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Although job recovery in the private sector in El Salvador could be more accelerated, the country’s National Association of Private Enterprise (ANEP) reports that acceptable biosecurity practices have enabled progress to take root.
Since last July, and with the economic revival that began during the following month of August, the private sector in El Salvador has been achieving a monthly job recovery rate of approximately 5,000 positions. This information is according to Waldo Jiménez. He holds the position of economic manager of the National Association of Private Enterprise (ANEP).
According to data from ANEP, as a result of the confinement and the cessation of production that COVID-19 has caused, El Salvador lost just over 70,000 jobs. Of this total, 30,000 have already been recovered.
“Some companies have regained their ability to reinstate jobs, and some 5,000 positions have been recovered per month. This development is good news for everyone, both for businesses and families that have lived with great uncertainty in recent months,” he said.
Job recovery in the private sector in El Salvador is even
According to Jiménez, until the present, the jobs that have been recovered dominate no one economic sector in particular.
“This is good news because it indicates that all the elements of the economy are progressing at a very similar rate,” he said.
The private sector in El Salvador expects that the average trend of 5,000 recovered jobs will continue, even though the beginning months of 2021 may remain somewhat slower due to the country’s pending elections.
“An election event always interferes with the progress of economic activity. It always results in the postponement of investment decisions that companies are considering. As regard entrepreneurs, for them, there is the uncertainty that is associated with Legislative Assembly elections. Despite this circumstance, officials are optimistic that the recovery will accelerate during the second quarter,” he said.
As of June of 2020, according to figures from the Salvadoran Institute of Social Security (ISSS), 71,912 private-sector jobs had been lost. As of July, the figure fell to 68,422, resulting in a gradual recovery.
Meanwhile, Pension Fund Managers (AFPs) figures summarize the number of people that are trading and, therefore, are active at work. This also reflects a slow recovery, as at least 20,000 quotes are still missing from those actively contributed in January.
Jiménez says that although the coronavirus is mostly dormant in the country, companies in El Salvador have continued to take preventive measures and have improved their processes to avoid a massive outbreak in the formal sector. These measures taken by the private sector in El Salvador have also prompted job recovery.
The industrial sector
Eduardo Cader, president of the Salvadoran Association of Industrialists (ASI), has reported that, although Salvadoran industry has been hit hard by the pandemic’s effects, it is gradually showing signs of recovery.
“We know it will be a slow process to gain the ground lost during the cessation of activities, mainly in terms of jobs, growth, and exports,” he said.
He further emphasized that to achieve a robust recovery and boost economic demand, it is vital to promote the consumption of domestically produced goods. The ASI has been supporting efforts to achieve this objective through an internal campaign.
“However, apart from the improvements made related to the health crisis in El Salvador, we are still facing an uncertain future with our connection to the global supply chain because uncertainty on a worldwide level persists,” Cader said.
In the wake of the closure of the world’s economies, there was a breakdown of production and supply chains. This, of course, had a profound effect on the local industry and the private sector in El Salvador.
“Liquidity is also needed to fully meet all obligations considering that for several months there was no revenue stream for businesses. This situation and the export of goods is gradually recovering,” Cader said.
In the industrial sector, some 9,964 jobs were lost in November 2020 compared to November 2019. The most affected sectors were textiles, clothing, and food. Overall, the private sector in El Salvador had 46,473 positions lost due to the pandemic as of November, according to ASI data.
When comparing data from November 2019 to 2020, there was a loss of 3,082 jobs, while in the beverage sector the drop was 259 jobs. The paper, cardboard, and graphic arts sectors suffered the loss of 1,635 jobs.
The industry sector in El Salvador generated 179,079 jobs last year; 21% of this total consisted of positions created in the country’s formal sector.
According to data from the Francisco Gavidia University (UFG), the impact of the pandemic recorded a total number of 60,461 jobs lost between January and September. Such a level of economic contraction had not been experienced for the past 66 years. This is according to ISSS data.
If the number of formal jobs in the private sector in El Salvador registered by the ISSS is added to the informal sector, which generates more than 60% of the jobs, total jobs lost would have been around 180,000 to 190,000 by the end of 2020.
The data also indicate that private-sector wages fell by 7.4% in 9 months of 2020, while in the public sector, they increased by 30.0%.
Among the recommendations of the UFG are that reversing this situation will require supporting entrepreneurs and private sector businesses so that they do not lose their productive capabilities.
The International Monetary Fund (IMF) recently recommended in its periodic update that in 2021 Latin American and Caribbean country governments should continue to support the families and businesses most affected by the pandemic within the means determined by their fiscal and monetary capacity.
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