Caribbean & Central America - November 2020

Honduras has seen a significant rise in underemployment in the past decade and the phenomenon is a push factor for migration, according to a new study.

In 2009 the proportion of the economically active population in Honduras reporting no employment-related problems stood at 59.8%, but by 2019 this had dropped to 39.4%, according to a report released on 7 October by investigators  from the Universidad Nacional Autónoma de Honduras (Unah). In the public sector, 88.8% of workers reported no employment-related problems in 2009, falling to 57.7% in 2019, compared to the private sector (47.0% and 28.1% respectively) and self-employed people (59.4% and 35.2%).

The investigators, who are from the university's demographic observatory (ODU) and masters programme in demography, say underemployment is characterised by occasional or seasonal work with insufficient hours or shift work with low salaries and poor conditions. The International Labour Organization defines underemployment as “underutilisation of the productive capacity of the employed population, including those which arise from a deficient national or local economic system”. 

The ODU report’s findings show that the functioning of the Honduran labour market has worsened, with the study pointing the finger at some counterproductive job creation measures. The introduction of hourly and temporary contracts has helped to create jobs but have contributed to underemployment. It adds that “In general terms the labour market in Honduras lost capacity to generate formal jobs, which forces people to take short-term positions in other economic sectors such as the informal economy, or work in businesses in the formal sector but for fewer hours”. 

Unemployment rates have fallen from 6.7% in 2016 to 5.2% in 2020, according to the World Bank, but the ODU researchers say this does not tell the full story. Official policy has focused on palliative measures such as  the ‘With work you live better’, ‘Work by the hour’ and the ‘10k grant’ programmes, which do not address structural issues in the labour market, the ODU says. People may technically have a job, but they are not necessarily earning enough to pay for basic necessities. This is one reason why Hondurans migrate to the US, according to researcher Alejandro Melgar, who was involved in producing the report, as the domestic labour market does not generate opportunities to pay for basic necessities.

To improve the situation the Honduran government and private sector should work to diversify economic activities, moving away from the primary sector towards industry and technology, according to the paper. These industries would then be able to make more use of trained workers, reducing underemployment. One way to do this would be to encourage partnerships between businesses and educational institutions, so companies know they can employ people with the right skills. 

As for the government, back in January then labour minister, Carlos Madero, acknowledged the issue of underemployment, calling it the “most dramatic problem facing Honduras,” and blaming employers for not paying agreed salaries. On 22 October Madero’s successor, Olvin Villalobos Velásquez, told reporters that underemployment figures are set to worsen due to the effects of the coronavirus (Covid-19) pandemic. Villalobos pointed to cash transfer programme ‘Bono Único’, paid to self-employed workers affected by the crisis (see sidebar), as one way in which the government is trying to help. However, as the ODU said, these kinds of payments do nothing to deal with structural issues.

• Bono Único

On 14 October the Honduran government, with support of the United Nations Development Programme (UNDP), launched ‘Bono Único’ (‘single bonus’), a social protection programme aimed at supporting the most vulnerable population affected by Covid-19 in Honduras. The Bono Único is a one-time subsidy of HL2,000 (US$82) delivered through an electronic voucher that can be exchanged for food, medicine and /or medical supplies. The government says that up to 260,000 people in the country will receive the bonus in the next three months.