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Eighth annual Global Business Complexity Index (GBCI) reveals focus on good governance and responsible business; tougher penalties for breaching regulations; long-term impact of Covid-19 on global business landscape.
The comprehensive report by TMF Group, a leading professional services firm, analyses rules, regulations, tax rates, penalties and compliance issues across 77 jurisdictions, accounting for 92% of the world’s total GDP and 95% of net global FDI flows.
292 indicators are tracked annually, offering data on key aspects of doing business, including incorporation timelines, payroll and benefits, and staying compliant.
Brazil ranks as the most complex jurisdiction this year, leading a list of six Latin America countries in the top ten, with Mexico, Colombia, Argentina, Bolivia and Costa Rica close behind. Brazil’s ranking owes a lot to bureaucracy: businesses register with three different levels of authorities (federal, state and city) when incorporating. Furthermore, tax rates differ from city to city and state to state.
France and Poland top the European rankings as the 2nd and 10th most complex. Indonesia, at number six, is the only jurisdiction in APAC in the top ten.
Denmark and Hong Kong are the simplest jurisdictions, followed by the Cayman Islands, Ireland and Curaçao. Denmark’s success is driven by a straightforward incorporation process, acceptance of English documentation, and digitalisation.
The UK has moved down to 58th, meaning it is simpler to do business. The conclusion of Brexit, along with new international trade agreements, brings increased clarity and stability. Familiarity with digital tax processes has increased and the legislative environment stabilised – law changes resulting in greater economic substance requirements are unlikely to be approved within the next five years.
The United States continues to be an attractive destination, ranking 7th least complex. Factors driving ease of doing business include the three-week turnaround to incorporate via a single body, the ability to pay taxes from a foreign bank account, and that company directors need not be US residents.
TMF Group CEO Mark Weil said: “Our 2021 report is written in the shadow of Covid-19 and the disruptions to travel, trade and health that it has brought. Within that difficult backdrop, attracting and encouraging business investment remains a critical driver of the world economy and local prosperity, and we at TMF Group are pleased to play our part in encouraging simplification by regulators and governments.
“A continuing observation, from our eight years of reporting on complexity, is that some of the most attractive markets to operate in are both the most complex and the most punitive for getting things wrong. Firms typically have a small number of large bases, often in relatively simple locations to operate in. They then have a long tail of offices at lower scale in more complex locations. That exposure caused by their ‘complex tail’ is where risk concentrates.”
In addition to analysing 77 locations, the report identifies key themes shaping the global business landscape and regulatory environment.
There has been a global increase in penalties for non-compliance. Fines are the most common penalty for accounting and tax misdemeanours, imposed for doing business without being tax registered in 93% of jurisdictions in 2021 compared to 84% last year.
Penalties are more stringent in complex jurisdictions. While 45% of jurisdictions globally can suspend an operating licence for doing business without being tax registered, this jumps to 70% in more complex jurisdictions. Since 2020, there has also been an increase in fines for errors in tax reporting and payment.
Rise of responsible governance
There is renewed focus on ensuring companies behave responsibly across all business activities, from employing workers to paying taxes and ensuring transparent structures.
Requirements such as UBO and PSC have remained steady since 2020, as has the percentage of jurisdictions adopting ownership records, demonstrating that transparency processes are consistent year-on-year. The report shows the requirement to provide UBO and/or PSC information to a central register is highest in EMEA at 82% of jurisdictions compared to 43% in APAC.
The mandated involvement of a third party in business operations has increased. In 2020, 17% of jurisdictions required that an entity appoint and register a certified accountant, compared to 27% in 2021.
Impact of Covid-19 on digitalisation, HR and payroll
Covid-19 has accelerated the trends toward process digitalisation and simplification of interactions between businesses and government authorities. In 2021 the automatic notification of all relevant state authorities when a company incorporates rose to 14% of jurisdictions globally, up from 6% in 2020.
Some jurisdictions are temporarily permitting digital signatures, a step which is predicted by our experts to become a long-term change. Conversely, there have been significant delays in jurisdictions such as Colombia and Argentina where in-person appointments are required to process incorporation documentation.
The report highlights how the pandemic has changed how companies manage employees. In 2021, 20% of jurisdictions allowed businesses to dismiss an employee without reason, falling from 29% in 2020. North America’s 14 jurisdictions contributed most to this fall, with 64% permitting such dismissals in 2020 versus 23% in 2021.
Remote working and a globalised workforce bring challenges in hiring and payroll, across and within jurisdictions. In the US, Covid-19 has led to companies hiring remote workers in different states, bringing payroll challenges because income taxes are set and reported at state level.
- Costa Rica
- El Salvador
- The Netherlands
- United States
- British Virgin Islands
- Cayman Islands
- Hong Kong
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Regional GDP in 2020 experienced a -7.1% contraction, the biggest in a century, producing in turn a drop in employment and an increase in the unemployment rate, which reached 10.5% on average that same year, ECLAC and the ILO indicate in a new study released earlier in June.
The Economic Commission for Latin America and the Caribbean (ECLAC) and the International Labour Organization (ILO) launched this Monday, June 14, edition No. 24 of their joint publication, Employment Situation in Latin America and the Caribbean (June 2021) – now available online – in which they analyze the impact of the crisis prompted by COVID-19 on the main labor market indicators in 2020.
According to the document, the biggest effects were seen in the second quarter of last year, when governments implemented confinement measures and others aimed at containing the pandemic. These measures produced a sharp drop in economic activity, employment, and in the number of hours worked. Many workers, mainly informal ones, were unable to continue their productive tasks and had to withdraw from the market, which prevented them from earning income for their households and acting in a countercyclical way, as in previous crises. Furthermore, the suspension of care services and schools gave rise to a heavy workload inside homes, which is unequally distributed in general, overburdening women in particular.
Starting in the third quarter of the year, workers began returning to the labor market and a gradual increase in employment was observed. However, 2020 ended with lower levels of labor participation and employment and higher levels of unemployment than what existed before the pandemic.
“Given the depth of the impact of the crisis in the region’s labor markets in 2020, countries must implement policies that stimulate job creation, particularly among the most vulnerable groups such as young people and women,” Alicia Bárcena, ECLAC’s Executive Secretary, and Vinícius Pinheiro, the ILO’s Regional Director for Latin America and the Caribbean, stated in the publication’s foreword. The two officials also stressed the importance of regulating new forms of hiring through digital platforms.
According to the report, the contraction in employment in 2020 was much more pronounced in sectors such as the hotel business (19.2%), construction (11.7%), trade (10.8%) and transportation (9.2%), which together account for around 40% of regional employment. At the same time, industry (8.6%) and other services (7.5%) also experienced contractions, while in the agricultural sector there were comparatively fewer job losses (2.4%).
Both United Nations organizations emphasize that it is essential to think about strategies that would enable laying the foundations for a return to the job market with better labor conditions for all workers. This entails shoring up the employment recovery in the most highly affected categories and sectors, improving institutional aspects regarding health and job safety, formalizing workers, promoting women’s labor inclusion, and adequately regulating new work modalities.
In the current edition of the Employment Situation in Latin America and the Caribbean, ECLAC and the ILO also examine key aspects of decent work for workers mediated by digital platforms. During the pandemic, these workers constituted a very important source of employment due to the need to reduce personal contact and maintain the dispatch of essential goods. However, evidence suggests that there is a high degree of precariousness in this work modality characterized by instability, long workdays, the absence of socio-labor protection, and the lack of options for dialogue and representation.
The report emphasizes the need to design adequate regulatory frameworks to achieve the goal of establishing and protecting social and labor rights for these new and expanding work modalities.
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The Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), Alicia Bárcena, called today for taking decisive climate action including to decarbonize economies, restore ecosystems and place value on their contribution to the economy and society, during a seminar organized by the Regional Office of the United Nations Environment Programme (UNEP) and the National College of Mexico.
During her presentation on the economic perspective regarding sustainability, the senior United Nations official stressed the urgency of changing the development paradigm and model that have led us to overshoot the planet’s limits, with high economic and social costs.
“A window of opportunity opens today to rethink the development of the infrastructure of life: environment and nature, health, pensions, housing, employment, social protection, and moving towards a care society,” Alicia Bárcena affirmed.
ECLAC’s highest authority was one of the main speakers on the second day of the event held to present the report Making Peace with Nature: A scientific blueprint to tackle the climate, biodiversity and pollution emergencies, produced by UNEP, which was moderated by Julia Carabias, an academic from the Faculty of Sciences of the National Autonomous University of Mexico (UNAM).
Participating in the event with Alicia Bárcena were José Sarukhán, National Coordinator of the National Commission for the Knowledge and Use of Biodiversity (CONABIO); Cristián Samper, President and Chief Executive of the Wildlife Conservation Society; Hesiquio Benítez, Director of International Cooperation and Implementation of CONABIO; María Jesús Iraola, Lead Author and Coordinator of the sixth Global Environment Outlook (GEO-6) for Youth report; and Piedad Martin, UNEP’s Deputy Regional Director in Latin America and the Caribbean.
In her presentation, ECLAC’s Executive Secretary stressed that the region has extraordinary, but highly threatened, biodiversity, with the greatest loss of primary forest, 31 areas with eutrophication of the seas and 19 dead zones, 25% of socio-environmental conflicts globally, and incomplete and fragmented environmental institutions with small budgets and weak regulations.
She added that during the pandemic, the region has experienced greater use of natural resources for subsistence, self-employment, energy and food, among other purposes. It has also recorded an increase in illegality, above all in mining; a weakening of environmental rules and of environmental impact assessments on major development projects; reprimarization; and a reduction in environmental budgets.
Alicia Bárcena specified that COVID-19 broke out in the region in the context of three structural crises: a social crisis that is reflected in the high levels of inequality, with severe social, political and economic consequences; an economic crisis that translates into low growth in production and trade, and the decoupling of the financial system; and an environmental crisis that is manifested in environmental degradation that is irreversible in many cases, with potentially disastrous consequences for the planet.
“These three crises and the policies needed to overcome them mutually interact. Changing the region’s development pattern requires acting on all three in a coordinated way. To achieve this, a minimum growth rate of 4% is needed. This must be accompanied by a very sharp redistribution – that the wealthiest 1% give to the poorest 1% – and that is only attainable through fiscal policies,” Alicia Bárcena explained.
She emphasized that ECLAC proposes a transformative recovery with equality and sustainability. To that end, the Commission has identified eight sectors that promote technical change, generate employment and reduce external constraints and the environmental footprint. These are the transition towards renewable energy, sustainable electromobility in cities, an inclusive digital revolution, the health-care manufacturing industry, the bioeconomy, the care economy, the circular economy, and sustainable tourism.
ECLAC’s Executive Secretary called for bridging the short and long term through expansionary fiscal policy and low interest rates, an increase in tax collection using the criteria of progressivity, the expansion of sources of taxation, and the harnessing of sources of public finance to mobilize private financing, such as bonds and green finance.
On environmental matters, she called for internalizing the information available in countries’ national accounts, introducing environmental taxes or adjusting those already in existence, incorporating sustainability into the evaluation of investment, and measuring development, natural heritage and well-being and not just market transactions, among other measures.
Finally, Alicia Bárcena urged for strengthening regional integration.
“We are a megadiverse region and we have to talk about biodiversity with a single voice, and with a renewed multilateralism,” she concluded.
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Before COVID-19, small merchants globally were gradually beginning to see the power of digital financial services. Transitioning to digital services helps small businesses transact faster, smarter and safer, and opens up credit options and other benefits. It also increases their financial inclusion, which gives them the tools to achieve financial security and grow their businesses. Yet despite these benefits, many micro and small enterprises have been slow to move past their traditional, cash-based operations.
But then the pandemic struck, bringing a new awareness of the drawbacks and dangers of relying on cash. Suddenly, digital access to financial services was more than a “maybe someday” — it was an urgent priority.
In the early months of COVID-19 shutdowns, BancoSol in Bolivia — the first regulated commercial bank in the world dedicated to micro and small entrepreneurs — saw its digital transaction volumes rising. It soon realized that speeding up its digitization efforts would be key to a lasting recovery for Bolivia’s small merchants, by enabling BancoSol to stay in touch with its customers and continue to support them throughout the pandemic. BancoSol serves 1.5 million microentrepreneurs in Bolivia, where the informal small business sector employs more than half the country’s population , the majority of whom still operate in cash. By shifting its many microentrepreneur customers to digital services, the bank could help them weather the pandemic.
BancoSol also realized that these businesses’ long-term resilience would be enhanced if they maintained their usage of digital financial services even after the crisis, so it committed to making this new trend stick. The only question was: How?
An answer to that question came via a first-of-its-kind partnership between Accion and Mastercard, which aims to empower microbusinesses to join and benefit from the digital economy, while boosting their financial inclusion. Over the past year, the partners have been supporting BancoSol to integrate responsible data use by the organization in order to better serve their customer base of microentrepreneurs.
Like many microfinance organizations, BancoSol has years of customer data. But it often didn’t know what to do with all that information. To help the bank derive data-driven insights with the objective of expanding financial inclusion for microbusinesses in Bolivia, 40 Mastercard volunteers in Bogota, Colombia and Arlington, Virginia gathered virtually in a 36-hour “datathon.” The goals of the exercise were to understand how to enable digital adoption by more BancoSol customers, better serve them with more products and retain them over the long term. While planning for the datathon had begun prior to the pandemic, its findings proved to support BancoSol’s efforts to help its customers recover from the crisis and build financial resilience. The datathon developed the methodologies and a proof of concept for how BancoSol and other microfinance institutions can take a more data-driven, customer-centric approach. Below are the three steps it identified for tapping into customer insights to better serve the needs of micro and small business customers.
Using data to improve digital financial services for micro and small businesses
Start by understanding your typical digital customer: Analyzing customer banking patterns can help identify customer segments that are most likely to go digital. In BancoSol’s case, data-driven insights indicated that its typical digital app customer was more likely to be female, and more likely to be younger compared to the average BancoSol client. By better understanding the typical digital customer, BancoSol can prioritize the customer segment that may be most-inclined towards digital adoption.
Equip loan officers with insights to match customers with products that meet their needs: The datathon analysis indicated that app users made nearly twice as many deposits as other users — linking digital adoption with increased usage. As research has shown , greater use of financial products, whether that’s insurance, savings or credit, makes small businesses more resilient to shocks like COVID-19 and also ensures the bank’s own sustainability. Equipped with these kinds of insights, BancoSol was able to streamline the app experience to better match customer expectations and develop clear messaging for loan officers to better communicate key benefits of going digital.
Retain customers by being proactive, not reactive: The datathon also offered insights on customer retention enabling the bank to reduce attrition by proactively engaging customers before they begin to disengage. The data-driven insights also suggested that a digital connection can improve retention in the absence of an in-person connection — a critical benefit in this era of social distancing.
Helping more financial service providers reap the benefits of data
Insights like these can help more inclusive financial service providers use their data to become more customer-centric. “The data was always there,” said Carlos Otalora Martínez, national manager of information technology at BancoSol, referring to the bank’s customer data. “But now we see it in a different way, with more value. This fact led us to delve into organizational changes to better leverage the data, as well as ensure that the data is structured, clean and available for consumption — actions that we are already taking with the impetus provided by the datathon exercise.”
As a next step, Accion plans to develop a playbook outlining the processes and methodologies used during the datathon, so other inclusive financial service providers can use their own internal data to drive their digital transformation. The playbook will include customer segmentation concepts, as well as guidance on using statistical modeling to prioritize customers and personalize their experiences.
For BancoSol, the datathon revealed the potential of data to better support the millions of small merchants who are working hard to stay in business — and who power the Bolivian economy. If other financial inclusion-focused institutions in other markets leverage their data to similar effect, they can help to speed a digital transition that can help reduce the economic damage of the pandemic, and set micro and small enterprises on the path toward greater success after the crisis has ended.
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Quality of human talent, as well as economic stability, were determining factors for Argentine companies to invest more than 155 million dollars in the city.
Bogota is becoming an increasingly important investment destination for Argentine companies. According to figures analyzed by Invest in Bogota for the period 2016-2020, year after year, the number of new investment and expansion projects that arrived in the city from the Latin-American country remained constantly on the rise, except for 2020.
Last year, despite the fact that the pandemic slowed the growth that had been registered in terms of projects, Invest in Bogota accompanied six new investments or expansion of Argentine companies in the Bogota Region, a figure that made it the second country that invested the most in the capital, only below the United States.
One of the most outstanding investment projects that Bogota received during the past year was from Mercadolibre, that launched a technology and innovation Center, the first of its characteristics that the company developed in Colombia, and which, according to the company, will become the engine to promote the development and growth of its operation in the local market and in Latin America.
“In the last five years, Bogota received investments from Argentina for more than 155 million dollars through 31 projects, which generated more than 3,800 direct jobs”, highlights the Executive Director of Invest in Bogota, Juan Gabriel Pérez, who adds that the city, based on its strengths and what learned from the pandemic, has been strengthened and hopes to resume the path of growth in terms of investment this year.
Another of the outstanding examples of Argentine companies that have trusted Bogota and that have made the city fundamental for their international operations is Globant. This IT and software development company already has more than 3,500 employees in Colombia, most of whom are in Bogotá. In addition, the workforce that it has throughout the country is already equivalent to 30% of the total employees that the company has throughout the world.
Analyzing the behavior of Argentine investments in Bogotá during the last five years, 2019 appears as the period in which the largest number of projects arrived (nine in total), with companies in sectors such as software and IT services, corporate services, and textiles, mainly.
In 2021, Invest in Bogota expects to carry out at least two virtual campaigns in which it will promote investment by Argentine companies in sectors such as information technology and services outsourcing, creative industries, life sciences, value-added manufacturing and infrastructure.
For these reasons, Argentine companies invest in Colombia:
Conditions such as economic and political stability, as well as the country’s good investment climate, are usually decisive for international companies, including Argentine ones, which decide to locate in Colombia and in its capital.
“Colombia, without a doubt, and I have been saying this for 20 years in this BPO sector, has a series of benefits and virtues that make the country a very attractive place for investment”, highlights the CEO Apex America Colombia, Álvaro Pinzón, who includes in this list aspects such as labor legislation, the quality and adaptability of human talent and the geographical position of the country.
Apex America, an Argentine service outsourcing company that arrived in the country in August 2019 and that has invested about 10 million dollars, has found in Colombia and Bogota the ideal destination not only for its customer service operations, but also for the development of technological and digital solutions such as virtual agents and conversation analysis tools, both in voice and written, which are used to improve the consumer experience.
“At this moment in which the economic reactivation is advancing, we see in foreign investment a pillar of development, growth and opportunities. Colombia has a wide potential for the arrival and diversification of Argentine investment in our territory with tax incentives, clear rules and legal security, in addition to providing an export and near-shoring platform, thanks to the 17 current trade agreements that allow us to access a market of more than 1,600 million consumers in the world”, said Flavia Santoro, president of ProColombia.
Thanks to the international trade agreements signed by Colombia with other countries, companies located in Bogota have direct access to the Colombian market – of US $ 271 billion – one of the largest and most dynamic in Latin America.
“It is logical to be in Colombia, a country that has given great importance to sectors such as BPO and that allows you to have a different commercial position than other countries in the region can give you. Emphasizing Bogota, this is a city located in the center of the continent, with very good air connectivity, access to international markets thanks to the country’s free trade agreements and ethical and well-trained people, factors that make it easier to think about scalable operations”, adds Martín Ruiz, Legal and Corporate Affairs Manager of Skytel, a BPO company with headquarters in Buenos Aires and which has 400 employees.
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The Green Climate Fund (GCF) approved US$23.9 million in finance for a coastal resilience project along Cuba’s southern coastline.
GCF financing will be provided during the project’s first 8 years and will complement US$20.3 million of dedicated financing that will be provided by the Government of Cuba for the implementation of an ecosystem-based adaptation approach for coastal protection. The 30-year ‘Mi Costa’ project will enhance climate resilience for over 440,000 Cubans and protect vulnerable coastal habitats.
Delivered by the Environment Agency of the Cuban Ministry of Science, Technology and Environment (CITMA) with support from the United Nations Development Programme (UNDP), the innovative project will accelerate the ambition of the Cuban Government’s contribution to the Paris Agreement, enhancing ecosystem-based adaptation approaches for 1,300 kilometers of coastline across 24 municipalities. It will also provide an important basis of support for the implementation of the “State Plan to Manage Climate Change ‘Tarea Vida’ (Life Task).”
The island nation of Cuba is highly vulnerable to the impacts of climate change. And while the Cuban Government has made impressive gains towards sustainable development, coastal erosion, flooding, saline intrusion, drought and sea-level rise, threaten these hard-won economic and social gains.
“Impacts from these climate drivers pose an existential threat to coastal settlements and communities. With funding from the Green Climate Fund and support from UNDP, this new project will provide valuable inputs to the Government’s work under Tarea Vida. Together these efforts will help vulnerable populations adapt to risks brought on by climate change,” said Dr. Odalys Goicochea, Director, General Environment Directorate of CITMA.
Projections show that if no intervention is made by the end of the 21st Century, up to 21 coastal communities will disappear entirely in Cuba, with 98 more severely affected by climate-related threats.
Hurricanes have also extensively damaged infrastructure across the island. Hurricane Matthew crossed the eastern end of Cuba in October 2016, causing over US$97 million in damages (2.6 percent of GDP). Hurricanes Ike (2008) and Sandy (2012) cost US$293 million (12.05 percent of GDP) and US$278 million (9.53 percent of GDP) respectively.
“By taking cost-effective ecosystem-based approaches, this innovative project will protect and restore natural habitats, reefs, seagrasses and mangroves, and help communities to protect their environment from the present and future risks posed by these severe tropical storms and hurricanes, sea-level rise and other climate change related risks. A key aspect of the project will be its focus on working with communities and local authorities to fully understand the value of ecosystems to their own resilience and livelihoods,” said Dr. Maritza García, President of the Environment Agency.
In all, the project will restore over 11,000 hectares of mangroves, 3,000 hectares of swamp forest and 900 hectares of grass swamp. These steps will improve the health of over 9,000 hectares of seagrass beds and approximately 134 kilometers of coral reef crests – essential protections from rising seas and storm surges. The project’s integrated ecosystem-based approach will allow coastal ecosystems to act as a layer of protective barriers to climate change impact seen in the form of coastal erosion and flooding while managing saline intrusion.
“The interventions on ecosystems and with the participation of communities will be reflected in the benefit of more than 1.3 million of inhabitants. “Mi Costa” will be a critical contribution to Cuba’s efforts in achieving the Sustainable Developments Goals set in the 2030 Agenda,” said Ms. Maribel Gutiérrez, the UNDP Cuba Resident Representative.
“Mi Costa” builds on the impacts of a highly successful coastal resilience project financed by the Adaptation Fund and implemented also with the support of UNDP and Environment Agency.
This new project will enhance adaptive capacity for vulnerable coastal communities on Cuba’s southern coast by rehabilitating coastal land and seascapes, and their interlinked ecosystems and hydrology, replanting and restoring mangroves and reefs, and strengthening local climate governance and approaches for communities living on the frontlines of the climate crisis. It will be benefitted by leveraging the support of local centers for environmental education, capacity building centers as well as local and national coordination mechanisms as part of the project’s long-term approach to manage climate change.
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The large-scale and long-lasting effects of coronavirus disease (COVID-19), combined with the possible impact of other hazards and recent events, threaten to damage or destroy vital infrastructure and the life-support systems of large parts of societies and economies. That is why it is urgently necessary to move towards a systemic approach to disaster risk, primarily in the Caribbean, which is highly vulnerable to the effects of climate change, with economies dependent on foreign tourism and heavy debt burdens. So indicates a document released today, which was produced by the Economic Commission for Latin America and the Caribbean (ECLAC) and the United Nations Office for Disaster Risk Reduction (UNDRR).
The report entitled The coronavirus disease (COVID-19) pandemic: an opportunity for a systemic approach to disaster risk for the Caribbean emphasizes that disaster risk is systemic and generates complex interactions between human, social, political and economic systems on the one hand, and natural systems on the other. The COVID-19 pandemic demonstrates the extent to which a single hazard has the potential to trigger a series of cascading effects, impacting the life-support systems of societies and economies worldwide.
“This crisis underscores the need for disaster risk management to be incorporated into national planning, in order to guarantee a comprehensive response to disasters. At the global and regional levels, it is crucial that those of us who work in international organizations seek ways to promote and foster a new development model and a global framework that would enable us to provide a coordinated and adequate response to the next pandemic,” Alicia Bárcena, ECLAC’s Executive Secretary, affirmed.
Meanwhile, Mami Mizutori, Special Representative of the Secretary-General for Disaster Risk Reduction, indicated that “now is the time for multi-stakeholder dialogue and action to understand and manage systemic risk. Progress towards risk-informed sustainable development will only be accelerated by incorporating systems-based approaches into the design of policies and investments across all sectors and regions, and at all levels.”
The document indicates that the duration of COVID-19 increases the likelihood that the risk of disasters originating from other threats occurs simultaneously, or that post-disaster reconstruction be delayed. The effects and impacts of the Eta and Iota hurricanes in Honduras, Guatemala and Nicaragua – combined with those of COVID-19 – are proof of this, as is the delay prompted by the pandemic in reconstruction efforts after the disaster caused by Hurricane Dorian in the Bahamas.
It specifies that the selection of the Caribbean to exemplify the potential effects of systemic disaster risk is no coincidence. “This region was chosen because it is highly vulnerable to hydrometeorological or extreme climate phenomena, it has more than 90% of the population living in coastal areas and its economies are dependent on foreign tourism and are highly indebted,” the report emphasizes, adding that the economic and social effects of COVID-19 have been devastating for the Caribbean and will last for several years.
According to the report, the pandemic has brought to light the cracks in current development models and highlighted their limitations, both globally as well as in the case of Latin America and the Caribbean in particular. Until recently, orthodox economists agreed that maintaining fiscal balance, limiting State intervention in the economy as much as possible, and fostering trade and financial openness would suffice to generate growth and redistribution. There was unfettered confidence that liberalizing markets for goods, services and capital would be the right formula for ensuring prosperity. This ideological framework sustained a system of international governance whose main objective was to minimize national barriers to trade and investment.
“It is now recognized that the State must play a much more important role, regulating and coordinating markets and promoting social protection and equality. Building back better in the Caribbean must be rebuilding with equality and resilience, for instance by implementing active fiscal policies with a gender approach to mitigate the disproportionate effects of the COVID-19 pandemic on women and by forging political compacts at all levels based on feminist principles of redistribution of power, time, work and resources. The aim is to move towards a development model that has equality and environmental sustainability at its center. In the Caribbean, which is threatened by multiple hazards, a systemic approach is required to reduce disaster risk and vulnerabilities,” the document states.
The report concludes that the complexity of these situations demands an approach that transcends traditional and compartmentalized methods of disaster risk reduction. It asserts that, in order for efforts to reduce disaster impact to be effective, it is necessary to abandon the simplistic model that ignores the systemic characteristics of extreme phenomena. This applies to institutional arrangements for risk governance, community organizations, research initiatives and policymaking. Thus, development planning can play a fundamental role, helping to incorporate a systemic approach into risk governance.
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The crisis caused by the COVID-19 pandemic has had a negative impact on employment and labor conditions for women in Latin America and the Caribbean, generating a setback of more than a decade in terms of the progress achieved in labor market participation, according to Special Report COVID-19 No. 9: The economic autonomy of women in a sustainable recovery with equality, released today by the Economic Commission for Latin America and the Caribbean (ECLAC).
According to the report, the rate of job market participation by women was at 46% in 2020, while for men it was 69% (in 2019, these rates were 52% and 73.6%, respectively). It is further estimated that the unemployment rate for women reached 12% in 2020, a percentage that rises to 22.2% if we factor in women’s participation in the labor force in 2019. In 2020, the study explains, there was a mass exodus of women from the labor force, who have not returned to search for employment, having to attend to care demands at home.
The decline in regional gross domestic product (GDP) (-7.7% in 2020) and the impact of the crisis on employment are negatively affecting household income, says the report presented at a press conference by Alicia Bárcena, ECLAC’s Executive Secretary. The United Nations regional organization estimates that around 118 million Latin American women are living in poverty, 23 million more than in 2019.
“The women of the region are a crucial part of the frontline response to the pandemic. Some 73.2% of people employed in the health sector are women, who have had to face extreme working conditions such as long work days, in addition to increased risk of contagion as health personnel. All of this in a regional context in which salary discrimination persists, where salaries for women who work in the health sector are 23.7% less than men’s in the same sector,” pointed out Alicia Bárcena.
The study further underscores that paid domestic work, characterized as highly precarious and impossible to do remotely, has been one of the sectors hit hardest by the crisis. In 2019, before the pandemic, around 13 million people worked in paid domestic labor (91.5% of them women). In total, this sector employed 11.1% of employed women in the region. However, in the second quarter of 2020, the employment levels in paid domestic work fell -24.7% in Brazil; -46.3% in Chile; -44.4% in Colombia; -45.5% in Costa Rica; -33.2% in Mexico; and -15.5% in Paraguay.
“Latin America and the Caribbean must invest in the care economy and recognize it as a dynamizing sector in the recovery, with multiplying effects on wellbeing, the redistribution of time and income, labor participation, growth and tax revenue,” asserted the ECLAC senior authority.
In this context, Bárcena encouraged governments to “prioritize health workers in their vaccination strategies – including persons who provide associated services like cleaning, transport and care – as well as those working in educations systems and domestic health, most of them women, who are a fundamental pillar for the care and sustainability of life.”
According to the ECLAC report, 56.9% of women in Latin America and 54.3% in the Caribbean are employed in sectors where the pandemic is expected to have a higher negative impact in terms of employment and income.
According to the study, the closing of borders, restrictions on mobility, the fall in international trade and paralysis of internal production have impacted the female workers and businesswomen associated with sectors like commerce, tourism and manufacturing. For instance, the tourism sector, where 61.5% of positions are occupied by women, suffered a significant contraction that mainly affected the countries of the Caribbean, where one in 10 working women are employed in this sector.
During the presentation of the report, ECLAC’s Executive Secretary highlighted the urgent need to reinforce employment policies and ensure that women participate in the dynamizing sectors of the economy in decent working conditions. She likewise emphasized the importance of combining measures aimed at employment support and reactivation with measures of immediate attention to losses in income.
In this context it is “urgent that we promote inclusive processes of digital transformation that guarantee women access to technologies, strengthen their abilities and remove the socioeconomic barriers they face in order to strengthen their economic autonomy,” underlined Alicia Bárcena, while at the same time stressing the low fiscal effort posed by the basic digital basket proposed by ECLAC (1% of regional GDP) and the enormous impact connecting one of every four women in Latin America and the Caribbean would have.
“It is essential that we advance toward a new fiscal compact that promotes gender equality and prevents the deepening of poverty levels among women, the burden of non-paid work and the reduction of financing for gender policies,” she warned.
“In addition to having a gender perspective that cuts across all recovery policies, affirmative actions are required in the areas of fiscal, labor, productive, economic and social policies to protect the rights of women achieved in the past decade, prevent setbacks and take on gender inequalities in the short, medium and long terms,” concluded Bárcena.