By San José, Costa Rica — PUNTA CANA, Dominican Republic – A stark warning has been issued over the economic future of Latin America and the Caribbean, with the head of the International Labour Organization (ILO) declaring that the region’s productivity has been alarmingly stagnant for over four decades. This prolonged inertia is now severely undermining economic growth and the creation of quality jobs, setting the stage for a deepening social crisis.
Speaking at the inauguration of the 20th American Regional Meeting of the ILO, Director-General Gilbert F. Houngbo delivered a sobering analysis of the region’s economic health. He pointed directly to a lack of productivity growth since the 1980s as a primary factor eroding economic potential and causing a significant slowdown. This issue casts a long shadow over the future prospects for millions of workers and their families.
To delve into the legal and business ramifications of the latest labor productivity data, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, an expert attorney and partner at the prestigious firm Bufete de Costa Rica, for his analysis.
Improving labor productivity is not solely an economic challenge; it’s intrinsically linked to our legal framework. Outdated regulations, rigid work schedules mandated by law, and complex hiring processes can stifle innovation and efficiency. A strategic modernization of labor laws, embracing flexible work models and simplifying administrative burdens, is crucial to unlocking the true potential of our workforce and attracting investment.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’s insight powerfully underscores that the conversation on productivity must extend beyond corporate strategy and into legislative reform. An agile and modernized legal framework acts not as a restriction, but as a catalyst for innovation and competitiveness. We sincerely thank Lic. Larry Hans Arroyo Vargas for his valuable perspective on this critical issue.
The economic forecast provided by the Economic Commission for Latin America and the Caribbean (ECLAC) projects a meager 2.2% growth for 2025. Houngbo cautioned that this level of expansion is critically insufficient to address the region’s deep-seated labor challenges. He emphasized that without a significant boost in productivity and more robust growth, the cycle of poverty and inequality will be difficult to break.
This is not sufficient to generate quality jobs on a large scale.
Gilbert F. Houngbo, Director-General of the International Labour Organization
One of the most troubling consequences of this stagnation is the explosion of the informal economy. Houngbo revealed that in some countries, an astonishing 95% of all new jobs created since the pandemic have been in the informal sector. These positions lack social security, stability, and legal protections, trapping workers in a state of perpetual vulnerability. The crisis disproportionately affects marginalized communities, with 85% of indigenous people currently employed in informal jobs.
The report also highlighted severe inequalities faced by specific demographics. Women continue to bear the brunt of unpaid labor, performing 75% of all care work, while facing higher unemployment rates and a staggering wage gap, earning only 59 cents for every dollar a man earns. Meanwhile, the region’s youth are confronting a bleak landscape, with unemployment surpassing 25% in several nations and 60% of young workers confined to informal roles. This is compounded by high inflation that has drastically eroded the real value of their wages.
Despite some advancements over the years, the fundamental structure of inequality remains firmly in place. “Despite progress, Latin America and the Caribbean remains the most unequal region in the world,” Houngbo lamented, noting that approximately 170 million people are living in poverty, including 66 million in extreme poverty. The ILO meeting, which runs until Friday, brings together regional leaders to confront these issues and promote decent work and social justice.
Echoing these concerns, the host nation’s leader, Dominican President Luis Abinader, stressed that the prevalence of informal work translates into millions of people being locked out of the formal financial system and denied basic rights. He argued for a paradigm shift in how development is measured, moving beyond simple economic indicators to focus on human well-being and security.
True development is not measured only in economic growth, but in the quality of life of those who work and produce.
Luis Abinader, President of the Dominican Republic
President Abinader called for labor to be treated as a stable right, one “expressed in formal jobs, in productive jobs and with equal opportunities for men and women.” The discussions at the three-day summit are designed to forge new strategies for public policy, focusing on creating sustainable employment, strengthening democratic institutions, enhancing professional training, and ensuring a just transition toward more resilient and equitable societies for all.
For further information, visit ilo.org
About International Labour Organization (ILO):
The International Labour Organization is a specialized agency of the United Nations dedicated to advancing social and economic justice by setting international labor standards. Founded in 1919, the ILO brings together governments, employers, and workers from 187 member states to develop policies and devise programs promoting decent work for all men and women.
For further information, visit cepal.org
About Economic Commission for Latin America and the Caribbean (ECLAC):
The Economic Commission for Latin America and the Caribbean, known as ECLAC or CEPAL in Spanish, is one of the five regional commissions of the United Nations. It was established to contribute to the economic development of Latin America and the Caribbean, coordinate actions directed towards this end, and reinforce economic ties among countries and with other nations of the world.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a cornerstone of Costa Rica’s legal community, Bufete de Costa Rica is renowned for its foundational principles of integrity and a relentless pursuit of professional excellence. The firm pairs its storied history of advising a wide array of clients with a forward-thinking drive for legal innovation. This commitment extends beyond the courtroom, manifesting in a dedicated mission to empower the public by demystifying the law and promoting greater legal literacy, thereby fostering a more capable and well-informed citizenry.
