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Storm Clouds on the Horizon

Zoraida Portillo, IPS, 30 March 1998

LIMA, Mar 30 (IPS) - The outlook for labour this year in Latin America is bleak, thanks to the expected negative impact of the El Nino weather phenomenon and the Asian financial crisis on jobs and growth, experts say.

Ricardo Infante, an International Labour Organisation (ILO) adviser, predicts three percent or lower economic growth in the region this year, which would push unemployment up to around 8.5 percent.

The region's overall economic growth rate was 4.5 percent in 1997, when unemployment dropped to 7.2 percent, bringing hopes that the downward trend would steadily move Latin America back to the six percent average unemployment rate seen in the first few years of the decade.

But the statistics from the first quarter of the year suggest that will not happen.

Infante explained that the projections on unemployment this year took into account the fiscal and monetary measures adopted by a number of Latin American governments to offset damages caused by El Nino and the fallout from the Asian crisis.

"We believe the region will not grow more than three percent this year, meaning unemployment will rise to eight percent, because a drop in growth levels automatically brings a fall in employment," said Infante.

The International Monetary Fund (IMF) also put out a recent warning to developing countries, focusing more on the Asian crisis than on the effects of El Nino.

The IMF cautioned that the financial crisis could worsen and spread over the next few months, which would be devastating for several weak economies and lead to an even sharper drop in unemployment, already one of the region's worst problems.

Experts say the other major difficulties - under-employment, low levels of income and poor quality of jobs - all stem from the basic problem of unemployment.

Countries like Argentina and Venezuela, where a significant proportion of the economically active population is generally employed well, are plagued by high rates of unemployment today.

Argentina continues to have the region's highest rate - 17 percent in 1997 - in spite of the fall from 18.8 percent in 1995 and 18.4 percent in 1996. And in Venezuela, open unemployment rose to 13 percent last year, in a continuation of the upward trend that began in 1994, when the rate rose from 6.8 to 8.9 percent.

Breaking the statistics down by gender, women in Venezuela and Colombia are the hardest-hit by unemployment, according to ILO figures, which indicate that 14.8 percent are without jobs in Venezuela and 16.9 percent in Colombia.

In other countries with unemployment rates below the regional average, like Bolivia - less than five percent, according to official figures - the informal sector and under-employment have grown enormously and provide a cushion, absorbing a large proportion of the unemployed.

In its last annual report issued in late 1997, the ILO warns of that phenomenon in Latin America, pointing out that around 85 of every 100 new jobs crop up in the informal sector.

A study by the non-governmental Service for Social Development (Serdes) in Peru on unemployment and ways to conceal it says the informal economy is one of the only means for survival in places where people, rather than jobs, abound.

"There are not enough streets, and businesses are becoming more and more short-lived: grocery stores, restaurants and liquor stores open, while taxis are increasingly being driven by unemployed professionals...Companies offer part-time jobs at low wages, with brief contracts and lacking labour rights that protect the worker," says the report.

Rising crime and violence, drug trafficking and prostitution are simply the other face of unemployment, says Serdes, which maintains that the unemployed have practically no alternative. In Lima alone, 120,000 people are looking for work today, a figure that soars to close to 700,000 at a national level, not even counting those who have already lost all hope of finding work.