Employment in LAC steadily recovering but growth still ‘unsatisfactory’, World Bank reports

World Bank says “long-term scars” of pandemic like increased poverty, informal employment, learning loss must still be urgently addressed 

BRIDGETOWN, BARBADOS — Employment levels in Latin America and the Caribbean are steadily approaching pre-pandemic levels, according to a new report released by the World Bank.

However, the global organization also cautioned that while the region is gradually recovering from the severe impact of the COVID-19 pandemic on local and international economies, more must be done to attain sustainable growth in the long run.

“The Latin America and the Caribbean region is progressing toward consolidating its recovery from the COVID-19 crisis,” the World Bank acknowledged in its report.

“Vaccination is well-advanced in most of the region, increasing resilience against new variants.

“The region is on track to recovering previous levels of GDP and employment. Schools are opening and firms are hiring.”

But all is not rosy despite this trajectory, the World Bank cautioned, noting “consolidation of the recovery does not imply satisfactory rates of growth — only that LAC has returned to the unsatisfactory growth rates that characterized the period before the pandemic”.

On top of that, the region is facing “increased uncertainties as it navigates recovery”.

But nonetheless, the World Bank said the need for LAC nations to “continue to pursue the foundations for dynamic, inclusive and sustainable growth remains paramount, and is even more urgent” than before.

Pandemic scars 

The World Bank’s report stressed “long-term scars of the pandemic” such as increased rates of poverty and informal employment “remain and continue to require attention”.

“Students have lost between one and one-and-a-half years of education,” the World Bank elaborated, “leading potentially to 10 percent loss in their lifetime incomes.

“Many of the new jobs that have been created, particularly for women, are in small firms that are often informal.”

Additionally, “The sharp drops in economic activity have led to dramatic declines in employment…

“It slowly increased to nearly recover its pre-pandemic levels by the end of 2021. However, this recovery obscures a longer-term decline in the quality of employment, and the unevenness of the recovery across demographic groups.”

According to the report, a large portion of the recovery in employment has been in informal and small enterprises — a fact it said highlights the unevenness of economic recovery.

In fact, the World Bank found employment in small, medium and large enterprises actually declined over the past year, while employment in microenterprises increased by 7.4 percentage points.

To this end, the organization urged nations to adopt “a far-reaching reform agenda”.

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References:

World Bank semiannual report for Latin America and the Caribbean, “Consolidating the Recovery: Seizing Green Growth Opportunities”