DEVELOPMENT: Social Problems Perist in Peru

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Analysis - Abraham Lama

LIMA, Apr 20 1998 (IPS) - The social ghosts of unemployment and extreme poverty persist in Peru, despite eight years of enforced economic structural adjustment and optimistic predictions of increased economic growth.

More than one-half of all Peruvians of working age presently are unemployed or under-employed and, to make the labour situation worse, 300,000 youths enter the job market for the first time every year.

The National Institute of Statistics and Information (INEI) reports that 4.5 million people – about 20 percent of Peru’s population of 21 million – live in conditions of extreme poverty and lack sufficient income to cover their daily nutritional requirements.

Politicians, especially those in the opposition, are focused on civil rights issues and fighting attempts by President Alberto Fujimori to change the Constitution to enable him to run for a third consecutive term in office. But in the popular sectors, the predominant problem remains unemployment.

“The political parties have not picked up on the existing emotional climate in the poorest sectors in terms of unemployment, or at least they do not act as if they understand it,” says left- wing sociologist Manuel Benza, a former congressman and now a small businessman.

In 1990, the Fujimori government initiated structural reforms that reduced the role of the state, privatized public enterprises, ended subsidies, and liberalized labor laws. In doing so, he managed to bring down hyper-inflation, stabilize the economy and achieve an average GDP growth rate of more than four percent over the past five years.

But thjere hsave been no precise figures released of the number of people dismissed who were public employees, or who worked in public enterprises. Labour circles estimate at least 300,000 former employees were forced to seek new employment.

In order to impose his program, Fujimori took advantage of the economic chaos and hyperinflation that reigned in Peru when he assumed the presidency, as well as the general pessimism of the population with the civil war, which the Maoist guerrilla movement, the Shining Path, seemed poised to win.

Despite the harshness of adjustment measures, Fujimori won backing for his program – from the private sector which benefited from the measures to the poorest, who were fascinated by the promise of greater job opportunities in the context of peace and economic growth.

The middle class, which lacked access to the food assistance programs set up by the government the first year of the adjustment, perhaps has been hit the hardest by the process, or at least it is the sector protestiong the loudest.

Official sources affirm that 72 percent of the employees of state enterprises who were fired, received economic incentives to leave their posts of between one year and fifteen months salary, which many used to start up their own businesses.

This enabled official statistics to reflect what appeared to be a rise in the percentage of the population with adequate employment, based on “self-employment” and family-owned microenterprises. But hopes that these individual or family efforts could succeed diminished rapidly, and the majority of those who benefited from the economic incentives have exhausted their capital and been forced to close their small businesses.

“Taxis, which roam around Lima and are in far greater supply than demand calls for and that compete ferociously for passengers, are the final salvation of the self-employed,” says sociologist Imelda Vega, of the Catholic University of Lima.

Social analyst Fernando Guerra adds that “Five years ago, the guerrillas were defeated. Six years ago, inflation was brought down and the economy was stabilized. However, the population now is moving their feet impatiently because they are not seeing the benefits they were promised.”

“The country has jumped from pessimism to protest and has put the social agenda on the top of its list. Peruvians are tired of the neoliberal discourse,” said commentator Juan de la Puente in the Lima daily, La Republica. “The expectations and the initial attraction of the reforms have died out. In the first years, the economic model won the heart of the people, who were tired of the disastrous populism of the previous government and of the social conflict brought by subversion, and they opted for a promise that seemed like the only solution.”

A survey by the independent polling firm, Datum, revealed that 61.4 percent of Peruvians attribute unemployment to Fujimori’s neoliberal program, which they say should be altered. Fifty-two percent of those surveyed said that the free market makes it difficult to generate new jobs, while 30.1 percent said it facilitates job creation.

There has been an apparent reversal away from neoliberal ideas and toward previous collective beliefs. The survey showed that 65.7 percent of Peruvians believe that creating jobs is the responsibility of the government, while only 29.3 percent believe that the business sector should assume this task.