Working through the Crisis

Working through the Crisis documents how the Great Recession affected employment outcomes in developing
countries and how those countries’ governments responded. The chapters comprise a unique compilation of
data and analysis from different sources, including an inventory of policies implemented during the crisis,
among countries in Latin America, Eastern Europe, Asia, and Africa.

The effects of the crisis depended on the size of the shock, the channels through which it was manifested,
the structure of institutions in the country―especially labor institutions―and the specific policy responses
undertaken. Although these factors resulted in differing outcomes among the countries studied, common
patterns emerge. In terms of impacts, overall adjustments involved reductions in earnings growth rather than in
employment growth, although the quality of employment was also affected. Youth were doubly affected, being
more likely to experience unemployment and reduced wages. Men seemed to have been more severely
affected than women. In most countries where data are available, there were no major differences between
skilled and unskilled workers or between those living in urban and rural areas.
In terms of policy responses, this crisis was characterized by a high prevalence of active interventions in the labor
market and the expansion of income protection systems, as well as countercyclical stimulus measures. When
timed well and sufficiently large, these stimulus measures were effective in reducing adverse employment
effects.

Specific sectoral stimulus policies also had beneficial effects when they were well targeted. However, social
protection and labor market policy responses were often ad hoc, and not in line with the types of adjustments
workers experienced. As a result, these policies and programs were typically biased toward formal sector workers
and did not necessarily reach those who needed them the most. In retrospect, there is a sense that developing
countries were not well prepared to deal with the effects of the Great Recession, and that the further development
of social protection systems is crucial to better protect workers and their families from the next crisis.