latin America and the Caribbean must strive to increase the market value of studies if they are to keep up with the most advanced economies and must also encourage training and job reinsertion plans for adults.

In addition to supporting the health response, social containment and economic recovery in 17 countries in the region in the midst of the coronavirus emergency, the World Bank this year approved several programs for the creation of human capital, for example, in Peru, Honduras and El Salvador.

No less important will be to achieve a leap in productivity.

For the region's agricultural sector, the index is on average 20% lower than in the United States.

It is 40% lower in industry and 25% in services.

Improving efficiency in the three areas will require incorporating technology, stimulating innovation, competition and quality, eliminating market distortions that impede the growth of the most productive companies, removing trade barriers and advancing in international agreements that facilitate exchanges.

The region's potential is huge, but it will only be realized if we apply the right policies.

The report also emphasizes the need to rethink labor regulations, so that they stimulate job creation and promote labor formalization.

There is a need to expand employment, but in such a way that the benefits of social protection cover broader segments of the population.

Governments can also improve the business climate to attract investment, and develop communications, transportation, and logistics infrastructure to drive business growth.

The World Bank is going to help set these much-needed transformations in motion.

Furthermore, the jobs of the future will possibly be conditioned by technological advances linked to the so-called fourth industrial revolution.

We do not yet know how innovations such as artificial intelligence, the Internet of Things and 3D printing will impact the labor market.

Historically, despite initial fears they might unleash, new technologies have supported the creation of more jobs, higher productivity, and a better quality of life.

The region has the opportunity to be at the forefront of this revolution and reap its benefits.

One of the greatest challenges facing Latin America — perhaps the greatest — is creating new sources of work in the environment of sectoral changes and technological evolution that we have to experience.

The gigantic economic and social costs of the pandemic have accelerated the transformation of the labor market and make this challenge more urgent.

But that path of inclusion through employment is unavoidable if we want more equitable societies.

That will be the measure of success.

Carlos Felipe Jaramillo

is Vice President of the World Bank for Latin America and the Caribbean