Employment in Crisis: The Path to Better Jobs in a Post-COVID-19 Latin America

Abstract

This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved.

Anatomy of Brazil's Subjective Well-Being: A Tale of Growing Discontent and Polarization in the 2010s

“…First, our findings indicate that the decline in SWB in Brazil can be linked not only to the economic decline after 2014, but also to the political crisis. This finding supports the notion that the effect of economic crises on subjective well-being can indeed be alleviated by good governance (Arampatzi et al 2019) and a timely and effective government response to the crisis (Silva et al, 2021). Second, the study shows that there is a lot of heterogeneity in the relationship between economic decline and SWB.…”

“…First, such events are typically accompanied by rising unemployment and personal indebtedness, deteriorating wages, and increased reliance on social safety nets and public services, which tend to be insufficient and/or of poor quality in many developing countries. In Latin America, crises lead to persistent employment losses and reduction in formal job creation, permanent scarring of some workers, especially the low-skilled, and downturns that take longer to reverse due to the less competitive market structure in the region (Silva et al 2021). Furthermore, economic crises are often periods during which inflation spikes and tax revenues decline, putting pressure on policy makers to cut public spending precisely when demand for public services and social programs escalates.…”

“…As indicated in the previous subsection (2.3), at least part of this discontent can be traced back to growing grievances among Brazil's emerging middle class that remains vulnerable to economic shocks. This vulnerability reflects still inadequate unemployment insurance and short-term compensation programs and lack of good formal-sector jobs in an economic environment plagued by market competition issues (Silva et al 2021). The crisis in the mid-2010s threatened especially the newly acquired status of groups belonging to the lower middle class.…”

“…Whereas the poor in Brazil were satisfied with a system focused on poverty reduction and social redistribution, the middle class expected more as people in the lower middle class -including those with recently acquired middle-income status -were vulnerable to falling into poverty following economic shocks. These populations were not covered by unemployment insurance and other social protection programs (see also Ferreira et al, 2012) and suffered for many years after an economic shock (Silva et al, 2021). At the same time, the middle class felt that their increasing tax burden was not efficiently spent and was not allocated to policy areas important to them such as infrastructure, health, and education (Clément et al, 2020).…”

The multidimensional construct of precarious work, the future of work, and workers’ health

“…The World Bank shows elements that support the slow recovery of the world of work. The scarring effect of the crisis is the long-term impact of job loss, which has a stronger persistent burden on less qualified workers, with less education, associated with worse conditions of labor market (re-)entry after the crisis, when a disproportionate reduction in access to employment experience and growing informality are expected 8 . These characteristics can be observed in the trajectory of occupations in Brazil, which fell sharply from March to September 2020 and has recovered since September 2020, with informal work reaching 41.1% of the employed population in the third quarter of 2021 and a drop in real average income.…”