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Social Consequences of the Global Financial Crisis in Latin America : Some Preliminary, and Surprisingly Optimistic, Conjectures
(World Bank, Washington, DC, 2009-11) Schady, Norbert; Ferreira, Francisco H.G.
Surprisingly, the most severe economic crisis the world has seen since the great depression does not appear to have had as dramatic an impact on poverty in Latin America as might have been expected. The exceptions to this heartening assessment are the countries geographically and economically closest to the United States, chiefly Mexico. Elsewhere, although poverty statistics for 2008-09 are not yet available, the data on output, unemployment and real wages suggest relatively modest changes in poverty. There are two candidate explanations for the smaller-than-expected increases in poverty in Latin America: lower output declines, deriving from enhanced protection against external shocks; and a lower output elasticity of poverty. If the latter is indeed observed when the required data becomes available, the report conjecture that it may reflect both the lower inflation rates now prevalent in the region, and recent reforms in the social protection system. For all their faults, the social protection systems in many Latin America and Caribbean (LAC) countries now reach the poor rather than only the middle-classes. The note concludes arguing against complacency, and pointing to areas where further research; and greater policy reform and experimentation are needed.
Labor Markets and the Crisis in Latin America and the Caribbean (A Preliminary Review for Selected Countries)
(World Bank, Washington, DC, 2009-06) Murrugarra, Edmundo; Freije-Rodríguez, Samuel
Countries in Latin America and the Caribbean are experiencing the impact of the international financial crisis on labor markets across different dimensions, such as employment, wages and the quality of labor market arrangements. This note reviews a selected group of countries to assess the speed and severity of labor market impacts. It identifies patterns in the changing labor market conditions, such as specific sectors or types of workers being affected. It also describes countries' preparedness and capacity to respond to the crisis and the specific policy responses being implemented. The review finds a large variation in impacts and responses in the context of increases in unemployment rates that range from 0.4 to 2.1 percentage points. The impacts of the crisis are evolving rapidly but seem to have a more noticeable negative effect among salaried workers in Brazil and Chile whereas in Colombia non-salaried workers have been affected the most. Mexico shows both types of workers as being seriously hit by the recession.