Saturday, 11 May 2024 04:07

Labor growth in Latin America will be 2% in the next 5 years

Written by Alejandra García Ortiz
Labor growth in Latin America will be 2% in the next 5 years Courtesy

Latin America's labor force grew by almost 50% in the two decades prior to the pandemic, which contributed significantly to boosting economic growth. Today, trends are turning around and will cease to be a driver of growth in the coming years.

According to the International Monetary Fund, Latin America's labor force growth will average around 2% annually over the next five years, below its historically low average.

These projections are also considerably more moderate than those for other emerging market economies in Europe and Asia, which are also expected to slow in the coming years, but still achieve annual growth of 3% and 6%, respectively.

This bleak outlook reflects long-standing problems related to low investment and slow productivity growth. These are now compounded by changing demographic trends and cooling labor force growth.

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To keep the labor force engine going, according to the IMF, it will be necessary to stimulate labor force participation. Forecasts indicate that some of this will occur in the coming years, as the proportion of the working-age population looking for work will continue to increase.

Job growth in Latin America is influenced by a variety of economic, social, and political factors. While there are challenges, there are also opportunities to improve the labor market and promote inclusive and sustainable growth.

Other avenues for expanding the labor force include providing vocational training opportunities, raising the retirement age, removing disincentives to work after retirement, and adopting policies that facilitate the employment of older people.

 

Translated by: A.M