LABOUR-LATAM: 2003 a Grim Year, But 2004 Won’t Be Much Better

By IPS Correspondents Reprint | | Print |

José Eduardo Mora

SAN JOSE, Jan 7 2004 (IPS) - With 19 million unemployed, a decline in the quality of jobs, an increase in informal sector work, a drop in real wages and a reduction in productivity levels, 2003 was a dismal year for labour in Latin America.

However, the International Labour Organisation’s (ILO) annual regional report, released Wednesday, does project a slight recovery in the number of jobs in 2004, although it warns that they will largely be low-quality and underpaid.

The grim summary of the results for 2003 underscores ”our concern over the performance of the development model applied since the early 1990s, which tends to ignore the social effects of economic policies,” said ILO regional director for the Americas Agustín Muñoz in a videoconference broadcast from Santiago.

According to the report, the urban unemployment rate stood at 11 percent in the first three quarters of 2003, slightly below the 11.2 percent of the same portion of 2002, while total unemployment dropped from 10.8 to 10.7 percent.

Comparing that period in 2002 and 2003, urban unemployment increased from 12 to 12.4 percent in Brazil, 6.3 to 6.7 percent in Ecuador, 2.8 to 3.2 percent in Mexico, 16.5 to 17.4 percent in Uruguay, and 15.7 to 18.9 percent in Venezuela, says the report, which does not include statistics from the last quarter of 2003.

However, urban unemployment did drop in some countries, by 5.9 percent in Argentina, 0.4 percent in Chile, 0.5 percent in Colombia, 0.1 percent in Costa Rica, and 0.3 percent in Panama and Peru.

The report on the state of labour in Latin America and the Caribbean in 2003 says unemployment grew among youth in Argentina, Brazil, Mexico, Chile, Uruguay and Venezuela, while in the region, women and youth remained the sectors most vulnerable to joblessness.

Women’s participation in the job market increased in Argentina, Bolivia, Honduras, Nicaragua and Paraguay, but in conditions marked by a lack of social benefits and protection.

Forty percent of Latin American women work in the informal sector of the economy, where inequality and gender discrimination are much greater than in jobs that provide a minimum level of stability, reports the ILO.

The average productivity of labour in Latin America fell 0.5 percent in the first nine months of 2003 compared to the same period in 2002, reflecting a deterioration in the quality of jobs – the result of the expansion of the informal economy, which is characterised by low productivity, says the ILO.

”It is clear that there will be no successful strategies for fighting poverty, which affects 220 million Latin Americans, if they are not based on the creation of better quality jobs and more and better companies, capable of generating those jobs,” said Muñoz.

The ILO underlined its concern about the need for ”decent jobs” for millions of Latin Americans.

Muñoz pointed out that in the Buenos Aires Consensus, a document outlining social objectives and integration goals that was signed by Argentina and Brazil in October 2003, and in the final declaration signed at the Ibero-American Summit in Santa Cruz last November, the need for decent jobs was emphasised by presidents Luiz Inácio Lula da Silva of Brazil and Néstor Kirchner of Argentina.

”I don’t agree with those who say that we need to generate just any kind of jobs now, and that we can worry later about whether or not the jobs are decent,” he argued. ”By that logic, which has been followed in the past few decades, labour conditions will just keep getting worse.”

The ILO is opposed to the current model of economic globalisation, which it says is ”neither fair nor equitable” because ”its benefits are poorly distributed.”

Muñoz argued for ”a joint approach” instead of the ”fragmentation” of the past, in which the International Monetary Fund focused on financial questions, the World Bank on development, the World Trade Organisation on trade, and the ILO on social and labour issues.

ILO labour expert Miguel del Cid told IPS that the size of the informal economy in Latin America is alarming: One of every three workers in the region are active in the informal sector.

”In the case of Central America, for example, out of an economically active population of 14 million, only 800,000 are classified as unemployed, but the majority of workers have very precarious jobs,” he said.

One of the sectors with the worst labour conditions is agriculture, where labour is extremely underpaid, he added.

ILO director for Central America and the Caribbean Gerardina González said the agency was not prepared to predict whether a free trade deal that the United States agreed in December with El Salvador, Guatemala, Honduras and Nicaragua would lead to a strengthening or a worsening of labour conditions in those Central American nations.

Costa Rica is still negotiating its participation in the agreement, which is to be ratified this year by the legislatures of the signatory countries.

”We cannot say that the North American Free Trade Agreement (NAFTA), which links the United States and Mexico (as well as Canada), has led to a deterioration of the labour situation in Mexico,” González commented to IPS.

”There have been a number of factors that have affected the Mexican economy, including the ‘tequila effect’ (the 1995 financial crisis) that led to the loss of one million jobs in one month in that country,” she underlined.

Last year, the buying power of the minimum monthly wage dropped 1.6 percent in Latin America, due to the fact that adjustments of the minimum wage were tiny, and because of inflation, which averaged 10.2 percent in the region.

Real wages fell 15.9 percent in Venezuela, 15 percent in Uruguay, 3.9 percent in Ecuador, 1.9 percent in Peru, 0.8 percent in Bolivia, and 0.3 percent in Mexico.

However, they increased one percent in Brazil, 0.9 percent in Chile, and 0.5 percent in Costa Rica.

Although there were some improvements on the labour front in 2003 compared to 2002, ”as a result of the incipient economic recovery (in the region), that progress did not significantly revert the 2002 drop in employment,” says the report.