By Denis Pennel for staffingamericalatina

Latin America is undeniably a key global player after a booming period of economic growth. Mexico, Colombia, Peru and Chile are predicted to grow an average of 4.25% in 2014[1] which is much higher than the global predicted average of 3.6%[2]. With growth slowing but continuing in the region, evaluating the challenges facing the labour market in Latin America is more important than ever.

The Latin American economy has benefitted hugely from entering the global market but challenges within the labour market have also risen alongside these opportunities. Many countries face uncertain and fluctuating economies alongside high levels of unemployment and growing skills shortages. These are global challenges, but they are underpinned by antiquated regulation and informal employment in the region, which are preventing countries from dealing with the uncertain global business landscape.

According to the United Nations International Labour Organization (ILO) 47.7 per cent of Latin Americans have an informal job. In Bolivia, Honduras and Peru the picture is darker still with informal employment accounting for around 70% of non-agricultural employment. In addition the turnover between formal and informal employment is incredibly rapid. For example, in Mexico the number of people entering and leaving the labour market between 2001 and 2012 was 69 per cent higher than in the United States – which is shocking considering the United States is one of the most advanced economies with a high labour market turnover.[3]

So what are the issues with informal employment? Asides from the negative impact that it has on economies; through tax evasion and preventing growth, which would lead to creation of further jobs, the main impact is on the workers themselves. They are left with no protection from the law, little security in their jobs and few chances to find formal employment. But eradicating informal employment is difficult. It is difficult to discover, monitor and overcome and governments struggle to make a difference with little resources.

An important first step to take to eradicate informal employment is for governments to ratify ILO’s Convention no. 181. This would encourage well-functioning labour markets and would allow the private employment services (PrES) industry to play a role in promoting formal employment and its benefits for workers and businesses alike. It offers workers formal employment with legal protection, while giving businesses a chance to adapt to (temporarily) broaden their work force, without having to formally hire someone, or resort to informally hiring staff. Private employment services can and should act as the Way to Work: they are a necessary connector to source the right talent and effectively match labour demand with supply. They can protect workers from informal employment and work closely with businesses and governments to develop the skills that will help their economies to flourish in the future.

I believe that in order for Latin America’s labour market to become sustainable and to rise to the challenge of globalization the challenge of eradicating the widespread pandemic of informal employment must be met, and won.

Word Count – 498

Notes:

About Denis Pennel

Managing Director of Ciett and Eurociett, Denis Pennel is a labour markets expert with deep knowledge and years of experience relating to employment at global and EU levels. He just published “Travailler pour soi”, a book about the new realities of work.

Follow Denis on Twitter @PennelDenis

About Ciett, www.ciett.org

As the International Confederation of Private Employment Agencies, Ciett is the authoritative voice representing the interests of agency work businesses. Founded in 1967, Ciett consists of 48 national federations of private employment agencies and seven of the largest staffing companies worldwide. Its main objectives are twofold: to help its members conduct their businesses in a legal and regulatory environment that is positive and supportive; to gain recognition for the positive contribution the industry brings to better functioning labour markets.

Follow Ciett on Twitter @ciett_waytowork