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COVID-19: Slow road to jobs recovery for Latin America and the Caribbean

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The labour market in Latin America and the Caribbean faces a slow recovery after the COVID-19 pandemic, highlighting the need for “active macro policies” and other measures to promote sustainable development alongside getting people back into the workforce. 

That is the main finding of a joint report published on Tuesday by the UN’s Economic Commission for the region, ECLAC, and the International Labour Organization (ILO). 

It was presented simultaneously in the capitals of Santiago, Chile, and Lima, Peru, via a joint virtual press conference led by Alicia Bárcena. the ECLAC Executive Secretary, and Vinícius Pinheiro, ILO’s Regional Director. 

“In terms of employment, the health crisis affected vulnerable groups above all, deepening inequality in the labor market. Women have been most affected by job losses and the decline in labor market participation. A strategic view must link sustainable development with job creation,” they said

Surviving an ‘unprecedented blow’ 

COVID-19 has dealt “an unprecedented blow” to economies and labour markets in Latin America and the Caribbean, leading to the biggest contraction in the region in the last 100 years. 

The greatest effects were felt in the second quarter of this year, when an estimated 47 million jobs were lost, compared with 2019.   

Many people who found themselves without a job were unable to swiftly re-enter the workforce, or withdrew entirely, impeded by mobility restrictions which prevented them from seeking employment. 

Women, young people and migrants are among those who have been heavily impacted, and the report also looks at how the crisis has affected employment for people 15 to 24 years old. 

Grim prospects for youth 

The pandemic has had a greater impact on youth, partly because there are fewer entry-level vacancies around, fewer temporary contract renewals and fewer hires following probationary periods, the report reveals. 

Furthermore, the lower likelihood of finding a job has discouraged young people from seeking employment, leading to a rising number who are neither looking for work nor studying. 

“These long periods of inactivity have lasting effects on their career path: more informality and greater labor market exclusion in the future”, the report cautions. 

Subsidies and skills training 

The two UN organizations have called for promoting young people’s integration into the labour market by combining classroom training followed by internships.   

Monetary subsidies would ensure attendance and participation, and employment services would support their re-entry into the workforce. 

Young people who have been made jobless could also benefit from vocational training, which would facilitate re-skilling or re-training. Meanwhile, “digital technologies must be harnessed to enhance learning capacity and thereby close the digital gaps between them.” 

Stimulating job growth 

The report warns that based on the average economic growth rate over the past decade, returning to pre-crisis economic activity levels will take several years, which will translate into a protracted jobs recovery. 

Any return would require furthering environmental policies that stimulate job growth, the authors said, bolstered by “active fiscal policies that foster employment, with labor-intensive investment projects” focused on sustainability. 

These in turn must be accompanied by industrial and technological policies, they added, geared at building production capacity and increasing competitiveness, along with financing for small business and medium-sized enterprises.

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COVID-19 has reshaped last-mile logistics, with e-commerce deliveries rising 25% in 2020

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COVID-19 has shifted the way people buy goods, accelerating the rise in online shopping and e-commerce deliveries. According to a new report from the World Economic Forum, this has led to a 25% rise in consumer e-commerce deliveries in 2020.

The new report, Pandemic, Parcels and Public Vaccination: Envisioning the Next Normal for the Last-Mile Ecosystem, explores changes seen over the last year which will greatly influence last mile deliveries in the future. For example, it’s expected that 10%-20% of the recent increase in e-commerce deliveries will continue after the pandemic and the lifting of COVID-19 restrictions.

“Covid-19 shutdowns have completely reshaped how we live and of course this includes how and what we’re buying,” said Christoph Wolff, Head of Mobility, World Economic Forum. “Leaders must consider and respond to the effects COVID-19 has had on e-commerce deliveries and what impact these changes will have on their cities and communities.”

Beyond rising demand, the past year has also seen a large shift to greener delivery options, with wider spread EV across the industry and more stringent carbon emission rules from cities expected to shape delivery networks in the near future.

Overall, the report finds six main structural changes to the delivery and logistics sector that are expected to last:

Six structural changes

The pandemic has caused an increase in last-mile deliveries that are likely to persist.
In 2020, business-to-consumer parcel deliveries have risen by about 25%. The report suggests that part of this increased demand will be durable, with at least 10%-20% of the growth remaining post-pandemic.

Consumers increasingly buy new types of products online and consider environmental and health impact when buying.
As consumers continue to buy a wider array of goods online, they are also becoming more ecologically aware. For example, 56% of millennials cite environmental protection as the reason for choosing alternatives to home delivery.

Decarbonization of last-mile deliveries has accelerated.
Companies and cities have ramped up commitments to make emission-free deliveries, while many pandemic-related economic stimulus packages, especially in the European Union and China, contain provisions to support green mobility and goods transport.

Faced with budget challenges and increased transport needs, cities steer last-mile transitions.
Many cities, like Seattle and Boston, have started to repurpose kerb space to designated delivery pick-up. Others, including Santa Monica and Amsterdam, are taking bold action on cleaner delivery with “zero-emission delivery zones” and electric vehicle charging infrastructure.

Proven technologies are fuelling the last-mile ecosystem revolution.
While disruptive new technologies, such as drones and delivery robots, will continue to emerge, the last-mile revolution is happening now as proven technologies scale up. The likes of parcel lockers and data sharing for load pooling are being adopted around the world as the costs of implementation decrease

New business models emerge to meet increased demand for sustainable delivery vehicles.
Certain logistics companies are now offering services to online retailers, which will help them identify the delivery routes most suited to make the immediate transition to electric delivery vehicles.

Last mile for vaccines

While ensuring equitable access to COVID-19 vaccines remains the most pressing issue in global vaccine distribution, effective last-mile delivery is another critical issue for countries. The key challenges are cold storage, second vaccine dose needs, and a disconnect between the vaccine and patient journey.

“Governments and logistics companies could think about teaming up with players who are experienced in managing very local, capillary demand and with integrating a large number of local retail outlets,” says Anja Huber, Engagement Manager, McKinsey & Company. “Examples include large online retailers, eGrocery giants and technology platform players”

Potential solutions countries can implement for efficient vaccine delivery include real-time logistics planning, data integration, centralized management of delivery strategies at the national level and many more.

There are also early examples of countries that have handled this challenge particularly well. While there are many factors in vaccine distribution success, broadly speaking, countries with tight integration of healthcare and logistics stakeholders seem to show the highest national vaccination rates two months into 2021.

These include Israel, the UK and Chile outperforming other countries with more decentralized healthcare systems, like the US and Germany, which had slower initial vaccine rollouts.

Clearly, much still needs to be done to ensure developed countries overcome operational issues with vaccine delivery. However, mobility solutions should not overshadow an even larger ethical challenge in the differences of vaccine access between the global north and global south, which is a priority for greater equity.

Future of the last mile

The impact of COVID-19 on the last-mile delivery has accelerated existing trends across the sector, leading to six structural changes expected to shape the future of last mile deliveries.

These will be part of a broader urban mobility transition, driven by public policy and company actions. As cities and logistics leaders continue the sustainable urban delivery transition, close public-private coordination will be critical. Zero Emissions Urban Fleets (ZEUF) network, for example, provides a relevant dedicated stakeholder platform for this work.

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Asian Ports Dominate Global Container Port Performance Index

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Photo: Joedith Lego/Unsplash

Asian container ports are the most efficient in the world, dominating the Top 50 spots according to the new global Container Port Performance Index (CPPI) launched by the World Bank and IHS Markit. The report scored ports against different metrics, making the efficiency ranking comparable around the globe by assessing and standardizing for different ship sizes and container moves per call. The CPPI is intended to identify gaps and opportunities for improvement that will benefit stakeholders from shipping lines to national governments to consumers.

More than four-fifths of global merchandise trade by volume are carried by sea, and approximately 35 percent of total volumes and over 60 percent of commercial value is shipped in containers.

“The development of high-quality and efficient container port infrastructure is a key contributor to successful, export-led growth strategies both in developing and developed countries”, said Martin Humphreys, Lead Transport Economist and Global Lead for Transport Connectivity and Regional Integration in the World Bank. “Efficient ports also ensure business continuity and improve the resilience of the maritime gateways as crucial nodes in the global logistical system.”

“Inefficient port operations have a very direct impact on supplies across the country and their populations. During the COVID-19 pandemic we saw port delays causing shortages of essential goods and higher prices. Over the longer term such bottlenecks can mean slower economic growth, higher costs for importers and exporters and even resulting in less employment,” added Turloch Mooney, Associate Director, Maritime and Trade at IHS Markit.


Regional disparities

East Asian ports dominate the CPPI, led by Yokohama in Japan ahead of King Abdullah Port in Saudi Arabia and Qingdao in China.Algeciras in Spain is the highest ranked European port, in 10th place. Colombo in Sri Lanka is the top-ranked port in South Asia at 17th place and Mexico’s Lazaro Cardenas leads the Americas at 25th. Canada’s Halifax is the only other North American port in the Top 50. Djibouti, in 61st place, is the top-ranked African port.

Key port performance metrics such as minutes per container move show large discrepancies in global port efficiency, with top performers such as Yokohama taking just 1.1 minutes on average to load or unload a container in a standard port call while the average for equivalent workloads in African ports is more than three times that at 3.6 minutes.

The Container Port Performance Index is based on total port hours per ship call, defined as the elapsed time between when a ship reaches a port to its departure from the berth having completed its cargo exchange. Greater or lesser workloads are accounted for by examining the underlying data within ten different call size ranges. Five distinct ship size groups are accounted for in the methodology given the potential for greater fuel and emissions savings on larger vessels.

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Labour market disruption & COVID-19 support measures contribute to widespread falls in taxes

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The COVID-19 crisis has resulted in the largest decrease in taxes on wages since the global financial crisis of 2008-09, according to a new OECD report.

Taxing Wages 2021 shows that declining household incomes coupled with tax reforms linked to the pandemic are driving widespread declines in effective taxes on wages across the OECD.

The report highlights record falls across the OECD during 2020 in the tax wedge – the total taxes on labour paid by both employees and employers, minus family benefits, as a percentage of the labour cost to the employer. 

The tax wedge for a single worker at the average wage was 34.6% in 2020, a decrease of 0.39 percentage points from the previous year. This is a significant fall, but is smaller than the decreases seen in the global financial crisis – 0.48 percentage point in 2008, and 0.52 percentage points in 2009. The tax wedge increased in 7 of the 37 OECD countries over the 2019-20 period and fell in 29, mainly due to lower income taxes.

The drop in the tax wedge was even more significant for households with children, bringing tax rates on these family types to new lows. The average tax wedge for a one-earner couple at the average wage with children in 2020 was 24.4%, a decrease of 1.1 percentage points versus 2019. This is the largest fall and lowest level seen for this household type since the OECD started producing Taxing Wages in 2000.

Between 2019 and 2020, the tax wedge for this household type decreased in 31 countries, and rose in only 6. It decreased by more than 1 percentage point in 16 countries. The largest decreases were in Lithuania, the United States, Poland, Italy, Canada and Korea. The only increase over 1 percentage point was in New Zealand.

The gap between the OECD average tax wedge for the single average worker (34.6%) and the one-earner couple with children (24.4%) has widened by 0.7 percentage points since 2019, reflecting policy changes that provided additional support to families with children during the COVID-19 crisis.

The falls in country tax wedges for the single worker, the one-earner couple with two children, and the single parent resulted predominantly from changes in tax policy settings, although falling average wages also contributed in some countries. By contrast, increases in the tax wedge were almost all driven by rising average wages, offset only slightly by policy changes.

Of the ten countries where specific COVID-19 measures affected the indicators, support was primarily delivered through enhanced or one-off cash benefits, with a focus on supporting families with children.

The report shows that labour taxation continues to vary considerably across the OECD, with the tax wedge on the average single worker ranging from zero in Colombia to 51.5% in Belgium.

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