Region enjoys employment growth but workers see no boost in labor conditions

Demand for raw materials and past crises have helped governments cope

Buenos Aires - Jan 24, 2013 - 16:27Updated Jan 24, 2013 - 16:29 CET

A laborer works outside the Cahamay stadiium in Puerto Ordaz, Venezuela. IVÁN ALVARADO (REUTERS)

Embarking on their respective paths and following different formulas, Latin American economies are inching closer to reducing unemployment in the region.

According to the International Labour Organization, the median jobless rate over the past 10 years has dropped to 6.5 percent from 11.2 percent. It is the lowest rate since the ILO began recording unemployment figures in Latin America 22 years ago.

With the prices of raw materials remaining high and the region's economies continuing to grow, unemployment has been on a consistently downward trend over the past decade - albeit in some countries more than others. More than 30 million jobs have been created, and each year, more women are joining the labor force.

But the greatest challenge for governments is to improve working conditions as well as salaries. Half of the region's labor force does not contribute to a social security or pension plan, and some workers don't earn enough to emerge from poverty. About 28.8 percent of the region's estimated 600 million people live in poverty.

Just working one hour per day, a person is considered to have a job"

While jobs are abundant, low productivity is registered in many sectors.

"By taking different roads, various Latin American economies arrived at the same point: near full employment, but with a lot of social problems that still need to be resolved," said the Argentinean consulting firm Bein and Associates in a recent report.

The economies of nations such as Brazil, Chile, Uruguay, Peru, Mexico and Colombia have been helped in recent years by the drop in value of the US dollar, while Venezuela and Argentina, which registered moderate growth, have been hampered by high inflation, the report stated.

In the 1990s, unemployment grew with the wave of privatizations across Latin America and the relaxation of protectionist policies. By 2000, the situation began to stabilize with greater demands for raw materials, especially from China, and with economies that began to sustain themselves, says Julián Messina, a senior economist at the World Bank.

Mexico announces anti-poverty plan

EL PAÍS

In a new effort to eradicate poverty in his country, Mexican President Enrique Pérez Nieto announced on Monday a four-point plan to tackle hunger, which affects people in 400 of the nation's estimated 2,500 municipalities.

Speaking in Chiapas, one of the poorest states in Mexico located in the southern part of the country, Peña Nieto said his plan wasn't "a simple handout" but a program that would be designed for Mexicans to help themselves.

"It is painful and saddening that there are still Mexicans suffering from hunger here in Chiapas, and -- it has to be said -- in every corner of Mexico," said the 46-year-old president, who took office on December 1.

He pledged to strengthen agricultural production in areas that needed it most, such as Chiapas, the site of a popular Indian uprising in 1994 led by Subcomandante Marcos of the Zapatista Army of National Liberation.

Peña Nieto, who represents the Institutional Revolutionary Party (PRI), did not offer complete details of his plan but said it would go into effect on Wednesday through an executive order to be published by the secretary of Social Development.

Besides boosting agriculture, farmers who don't have enough land to harvest their crops will be helped by cooperatives in the 400 municipalities where the campaign is expected to be focused. Other points include helping the poorest rural workers by offering them grants and allowing them to work on cooperative farms.

Still, some analysts consider that the anti-hunger plan is vague, like many other Peña Nieto policies. "It's a rehash," Jorge Villaseñor, an economist at the University of Guadalajara, told Reuters. "He has just dusted off policies that have been around since the mid-1990s."

Employment in the region, meanwhile, was able to resist the world economic crisis, which began to take hold in 2008.

Besides taking advantage of greater economic buoyancy, some countries have also clearly capitalized on their accumulated experiences from past crises in the region: instead of mechanically reacting to the first signs of a global slowdown by adjusting their belts, they introduced investment and growth measures, said ILO regional director Elizabeth Tinoco. "A lot of these measures were focused on job protection and personal income guarantees."

During the last decade, jobs became more abundant at large farms and plantations that grow soya and corn. "Demand for raw materials brought in revenue that helped generate jobs in other sectors," said Carmen Pagés-Serra, the head of labor markets at the Inter-American Development Bank (IDB). For example, the construction industry in 2000 provided the region with 7.1 percent of Latin American jobs. By 2011, it accounted for 8.7 percent of the jobs. Jobs in commerce and trade also grew from 22.3 percent to 26.3 percent during this period. Employment opportunities in other sectors such as finance, telecommunications and transportation also grew. The only areas where employment dropped significantly were manufacturing and social service sectors.

"There were countries such as Argentina and Brazil that gave manufacturing a big drive," said Pagés-Serra, adding that they were the only two nations in the 10-year period that had growth indicators in these areas in terms of jobs. But in Mexico, industrial jobs dropped from 23 percent to 16.3 percent in 2011 due to the US economic crisis and competition from China. The governments of Argentina, Brazil, Uruguay and Mexico have introduced incentives for computer and data-based industries while Chile helped small business owners by starting their own enterprises, although some analysts believe those results have been modest.

Another reason why unemployment figures dropped was because different countries use different interpretations of what it means to "have a job," say consultants. There are more people in the region working fewer than 30 hours a week.

"When unemployment benefits are low or don't cover everyone, there are few who cannot afford not to moonlight," says Julio Neffa, an Argentinean economist for Grupo Fénix. "Just working one hour per day, a person is considered to have a job."

Such part-time employment in 2009 stood at 12 percent in Ecuador, 11 percent in Argentina, and nine percent in Peru, according Pagés-Serra. The lowest salaries have risen since the start of the new century, and the level of poverty has dropped since 2000, when it was listed at 44.3 percent. This is because there are more jobs to go around rather than the result of any social reforms enacted by the regional governments.