Capitalist Economic Reality in Latin America

Jay Moore research at
Wed Aug 30 06:58:55 MDT 2000

Unemployment bringing uncertainty, social tensions in Latin America
By Federico Quilodran, Associated Press, 8/30/2000 05:06

SANTIAGO, Chile (AP) Five years ago, Sergio Castelli led a comfortable life
as a bank teller in Chile. Then he lost his job, failed as a cabdriver, and
now, at age 63, lives with his wife on his $345 monthly pension.

In Ecuador, Camilo Benavides, 34, used to make $1,500 a month as a marketing
specialist. He now works at two jobs as a food store vendor and door-to-door
appliances salesman to make one-fifth of his old salary.

Latin America is steadily emerging from the economic crisis of the mid-1990s
triggered in part by the financial turmoil in Asia, but unemployment remains

In Colombia, where President Clinton is visiting this week, the jobless rate
is officially put at 20 percent and is worsening the country's decades-old
civil conflict by providing new recruits for rival paramilitaries.
Combatants face mortal dangers, but at least get daily meals.

Colombian President Andres Pastrana told the AP Tuesday he will urge Clinton
to drop trade barriers to create alternative jobs for the thousands of
Colombians who work in the drug trade.

Latin America closed 1999 with a global unemployment rate of 8.7 percent,
the highest in 20 years and up from 8.1 percent the year before, according
to the Economic Commission for Latin America, ECLA, a U.N. agency.

That's double the U.S. rate, and although it is roughly on par with the
average in the 15-nation European Union, Latin America doesn't have Europe's
generous social security systems.

''The first half this year has not yet brought an improvement,'' said ECLA's
economist Jurgen Weller.
Experts say the rise in joblessness stems mainly from the financial crisis
in Asia, which reduced imports from Latin America and froze Asian investment
in the region.

But another key factor is the painful adjustments dictated by a battle
against inflation and fiscal deficits, especially in Ecuador and Argentina.

A prime victim of Asia's woes is Chile. Asia accounts for more than
one-third of Chile's $16 billion in annual exports, and unemployment has
gone from 6 percent to 10.2 percent in two years.

Chile has had to set up a $100 million emergency program that grants
low-paid temporary jobs to heads of households through municipal projects
planting trees, maintenance and streetcleaning.

In Argentina, riots fomented by laid-off workers have shaken several
provinces in recent months. In Ecuador, protests culminated last January in
an uprising led by Indians that brought down the government of President
Jamil Mahuad.

In Uruguay, only weeks after taking office, the new conservative new
president, Jorge Batlle, faced a massive national strike under the slogan
''jobs for everybody.''

The strike, which idled much of the economy, was not in response to the new
president's policies but the result of widespread frustration with high
joblessness rates, organizers said.

The continent's two largest economies, Brazil and Mexico, are reducing
unemployment, but Argentina and Venezuela are still struggling with rates
over 14 percent. In Argentina alone, that means 2 million people out of

On June 9, Argentine workers staged the biggest work stoppage in years,
against the ''ajuste,'' or adjustment, as President Fernando De la Rua's tax
hikes and salary reductions are called. The strikers idled public transport
and forced hospitals and airlines onto an emergency footing.

Eight days earlier, much of neighboring Uruguay was shut down by a general

In Brazil, soaring urban crime is blamed in part on 8 million people being
jobless. The official unemployment rate is 7.8 percent. Private experts
calculate it at 18.7 percent.

The result in most countries has been thousands of college graduates working
as taxi drivers or forced to accept low-paid jobs. The number of street
peddlers and workers in other areas of the so-called informal economy has
grown steeply.

In Brazil, experts estimate nearly half of the nation's 70 million workers
hold informal jobs, paying no taxes and remaining outside the social
security system.

Jose da Silva, 40, lives with his wife and seven children in Rio's sprawling
Rocinha slum, and makes a living by selling telephone cards and umbrellas in
the fashionable Barra de Tijuca neighborhood.

Being illiterate further reduces his job prospects.

''Many days I leave home without being able to leave money for bread,'' he

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