Employment in Crisis

Page 112

88  E m p l o y m e n t

in Crisis

they can operate as “systems” to cushion the short-term impacts of crises, prevent lasting human capital losses, and facilitate the redeployment of working people through reskilling and reemployment support.

Cushioning the short-term impact: Income support during unemployment Landscape of income support for ­unemployment in Latin America and the Caribbean Only about a third of the countries in the LAC region offer national unemployment income support plans. Job displacement income support—programs specifically designed to sustain the income and consumption of laid-off workers and their families—in the form of unemployment insurance is, therefore, relatively rare in the region. Workers with formal employment contracts in Brazil, Chile, and Uruguay have access to large risk pools offered by a national unemployment insurance plan (that is, one not specific to a worker’s firm, occupation, or sector). In addition, Argentina, The Bahamas, Barbados, Colombia, Ecuador, and the República Bolivariana de Venezuela offer unemployment insurance in the form of contributory risk-pooling plans (table 4.1). I nd iv idu a l u nemploy ment s av i ng s accounts are also available in Chile, Colombia, and Ecuador. Only in Chile are these

various instruments fully integrated into a coherent and coordinated plan: participating workers who lose their jobs make scheduled, limited withdrawals from their individual savings accounts, and a risk-pooling “solidarity fund” underpins their protection should they exhaust their unemployment savings before finding a new job. In Panama and Peru, income support for unemployment is limited to individual savings accounts, with no risk-pooling mechanism. Mexico (with the notable exception of Mexico City and Yucatán) and most other countries in Central America and the Caribbean do not have any form of unemployment insurance, in sharp contrast with countries at similar income levels in other regions. For example, all countries in Europe and Central Asia have mandatory, risk-pooling unemployment insurance (see map 4.1). Most countries in the LAC region rely instead on severance pay mandates, which are specific to the employment relationship and are financed fully and paid directly by firms (table 4.1). The legal coverage and generosity of this form of protection can be uniform across all regulated employment relationships, or it can vary by contract type, by sector, or even by province. As a risk-sharing instrument, the distinguishing feature of severance pay is that it pools the risk of income loss from involuntary dismissals solely within firms.

TABLE 4.1  Landscape of formal unemployment income support in the LAC region “Risk-pooling” within firms

Savings (self-insurance)

National risk pooling

Severance pay mandates on employers

Funded severance and/or individual unemployment savings accounts

Unemployment insurance/benefits

Most countries

Argentina Brazil Chile Colombia Ecuador Panama Peru

Argentina The Bahamas Barbados Brazil Chile Colombia Ecuador Uruguay Venezuela, RB

Sources: Fietz 2020; Packard and Onishi 2020. Note: Argentina’s individual unemployment savings accounts are available only to registered workers in the construction sector. The government of ­Mexico City administers a job-seeker benefit, but only to residents and certain groups deemed vulnerable.


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References

23min
pages 151-159

Notes

6min
pages 149-150

Conclusion

6min
pages 147-148

4.18 Tackling structural issues that worsen the impacts of crises on workers

1min
page 146

4.12 Employment and reemployment policies, by the nature of the shock causing displacement

5min
pages 130-131

4.4 Permanent, systemic shocks: Responses to job dislocation caused by structural changes

3min
page 132

4.6 Evidence on the effects of place-based policies on mobility and labor market outcomes

3min
page 145

4.17 Labor market regulation instruments and the duration of unemployment

15min
pages 139-143

4.11 Positive effects of welfare transfers on local formal employment

5min
pages 126-127

4.5 How well have regional policies performed at strengthening economic opportunities?

3min
page 144

4.1 Family allowances as de facto unemployment insurance

3min
page 123

4.8 Insufficient support, with many left behind

2min
page 122

selected LAC countries

2min
page 121

Aggregate: Stronger macroeconomic stabilizers

6min
pages 106-107

4.1 Landscape of formal unemployment income support in the LAC region

2min
page 112

4.1 How adjustment works and a triple entry of policies to smooth it

1min
page 105

4.1 Unemployment insurance throughout the world

1min
page 113

Introduction

8min
pages 101-103

Three key policy dimensions

3min
page 104

References

11min
pages 96-100

Notes

3min
page 95

Places: The role of local opportunities and informality

6min
pages 92-93

Introduction

5min
pages 75-76

Workers: A bigger toll on the unskilled

6min
pages 77-78

Conclusion

3min
page 68

3.1 Effect on wages of displacement caused by plant closings in Mexico

3min
page 79

and informal sectors, 2005–17

1min
page 66

A changing employment structure and the disappearance of good jobs

3min
page 65

2.2 Cyclicality of net flows across sectors and out of employment, 2005–17

6min
pages 55-56

Key insights

15min
pages 29-33

References

5min
pages 42-43

Labor market flows: Unemployment versus informality

2min
page 50

Introduction

8min
pages 47-49

Notes

3min
page 41

1.4 Addressing crises’ impacts and preparing workers for change: Policy reforms

1min
page 39

1.3 Stabilizers and macroeconomic frameworks: Policy reforms

7min
pages 36-38

Rationale for this report

1min
page 25
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