SUNS 4352 Wednesday 13 January 1999

Latin America: Unemployment, the most pressing concern



Lima, Jan (IPS/Zoraida Portillo) -- How to tackle unemployment is the pressing question worrying government officials and citizens in Latin America, and poverty alleviation in the region in the new millennium depends largely on the right answer.

Unfortunately, there appears to be no magic formula - and the situation is getting worse, say financial observers.

According to the World Bank, since 1990, the creation of new jobs has averaged 2.8 percent, half a percentage point below the growth seen in the 1980s, while unemployment rose from six percent in the 1980s to eight percent today.

The International Labour Organisation (ILO) has estimated that at end of 1998, there was an average unemployment rate of 8.4 percent, 1.2 percent up from that of 1997, and similar to the unemployment rates seen in the region in 1985. But the situation could become truly dramatic in 1999, if forecasts of 9.5 percent unemployment hold true.

The ILO warned that such estimates were based on a "not overly pessimistic" scenario. Nevertheless, the estimate is higher than the unemployment rates seen at the peak of last decade's foreign debt crisis.

The rise in unemployment is the chief concern of the average Latin American. Nineteen percent of respondents in an ILO survey carried out last year in 17 countries in the region considered unemployment the most pressing problem.

Concern ran even higher for unemployment than for other problems in the region such as poverty, drug use and narco-trafficking, corruption and labour instability. In the same poll, known as the "Latino-barometro", a whopping 65% said they were "worried" or "very worried" about losing
their jobs.

Leading the rise in unemployment in the region this year were Brazil, Chile, Colombia and Peru. Unemployment really soared in Brazil, to an 8.5% unemployment rate in the first nine months of 1998, compared to 5.9% in the same period of 1997.

Women and the young bear the brunt of joblessness. ILO regional representative Victor Tockman said unemployment among those two segments of the population continued to surpass the national average in every country, with youths suffering even higher levels of unemployment than women.

Peru is a case in point. While the national average stands at eight percent, 11.2 percent of women are unemployed and 13.9 percent of the young, in spite of the existence of the Youth Training Programme which absorbs a significant part of the youngest sector of the labour force.

"I don't understand this illogicality: no one gives me work because I don't have experience, and I don't know how I'm going to acquire experience if no one gives me a chance to show what I'm worth," says Jose Moron, 24. A graduate in business administration, Moron got tired of "begging" for a job in endless lines and living in anguish, hoping to be called. So now he scrapes by, renting a car for 20 dollars a day which he uses as an informal taxi.
Statistically, Moron swells the ranks of those who gave up on looking for a job - nearly four percent of the unemployed in this country of 24 million.
At the other extreme is Horacio Gutierrez, 48, a skilled metallurgical worker. "When the company closed down, overburdened by debt and overwhelmed by competition from abroad, I thought I would find work quickly because of my experience and the fact that I'm a skilled worker. How wrong I was! In this country, experience is not valued, and those over 40 are considered too old, and no one wants us," he says.

He works in whatever he is offered, because he has three children still in school to support. He has no problem doing the housework, because his wife is a "micro-businesswoman" - a euphemism behind which a precarious job frequently lurks. "She is self-employed, selling trinkets one day, sewing clothes the next, she also knows how to make ceramic crafts," he says.

Both Jose and Horacio's wife are good examples of workers in the informal economy, a sector that experts see as a palliative that keeps unemployment levels from skyrocketing to catastrophic levels. In the past year, the informal sector grew 4.5 percent, while the number of jobs in the formal economy shrunk in some branches, or simply failed to grow.

Eduardo Lora, with the Inter-American Development Bank (IDB), says the informal sector ranges from domestics through the self-employed to those who work in businesses with less than 10 employees.

"They are invisible workers, for whom there are no labour benefits nor stability," he said. The ILO, meanwhile, has called attention to the increasing precariousness of labour, which swells the informal economy and has led to a growing trend among formally registered companies to hire workers without contracts or on a temporary basis - another aspect of the informal economy.

In Argentina and Colombia, for example, 60 percent of employees without contracts work in large companies that use this system to evade paying labour benefits.

Jaime Sanchez, a Peruvian researcher with the non-governmental ADEC-ATC, says informality is driving up the precariousness of labour to levels similar to those seen at the time unions first began to emerge.

"There is a reality that cannot be hidden: under-employment rates are growing while the number of adequately employed diminishes - which is occurring in spite of the efforts of many governments to come up with favourable statistics," he says.

In the view of specialists, misleading measurements, statistics that have been touched up or disguised and other manoeuvring by governments in the region only demonstrate the decline in employment that Latin America is suffering, and the failure to find solutions.

In Peru, for example, labour authorities boast of having slashed under-employment from nearly 78 to 42 percent. But what happened was that according to a new measurement, which takes into account income rather than hours worked, anyone who earns more than 178 dollars a
month is classified as "adequately employed" - a category that thanks to the new system swelled from 12.7 to 49.2 percent of the economically active population.