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Economic Reforms, Growth and Employment

Labour Markets in Latin America and the Caribbean

image of Economic Reforms, Growth and Employment

Labour conditions in Latin America and the Caribbean have long been a cause for concern. Despite relatively high economic growth rates, a large part of labour force was excluded from productive activities. This publication analyzes the evolution of Latin American and Caribbean labour markets in the 1990s and the impact of the economic reforms on them. The analysis makes it clear that the region faces a major challenge in the coming years, both in increasing the number of jobs and in improving job quality.

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Economic reforms and employment: Expectations and elements of analysis

The development of the labour market between 1950 and 1980 has been characterized as a simultaneous process of assimilation and social exclusion (PREALC, 1991, p. 2). A growing proportion of the economically active population (EAP) was integrated in dynamic activities. However, in the context of interlinked push-pull factors, a large segment of workers left the agricultural sector and frequently emigrated to the big cities, where they could only find work in low-productivity, low-wage activities (Infante and Klein, 1991; Weller, 1998a, pp. 9-22). The process of partial integration was fostered by the development of labour market institutions that were geared to protecting workers in a market that is structurally biased towards employers. As happened with integration in “modern” productive processes, however, labour market institutions were in force for only a part of the economically active population. These institutions could not by themselves offset the enormous social and economic instability of the countries of the region. Despite relatively low rates of open unemployment on average, it was generally perceived that the region suffered serious labour problems. A key phenomenon was the visible and invisible underemployment evident among large sectors of rural agriculture and the urban informal sector.

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