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ILO calls for reorientation of Latin American labour market policies

ILO: Labour market policies in Latin America must be reoriented to protect social achievements and address productivity gaps

At a time when governments in the region face the dual challenges of creating quality jobs and safeguarding achievements in social inclusion and work quality, an ILO report highlights the need for a new approach based on active labour market policies to address the current economic slowdown.

Lima, 21 June 2016 (ILO) – The International Labour Organization (ILO) has urged Latin American countries to carry out a “strategic reorientation” of their labour market policies in order to increase productivity and to address rising unemployment and informality resulting from the economic slowdown.

The report in Spanish

A report warns that “the achievements made since the 2000s, in terms of social inclusion and work quality have stalled and are even beginning to reverse,” which can lead to a dangerous “structural stagnation” in labour markets that could, in turn, generate an increase in inequality and informality and erosion in the middle class”.

“The alarm bells are ringing, the economic slowdown will impact the region’s labour markets in 2016 and over the next years,” said the ILO’s Regional Director for Latin America and the Caribbean, José Manuel Salazar.

“Now what we are talking about are effective solutions. The so-called active labour market policies represent a policy shift that seeks to improve and update the skills of the labour force, readjust labour supply and demand, and promote productive employment. This integrated approach is what labour markets in the region need,” he added.

The report, “What works: Active labour market policies in Latin American and the Caribbean ”, was developed by the ILO’s Research Department in Geneva.

According to the document, despite some years of solid growth in which social progress and unemployment advanced, those achievements were not consolidated, thus revealing structural deficiencies. The report warns that “even with remarkable progress, the shift to a knowledge driven economy and one based on better quality jobs has not been completed”.

ILO specialist Veronica Escudero, one of the authors of the report, warned that “even if these policies have great potential, we need to highlight that the design, targeting and implementation are essential to guarantee their effectiveness.”

In this sense, it is necessary to “be very clear about the employment barriers that people in a country face, as well as the needs of the local labour market, to ensure the relevance of the policies and to maximize their impact, including the number of beneficiaries,” explained Escudero.

An urgent policy reorientation for Latin America and the Caribbean

To tackle unemployment, informality and low productivity growth, a policy reorientation is needed in Latin America and the Caribbean. ILO economists Clemente Pignatti and Verónica Escudero discuss the potential opportunities that can be leveraged from active labour market policies in the region.