IDB - Inter-American Development Bank

04/30/2024 | Press release | Distributed by Public on 04/30/2024 11:19

There Are Jobs in Latin America and The Caribbean, but Their Quality Urgently Needs Improvement

-The latest edition of the IDB's Better Jobs Index places the quality of employment in the region at 41.2 on a scale of 1 to 100.

-The study includes policy recommendations to enhance employment quality by nurturing and strengthening workforce skills, among other measures.

-Women in Latin America have lower-quality jobs than men, with a 16-point gap in the Better Jobs Index.

Nearly 55% of workers in Latin America and the Caribbean have informal jobs without a contract or social security coverage, and 3 out of 10 do not earn enough to surpass the poverty threshold, according to the most recent edition of the Inter-American Development Bank's (IDB) Better Jobs Index, which assesses employment quality and quantity in Latin America every two years.

While 70% of working-age people are employed, the employment quality score is only 41.2 out of 100, based on the latest available data for 17 countries in the region. The quality dimension of the index is constructed with indicators related to formal employment and sufficient wages to overcome poverty.

Although the quality dimension of the index is at its highest historical level since 2010, the overall low average underscores the urgency of improving employment quality in the region.

The 2024 Better Jobs Index also highlights significant disparities in the region's labor markets. Women in Latin America have lower-quality jobs than men, with a 16-point gap in the Better Jobs Index. Additionally, young people in the region have lower-quality jobs than adults, with a 15-point gap in this dimension of the index.

Furthermore, countries with high scores in the overall index exhibit the largest gaps among these vulnerable groups. For example, Costa Rica, which ranks third in the latest edition of the Better Jobs Index, simultaneously has one of the largest gender gaps and the smallest gap between adults and youth in the region. On the other hand, Uruguay leads in the Better Jobs Index but presents the largest quality and quantity gap between adults and youth.

"In a region where 70% of people depend exclusively on their work to live and support their families, the quality of employment needs to improve rapidly," says Laura Ripani, head of the Labor Markets and Social Security Division at the IDB. "This means generating and connecting more people with formal jobs that allow them to save for retirement and have social security coverage against risks."

According to the 2024 Better Jobs Index report, the evolution of employment quality has been slow since 2010, and at the current growth rate, reaching around 70 points would take nearly 48 years. The quantity dimension has remained stable, with a decline in 2020 due to the pandemic's effects on employment but recovered by 2022.

Equipping human capital with skills aligned to the talent needs of each country's productive sectors, promoting formal employment with lower costs by making it a part of social security universal, and enhancing access to jobs by strengthening public employment services, are some of the solutions and initiatives promoted by the IDB to increase employment quality in the region.

For instance, in Bolivia, the Programa de Apoyo al Empleo (a national employment-support program) has facilitated access to quality jobs in companies for over 50,000 workers, primarily women and youth, through on-the-job training.

The Better Jobs Index is one of the IDB's tools to identify areas of opportunity for developing and boosting productivity in Latin America and the Caribbean. It assesses jobs in countries through two dimensions: quantity and quality. The quantity dimension comprises two indicators: the labor force participation rate and the employment rate (or occupancy rate). The quality dimension is constructed with the rates of formality and jobs with sufficient wages to surpass poverty. Thus, the index is the weighted average of these four indicators, and scores range from 0 to 100. For a country to score 100 points, all individuals participating in the labor force must be employed in formal jobs that provide them with living wages.