Mixed Social Progress

By Gustavo Gonzalez, IPS, 23 June 2000

SANTIAGO, Jun 23 (IPS) - Latin America will present mixed social development results at next week's Special Session of the United Nations General Assembly in Geneva. While poverty was reduced, the gap in job quality and income distribution grew.

Latin America's mix of achievements and setbacks reflects the impact of globalisation on the developing South -- a phenomenon that will not be ignored at the Copenhagen Plus Five conference in Switzerland, which will assess compliance with commitments undertaken at the 1995 World Summit for Social Development in the Danish capital

The 1995 world summit, which drew delegations from more than 160 countries, was proposed by former Chilean president Patricio Aylwin (1990-94) and presided over by Chile's ambassador at the time to the United Nations, Juan Somavia, current director of the International Labour Organisation (ILO).

The 1995 conference focused on the need to address social and economic inequalities, not only between rich and poor nations, but within industrialised countries as well, and to promote integral human development.

The globalisation process picked up steam in the early 1990s alongside the unprecedented expansion of telecommunications and informatics, with immediate effects in terms of the transnationalisation of the world's economies through large-scale capital flows, which escaped the control of states and multilateral bodies.

Investment and trade flows ballooned, while technological advances demanded changes in the structure of employment and education. At the same time, phenomena like labour migration, unemployment and social exclusion grew.

The 1995 summit served as a wake-up call to the risks of globalisation in terms of its impact on human rights. And it was the globalisation process itself that demonstrated towards the end of the decade that such fears were not misplaced.

The 1997-98 Asian-Russian financial meltdown was, strictly speaking, the second and most hard-hitting crisis of globalisation, following the tequila effect that swept the world in the wake of the late 1994-95 debacle in Mexico.

In a special report drawn up for Copenhagen Plus Five, the UN Economic Commission for Latin America and the Caribbean (ECLAC) states that the decline experienced by a number of countries in the region during the most recent global financial crisis brought the downward trend in poverty to a halt, and even reversed it in some countries.

>From 1990 to 1997, 11 of 14 Latin American countries studied by ECLAC in that respect successfully reduced their poverty rates.

While 41 percent of households in Latin America lived below the poverty line in 1990, the proportion was cut to 36 percent by 1997 -- or a total of 220 million people. However, that percentage was slightly higher in relative terms than the 1980 proportion of 35 percent.

The ECLAC study, The Equity Gap: A Second Look, reports that less than 15 percent of households in Argentina and Uruguay are poor; 15 to 30 percent in Brazil, Chile, Costa Rica and Panama; 31 to 50 percent in Colombia, El Salvador, Mexico, Paraguay, Peru, the Dominican Republic and Venezuela; and over 50 percent in Bolivia, Ecuador, Honduras and Nicaragua.

In Chile, urban poverty was cut from 23 to 18 percent between 1994 and 1998, while it was reduced from 12 to six percent in Uruguay from 1990 to 1994.

In the case of Chile, that achievement was based on a high level of economic growth, which did not bring about any shift in income distribution, while Uruguay, with a lower level of growth, reduced the gap between the rich and poor.

Panama slashed poverty from 36 to 27 percent of households between 1991 and 1997, while the proportion shrunk from 52 to 37 percent in Peru between 1986 and 1997.

Nevertheless, Peru continued to post a high rate -- 60 percent -- of rural poverty.

Uruguay is the only country in Latin America and the Caribbean to improve income distribution, while Argentina, Mexico, Panama and Venezuela experienced setbacks in that respect, and Brazil, Chile, Costa Rica and Paraguay recorded no change.

The continued income gap and persistent poverty have gone hand in hand with job opportunities in Latin America, both in terms of the possibility of finding employment and of winning higher wages through better quality jobs.

The intensity of the economic restructuring process that Latin America and the Caribbean have been experiencing for over a decade has defined new winners and losers, says the report.

As a result, the gap in productivity has widened between the large companies, leaders in the modernisation process, and a wide range of trailing sectors, where the bulk of jobs are concentrated, says ECLAC.

That situation lays the foundations for even greater social inequalities, by widening the internal productivity and income gap, the report adds.

It also affects growth, by limiting the links between productive sectors and the spread of technical progress, which has repercussions for the region's export capacity, warns the regional UN body.

The informal sector accounted for 69 of every 100 new jobs created in the region from 1990 to 1997. Thus, the weight of the informal economy -- in which 47 percent of employed urban Latin Americans work -- grew, with the consequent impact on productivity and wages.

In 13 of 18 countries on which such statistics were available, real minimum wages stood below those of 1980, while the difference between the salaries of professionals and skilled workers and low- skilled or unskilled workers increased 28 percent on average from 1990 to 1997.

But the problem is not exclusive to the informal sector. In nine of 16 countries for which figures were available, between 30 and 60 percent of private sector wage-earners lived in poverty.

In Argentina, Chile and Venezuela, the proportion of poor wage- earners is greater among unskilled self-employed workers.

The problem also touches public employees, 20 to 40 percent of whom live below the poverty line in Bolivia, Ecuador, Honduras, the Dominican Republic and Venezuela; around 15 percent in Brazil, Colombia, Ecuador, El Salvador, Mexico and Paraguay; and roughly five percent in Argentina, Chile, Costa Rica, Panama and Uruguay.

Meanwhile, unequal access to educational and training opportunities tends to perpetuate poverty linked to low-quality jobs.

ECLAC points out that youngsters from poor homes and whose parents have little formal schooling tend to spend eight years or less in the educational system, and generally go on to work as unskilled workers, urban or rural labourers or domestics.

Youngsters who stay in school for 12 years or more, on the other hand, tend to work as professionals, technicians or in managerial posts.

Poverty leads people to join the labour force at an early age, while dropping out of school sets a cap on possibilities of getting a better job in the future. In 1997, according to ECLAC, 22 percent of the region's 13 to 17-year-olds were working for pay.