8, November, 2013

Active Labour Market Policies in Latin America

In Latin America, active labour market policies are helping to improve access to decent jobs by disadvantaged workers and are also demonstrating the potential to reduce informality, underemployment and inequality.

The two principal aims of labour market policies are to overcome market failures preventing the efficient operation of labour markets and to provide support for socio-economically disadvantaged groups facing barriers to entry into formal employment. This Guide begins by describing the particular characteristics of labour markets in Latin America before presenting an analysis of the two kinds of active labour market policy most widely implemented in the region to tackles these issues – training and labour information programmes. The analysis highlights the impacts they are having on employment rates, formality and wages, particularly amongst women. The following section provides a discussion of gender and labour markets, including a review of some government strategies aimed at reducing inequality and improving access to decent jobs for women. Finally, the Guide describes the main enabling factors behind the emergence and implementation of active labour market policies in the region and summarises key policy and practice lessons. Links to further reading and key organisations are also provided to guide readers to additional information.

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Key Lessons:

  • The new generation of training programmes in Latin America has transformed the role of government in the provision of labour training. The state’s role has shifted from supplying training to promoting more and better training through market mechanisms. In the process, it has managed to improve the efficiency of its spending, in part through better targeting of disadvantaged groups.
  • Key elements for the success of training programmes are: private sector participation in the design phase; competition promoted on the basis of relevance, quality and cost-efficiency; and a clear mechanism to link training to a future job, such as through internships.
  • The impacts of training programmes on job quality (in terms of formal employment rates and higher wages) tend to be positive, particularly for women. Interestingly, impacts among women are generally greater than for men. This indicates that these programmes may play an important role in reducing gender inequalities in the labour market.

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