Technological progress holds the potential to significantly disrupt labor markets while also creating new job opportunities in Central America and the Dominican Republic. Advances in agricultural and industrial machinery, computers, and artificial intelligence (AI) have enabled machines to undertake many tasks previously performed by humans, posing a risk to jobs.
However, technological progress and automation can generate employment. In competitive environments, automation can create jobs as price declines linked to productivity improvements drive higher demand. Information and communication technology (ICT) can facilitate new working arrangements beneficial for workers and firms.
Despite the existence of technology capable of automating many tasks and enabling remote and platform work, the transition in Central American countries and the Dominican Republic (CADR) towards the future of work has been partial. Employment is evolving towards nonroutine tasks associated with the future of work in CADR, but routine tasks still dominate. Remote work surged during the pandemic but now seems to be diminishing. Platform work is present but constitutes a small share of total jobs in some countries. While many workers in the region appear at risk of losing their jobs to machines, factors related to employment structure, skills, technology use, and globalization mean that this risk has not materialized significantly.
Policymakers face the challenge of balancing policies that enable technological progress with those that mitigate any ensuing disruptions. From a labor market perspective, two priorities emerge: developing skills complementary to new technologies and adapting social protection and labor market policies to new working arrangements as well as disruptions associated with technological progress.
Less advanced countries in the region need to focus on building foundational structures and piloting initiatives for skills building and social protection. More advanced countries should aim to improve existing systems' sophistication.
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