Development Dream May be Over in Latin America

By Mario Osava, IPS, 2 December 1997

RIO DE JANEIRO, Dec 2 (IPS) - With the informal sector increasingly providing the only jobs available in Latin America, the dream may be ended for countries in the region wanting to develop societies like those of industrialized countries.

On average, 80 percent of new jobs in Latin America are being created in the informal sector of the economy, according to a study of the International Labor Organization (ILO). Even the majority of urban jobs, 56 percent, are found in this sector. The difficulty of organizing society and having it follow the known development models of the rich countries is compounded by another trend: the transfer of jobs in the formal industrial sector to the service sector, say the experts.

According to Brazilian economist Celso Furtado - who has served as both Minister of Planning and of Culture - Latin American economies are now defined by the following reality: meaningful social movements such as unions are not fostered by the type of labor relations and sectors of the economy that predominate in the region. Such social movements are essential for equitable distribution of income and the creation of wider markets.

Without these movements, unemployment statistics lose their meaning and accuracy as an economic indicator. Nonetheless, statistics are at the center of a new debate in Brazil, started by the president himself, Fernando Henrique Cardoso.

The president has accused the Inter-Trade Union Office of Socio- economic Statistics and Research (DIEESE ) of manipulation for coming up with a jobless rate of 16.5 percent for the month of October in Sao Paulo, the economic capital of the country. This rate of unemployment, an unprecedented figure that means 1.43 million people are without jobs in the nation's major city, is similar to that which overtook Argentina two years ago. Official data, provided by the Brazilian Institute of Geography and Statistics (IBGE), indicates that the most recent figures, for the month of September, show that six metropolitan areas had an unemployment rate of only 5.63 per cent.

Cardoso attributes the enormous difference in the two sets of statistics to the fact that the DIEESE includes in its surveys children who are at least 10 years old, although, according to Brazilian law, employment is only allowed at the age of 14. The IBGE only counts workers who are at least 15 years old.

Child labor is a reality that cannot be ignored, countered Sergio Mendonza, technical director of DIEESE, who argued that their calculation is the most accurate since it also includes the hidden aspects of unemployment: it takes into account people forced to accept temporary jobs as well as those who are too discouraged to look for work.

Official unemployment, calculated by the IBGE, only includes people who have been looking for work in the last seven days, whereas the DIEESE counts a period of 30 days. Even the latter figure, however, does not take into account the various manifestations of informal economies.

According to Marcio Pochmann, a researcher at the University of Campinas, near Sao Paulo, there are actually only 23 million workers in the formal sector, a figure which has decreased some 10 per cent in recent years.

This figure, representing only 15 per cent of the total population and less than a third of the economically active population, is hardly sufficient to stimulate the rest of society. It very nearly constitutes a privileged enclave in the country. Argentina and Uruguay benefit from almost double this rate of economic participation. But they are exceptions on a continent where most countries have an informal economic sector similar to or even larger than that of Brazil, one of the most industrialized nations in Latin America.

This economic reality offers a background for many of the problems confronting the entire region: the poor educational systems, the high rates of violence and crime, the chronic corruption, and the difficulty of governance.

Industry no longer needs the large work force of an earlier era when laborers in textile and mechanized metal factories helped launch social revolutions. There no longer exists the social discipline produced in the oldest industrialized countries, according to the political scientist Rene Dreifuss.

The logical conclusion is that Latin America can no longer develop according to this model.

Dreifuss also added that in recent times other factors promoting discipline and organization in society have also been steadily losing their importance. These factors would include the declining number of young people in military service, and more varied standards of behavior, customs and types of families. Dreifuss, who writes from a global perspective, stated that new roads must be found. The title of his last book, aptly summarizes his thinking on the current process of globalization: Era of Confusion.