One of the most negative consequences of the setback suffered by economicgrowth in the region during 1999 has been job losses and the resulting increase in openunemployment. In a sample group of ten countries, unemployment rose to an average 9.1% inthe first six months of the year, compared with 8.2% in the same period in 1998.Argentina, Chile, Colombia, Ecuador and Venezuela all experienced falls in the totalnumber of those of working age in jobs, as well as sharp increases of unemployment as such(defined as the proportion of those in the economically active population without jobs).In Brazil, the former rate fell only moderately while unemployment remained at existinglevels, but this occurred against a background of a job situation which had beendeteriorating since the end of 1997. Only Mexico and some Central American countries haveseen positive developments in the job situation, due largely to the impulse given by thestrong expansion of the United States economy.
Furthermore, all this has taken place in a context of longterm decline inthe job situation throughout the 1990s. With the exception of some countries, the decadehas been marked by increasing open unemployment and the concentration of job creation inlow productivity sectors. As a result, the unemployment rate for 1999 will rise evenfurther than in the 'lost decade' of the 1980s. In addition, this reducedquantity of new jobs will be concentrated once again in informal sectors, where 84% of newjobs in Latin America in the current decade are to be found, according to calculations bythe International Labour Organization.
High unemployment levels and the destruction of jobs have seriousconsequences both for the welfare of a large part of the population and for the recoveryof economic growth. Employment is the main means by which opportunities created by growthare passed on to the population at large, as well as being one of the most importantsources of purchasing power and domestic demand. Unemployment, for its part, causes notonly economic loss but personal frustration and potential social conflict. The loss ofincome by the main bread-winner
Unemployment causes not only economic loss but personal frustration and potential social conflict... frequently means that, as a matter of survival, households are forced tosend others of their members to seek work. In the case of young people, this can meantheir permanent departure from the education system, damaging their future job and socialprospects.
The double challenge, both structural and immediate, presented by theregion's current job situation must be placed at the centre of public debate,economic policy-making and the negotiation of social accords.
Promoting the creation of jobs which are both permanent and provided withappropriate social protection, must become a fundamental concern for the authorities. Inaddition, the recent crisis has made evident the need for mechanisms to moderate thenegative impact of such events on employment. The most immediate conclusion is that shortterm instruments of macroeconomic policy must be combined in such a way that their effectson production and job creation are minimized. They must also be accompanied by broadmeasures of support for those sectors of the population which are most vulnerable duringsuch crises.
Measures of this kind need to be permanent, as only then can they respondin a timely fashion to the needs arising from a fall in the demand for labour. They shouldinclude efficient, fiscally sustainable unemployment insurance schemes, or others allowingunemployed workers to retain a substantial part of their social protection. Emergency jobcreation programmes are also important, as are labour-intensive public works, incentivesfor job-intensive private investment (in construction and some services, for example),special programmes combining training with a basic wage, and school attendance subsidiesfor low-income households where the parents are unemployed.