As many as 2.4 million workers in Latin America could lose their jobs in 2009, raising the region's unemployment rate for the first time in six years, the International Labor Organization said.
The global economic crisis would end five years of job growth that brought the region's unemployment rate in 2008 to its lowest level in 16 years, an ILO report on Latin America and the Caribbean said.
With the region's economic growth expected to slow to 1.9% this year from 4.6% last year, average urban unemployment is to rise to between 7.9% and 8.3% this year from 7.4% in 2008, it said.
“In response to the financial crisis and credit restrictions it is probable that many companies will reduce their operational and labor costs,” the report said.
Unemployment could be even higher this year if growth forecasts are adjusted downward, the report added.
“We are talking about a strong slowdown, which will hit labor markets. We can't rule out that the figure will be revised (downward) again in coming weeks and that we face an even grimmer scenario,” Jean Maninat, regional ILO director, said in the report.
Many of the region's countries, especially in South America, depend heavily on commodity exports, whose prices have fallen sharply in recent months.
Mexico and Central America will be hardest hit by a recession in the United States due to their strong trade ties, the report said.
Some countries in Central America and the Caribbean will also suffer due to falling remittances from expatriates in rich countries as well lower revenues from tourism.
The global crisis already caused unemployment to rise last year in Chile, Barbados, and Jamaica. In other countries, the unemployment rate was unchanged or lower last year.
Governments should adopt anti-cyclical measures, such as spending on infrastructure and credit for small and medium-sized companies, to cushion the impact of the crisis, Maninat said.
In Brazil, the region's largest economy, the government has granted credits and tax breaks to consumers and several industries but on Tuesday announced a 37.2 billion reais ($16.1 billion) temporary spending freeze.
Steel and mining companies as well as car manufacturers have taken the lead in laying off workers in recent weeks. (Reuters)