How is COVID-19 affecting employment in Bolivia?

Since March 22^nd, Bolivia has been under a rigid quarantine in the wake of the COVID-19 pandemic. At first, voices underestimated the adverse economic effects that this health crisis would bring. However, as data from the last few months become available, the financial situation looks discouraging. At the same time, there is still little prospect of returning to normal in the next months.

In this scenario, a key question has revolved around the impacts of COVID-19 on employment in the country. The Continuous Employment Survey, published by the National Institute of Statistics until April, provides some guidance on urban areas to answer this question, analysed in this article. On the one hand, the labour force –as a percentage of the working-age population– decreased from 67.8% in February to 59.9% in April. It means that several people stopped working or looking for a job (if they were unemployed), thus increasing the ranks of inactive economic population. Still, others chose not to enter the labour market due to the adverse social, economic and health scenario generated by the pandemic. The situation characterises a financial crisis: jobs are destroyed, very few new ones are created, and the search for work is discouraged.

On the other hand, urban unemployment rates rose from 5.2% in February to 7.3% in April. Nevertheless, the indicator is reflecting only partially the shortage of jobs’ problem, mainly because it is measured in terms of the number of people. But quarantine has led to a drastic reduction in working hours per week. Data shows that in February, urban workers spent, on average, 39.6 hours per week on their work activities, but, in April, those hours dropped to 31.1. The increase in the underemployment rate corroborates this appreciation. That rate describes the percentage of workers who spent less than 40 hours a week engaged in their occupation and who wanted to work and were available to do so. This group increased from 4.6% to 10.7% between February and April.

Nonetheless, it is important to mention that workers and employers sought alternatives so that the perverse effects of COVID-19 could be, to some extent, cushioned. A first solution was to switch labour activities towards those less affected. A clear example has been food trade and the sale of biosecurity products. There has been a visible proliferation of street vendors in these areas. A second solution was to increase teleworking, meaning remote work, carried out using information and communication technologies. Many people were able to continue their activities and work meetings online, via computers, cell phones and others.

Although the official public data ends in April, the situation in May did not change much. Strict quarantine measures were maintained during that month as well. As of June, this scenario could improve. However, recovery will not be immediate. Restrictions that limit production, consumption and job creation remain.

To understand the situation better, imagine this scenario: somebody was severely beaten up. But even if this person received immediate medical care, his body will still need some time to heal. Similarly, the country’s economic system has collapsed. It will take some time to return to normal and to see an improvement in the employment condition.

In this situation, it is worth mentioning that it is not only the employment field that has deteriorated but also that of labour income. For this reason, families have reduced their consumption. This behaviour affects production and sales in a vicious circle. Also, the government is attracting fewer and fewer financial resources, either because of the drop in tax revenues associated with the pandemic or because of the lower value of natural gas sales (the primary source of public income). This second wave of impacts, derived from spending limitations, will undoubtedly delay the economy’s recovery.  Consequently, the employment situation’s improvement will take longer.

These reflections show the complexity of the effects of COVID-19 on employment in Bolivia. They also highlight the need to analyse this issue in a more in-depth and broad-sighted manner.