Seventy years of productivity: the gap that will not close
Labour productivity in the region grew 2.6% a year between 1951 and 1980. Over the last six years it grew 0.3%. This is the underlying constraint behind low growth.
Executive summary
Labour productivity in Latin America grew 2.6% a year between 1951 and 1980. Between 2019 and 2025 it grew 0.3%. In between there were two periods of contraction and one of near-complete stagnation.
Against the OECD, the region went from 46% of average productivity in 1990 to 37% in 2023. Against the United States, from 36% to 27%. The gap did not stabilize: it widened.
Informality explains much of the phenomenon. It fell from 54.5% to 48.0% of employment between 1990 and 2025, but almost all of that progress happened before 2013 and the process has since stalled.
The firm-size cut is the most severe. A small firm's productivity equals 23% of a large firm's, and a micro-enterprise's 6%: a difference seven times wider than the European one.
Context
The region's low growth is usually explained by the external cycle: commodity prices, international interest rates, demand from trading partners. The long productivity series suggests something else.
Periods of greater dynamism always coincided with more investment and more productivity, and periods of slowdown with less of both. The constraint is structural and survives every favourable cycle intact.
Figure 1 · Labour productivity by firm size
% of a large firm's productivityTable 1 · Latin American labour productivity by period
average annual change, in percentages| Period | Annual change | Context |
|---|---|---|
| 1951-1980 | +2.6% | Industrialization and infrastructure investment |
| 1981-1990 | −1.7% | Debt crisis and macroeconomic adjustment |
| 1991-2002 | +0.1% | Growth without productive transformation |
| 2003-2013 | +1.6% | Commodity price boom |
| 2014-2018 | −0.9% | Investment slowdown |
| 2019-2025 | +0.3% | Limited recovery, no structural change |
Business implications
Measure output per hour, not total output. It is the only indicator that separates growing by volume from growing by efficiency, and the one that anticipates what happens when the cycle turns.
If your supply chain is made of micro-enterprises, that gap is yours. The productivity of the smallest link caps the cycle time and the quality of the whole chain, not only its own.
Prioritize investment over hiring in already saturated functions. The seventy-year pattern is clear: where there was no capital accumulation, there were no sustained productivity gains.
Methodology & data
Labour productivity and informality series: chapter II of ECLAC's Economic Survey of Latin America and the Caribbean 2026, built on official figures from the national statistical offices of fifteen countries. International comparison: Latin American Economic Outlook 2025, by the OECD, CAF and the European Union.
The firm-size data have 2016 as their reference year. The ILO publishes informality close to 47% for 2025 across twelve countries; the difference from ECLAC's 48.0% is explained by country coverage.
References
ECLAC (2026). Economic Survey of Latin America and the Caribbean, 2026: growth and productivity in a context of high informality, chapter II. · OECD, CAF and European Union (2025). Latin American Economic Outlook 2025. · ECLAC (2019). MSMEs in Latin America: fragile performance and new challenges for development policies (LC/TS.2019/20). · ILO (11 December 2025). Labour Overview 2025 for Latin America and the Caribbean.