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- The new energy geopolitics is reshaping employment, investment and development prospects in Latin America and the Caribbean. The challenge will be to turn the opportunities created by the energy transition into more and better jobs through strong institutions, social protection and social dialogue.
By Fabio Bertranou
The escalation of tensions in the Middle East since late February 2026 is not only a regional crisis. It also constitutes a global energy shock with direct consequences for employment, labour incomes and working conditions for millions of people in Latin America and the Caribbean.
For many working families, the impact may be felt quickly through rising costs of food, transport and other essential goods. But the consequences go beyond the short term. The new energy geopolitics may also accelerate economic transformations that will reshape production, investment and job creation across the region in the years ahead.
A shock amid persistent vulnerabilities
The rise in energy prices is not occurring in a vacuum. Latin America and the Caribbean enters this new phase facing structural challenges that continue to limit the resilience of its labour markets. Nearly half of all employed people work in informal jobs, large segments of the population lack adequate social protection coverage, and many countries have limited fiscal space to respond to new economic pressures.
In this context, higher energy prices act as a regressive tax. They increase production and transport costs, fuel inflationary pressures and reduce households’ purchasing power, particularly affecting those with lower incomes.
The situation, however, is not uniform across the region. Some net oil-exporting countries may temporarily benefit from higher revenues linked to rising prices. By contrast, many net energy-importing countries, particularly in Central America and the Caribbean, face greater pressure on their external accounts and less room to implement economic support measures.
Critical minerals: An opportunity that requires active policies
Paradoxically, more expensive oil may also accelerate the global transition towards renewable energy and low-carbon technologies. That transition requires critical minerals such as lithium, copper and nickel, resources that Latin America possesses in abundance.
This situation creates a strategic opportunity to attract investment, diversify productive structures and generate employment. However, the region’s historical experience shows that the mere availability of natural resources does not guarantee inclusive development or decent work.
Without appropriate industrial policies, robust regulatory frameworks, skills development systems and effective mechanisms to distribute benefits, the boom in critical minerals could reproduce familiar patterns: concentration in extractive activities, limited creation of quality jobs and continued dependence on international commodity price cycles.
The key question is not only how much these sectors will grow, but also what kind of jobs they will create and who will have access to them.
A just transition as a strategic challenge
The energy transition has the potential to become an important source of new employment opportunities. Yet ensuring that these benefits reach more people requires deliberate policies to support processes of productive transformation.
The concept of a just transition is therefore fundamental. The shift towards more sustainable economies must be accompanied by investments in skills development, stronger social protection systems, support for workers affected by structural changes and effective social dialogue mechanisms.
The quality of institutions will be decisive in determining whether the energy transition helps reduce inequalities rather than deepen them.
Technology, fragmentation and institutions
At the same time, artificial intelligence and automation continue to transform labour markets across the region. However, growing fragmentation in the international environment may make it more difficult to access investment, infrastructure and technology transfer precisely when these are most needed to boost productivity and create new employment opportunities.
Faced with these trends, outcomes are not predetermined. Countries that strengthen labour market institutions, expand social protection, promote formalization and consolidate spaces for social dialogue will be better equipped to turn risks into opportunities for inclusive productive development.
A regional agenda to respond to transformation
These reflections are consistent with the priorities established by the region’s tripartite constituents in the Punta Cana Declaration, adopted during the ILO’s 20th American Regional Meeting in 2025.
The Declaration reaffirms the importance of strengthening democracy, social dialogue, labour institutions and social justice to address the profound transformations affecting the world of work. In a context marked by geopolitical tensions, the energy transition and technological acceleration, these principles are becoming even more relevant.
The question is not whether the new energy geopolitics will transform the world of work in Latin America and the Caribbean. That transformation is already under way.
The real question is whether institutions, public policies and social dialogue will be capable of steering this process towards a just transition that creates more and better opportunities for working people.
- This article is based on Bertranou, F. (2026). “The World of Work in Latin America and the Caribbean in the Context of the New Energy Geopolitics: Five Structural Trends”, Revista de Economía Política de Buenos Aires, Vol. 32, No. 20, pp. 9–21.