ILO: COVID-19 recovery in the Caribbean will be gradual but working hour losses expected to remain high

While partial reopening of Caribbean economies is showing some immediate signs of socio-economic recovery from the COVID-19 pandemic, reduced output, export and fiscal space continue to take a massive toll on regional labour markets according to a recently released report from the International Labour Organization (ILO).

Estimates produced in September 2020 (not necessarily robust following the fourth quarter (Q4) developments in Caribbean and tourism originating countries), suggest a gradual recovery for the Caribbean labour market during the third quarter (Q3) of 2020, although losses remained high. Despite a reduction between the second and third quarter of 2020, work hour losses were expected to remain high at 12.8 per cent (in line with the global average of 12.1 per cent). This is, however, substantially lower than the combined average of 25.6 per cent for Latin America and the Caribbean (LAC).

Similarly, 1.87 million full-time equivalent (FTE) jobs were expected to be lost in the Caribbean since the beginning of the pandemic (against a total of 345 million FTE jobs worldwide and 60 million for the LAC region).

Recovery can be imputed to the partial reopening of the tourism sector starting from June 2020, which provided immediate relief in certain countries. This reflected in an increase in hours worked and – most likely – the number of people employed. If the experience of past shocks is to be repeated, those who may benefit first from the recovery are longer tenured workers who lost employment when the crisis kicked in

Survey and administrative data for the first quarter (Q1) and second quarter (Q2) of 2020 suggest that – depending on the country – both unemployment and the proportion of people out of the active labour force have increased. While differences by gender are not necessarily consistent across all sources, youth have most likely been impacted disproportionately relative to the rest of the working population (surveys from Grenada, Jamaica and Saint Lucia confirm a spike in their unemployment rate).

In any case, evidence suggests a polarization of the impact: some workers bore the biggest burden, while others maintained employment or at least a reasonable degree of labour market attachment. Self-employment seems to have not played the traditional role of buffering the impacts of the crisis. Additionally, there is not enough evidence to conclude whether informal employment provided a cushion. As expected, at risk industries such as retail, trade, manufacturing, accommodation and food were the most impacted.

Despite limited, available evidence is important to have a clear idea of the number of people affected as well as the modality through which they were impacted. A reduction in the number of hours worked accompanied by a limited reduction in income has substantially different implications than, say, being dismissed and not being able to find any alternative employment opportunity due to plunging labour demand,” said Diego Rei, Employment and Labour Market Policies Specialist of the ILO Decent Work Team and Office for the Caribbean.

Labour market recovery measures predominantly short term across Caribbean

Across the region, government responses were usually quick and structured to provide mostly emergency or temporary relief. These included income support measures, financial assistance to economic units – at times accompanied by employment retention conditions- and range of other measures. Interestingly, in several countries, workers in the informal economy were able to benefit from special concessions or ad hoc designed disbursement modality facilitating access to available financial support. The report provides a systematic inventory of the policy measures implemented across the region categorizing them into three major categories: support measures to individuals, households and the self-employed, government support to businesses and other measures with direct labour market impact. It takes an in depth look is taken into dimension of special interest.

An analysis of occupational safety and health (OSH) highlights how the latter was generally maintained via systematic publication and verification of guidelines jointly agreed upon by employers’ workers and governments while challenges remains linked to the transformation of households into workplaces.

By assessing labour market policies, the report looks at how countries designed and implemented measures aimed at assisting the new batch of unemployed as well as the general population at looking for jobs or maintaining and enhancing human capital. While highlighting the obstacles to shifting trainings to online modalities, it concludes that there were almost no cases where skills-enhancing measures were combined with income or enterprise support transfers and that upgrade in the assistance to job seekers mostly consisted in enhancing on line tools available to them with little change in the type of services provided.

A section on legal matters examines how countries amended labour legislation and ensured user-friendly clarifications became available to the public on matters such as working time, wages, temporary layoff and flexible modalities of work.

Findings also highlight how social dialogue has been an integral part of most coordinated policy responses, but some gaps have emerged. On the one hand, workers’ and employer’s organizations effectively addressed the challenges of the pandemic by engaging with ministries of labour and ministries of health to identify challenges and craft responses to protect workers and keep businesses afloat.. At the policy level, tripartite stakeholders were universally involved in the discussion on stimulus or response packages but at the industry level the scenario was different. While, for instance, in the tourism sector tripartism was widespread other essential industries (specifically agriculture and entertainment) saw much less occurrence. More changes must be made on both ends for productive outcomes.

Steps towards longer-term recovery are seen in several countries. Some have begun to explore a wider variety of policies to move beyond providing financial relief and towards equipping businesses to better navigate the difficulties, adapt or enter into new sectors, as a means of making the private sector more resilient. However, challenges do exist. The report argues that financial help has rarely integrated strategic components to address the need to have comprehensive social protection systems that will be ready to support shocks. Similarly, the financing of policies targeted at bolstering (labour) productivity is still mostly vague and seldom reflect a time horizon beyond the yearly budgetary one. By the same token the flow of job seekers between different support measures remains vastly unorganized with different entities providing different assistance without necessarily exploiting complementarities and maintaining any sort of financial assistance separated from job search one and educational offer.

Closing labour policy gaps for shock-resistant long-term recovery

The ILO recommends that countries continue to provide emergency relief, but preventing long-term employment should be prioritized. This can be achieved by providing adequate support to vulnerable groups (especially youth) and allowing employers to co-determine skilling and employability needs while moving skilling/reskilling online. In particular, employment services can step up to embrace a coordinating role amongst government actors providing relief and reinsertion assistance in order to facilitate a structured flow of beneficiaries between different programmes.

In addition, recent regional developments and the operating procedures to dispatch relief funds suggest that countries could seize this opportunity to transform temporary income replacement programmes into a comprehensive resilient system of unemployment insurance.

The ILO also advises that it is essential to have medium- to longer-term policies in place to support entrepreneurship and modernization. These policies make it easier for potential entrepreneurs to adapt in response to market changes post-COVID-19 by changing products, services and business models with the full participation of Employer and Business Membership Organizations (EBMOs).

Labour legislation can strengthen by pre-emptively putting laws and regulations in place to make practical guidance available. Existing laws might be amended or new laws can be adopted, which would set out principles that must be upheld even during emergencies, provide for special protection for employers and workers, and which would lay out necessary flexibilities.

The ILO continues to assert social dialogue as an essential underpinning for finding effective joint policy solutions between governments, employer’s and workers’ organization. The participation of social partners is essential at all stages of the policy response, including initial needs assessment, formulation of measures, implementation, and monitoring and evaluation that allows for the scaling of measures to address policy performance and emergency situations.

“This report provides Caribbean policymakers with the most recent insights on how the pandemic is impacting governments, employers and workers across this region. It also offers tangible options to develop and put stronger measures in place for long-term labour market solutions. The ILO Caribbean Office looks forward to continuing to work with our constituents to secure a better future of work for the region based on our ongoing analysis and recommendations for a sustainable crisis recovery,” said Dennis Zulu, Director of the ILO Decent Work Team and Office for the Caribbean.

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