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Are the Unemployed Part of the Urban Poverty Problem in Latin America?*

Published online by Cambridge University Press:  05 February 2009

John Humphrey
John Humphrey
Affiliation:
Fellow of the Institute of Developmental Studies at the University of Sussex.
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Extract

For a long period, the consensus in development studies argued that the unemployed in urban areas were not part of the poverty problem. It was argued in the 1970s that open unemployment in developing countries was not, in general, a serious social problem. This was not because rates of open unemployment were low in urban areas – Turnham cited open unemployment rates in urban areas of over ten per cent for countries as diverse as Ghana, Guyana, Panama, Puerto Rico, Ceylon (Sri Lanka), Korea and the Philippines. Rather, it was argued that the unemployed were not poor. They were predominantly the relatively well-educated young, who were waiting to find good jobs, or migrants ‘queuing’ for work in the formal sector, or people temporarily out of work as they moved from one job to another. The urban informal sector or agriculture would provide jobs for those really needing work. Therefore, the ‘needy’ would not remain in open unemployment for long. Long periods of open unemployment would be luxury, available only to the better-off.

Type
Articles
Information
Journal of Latin American Studies , Volume 26 , Issue 3 , October 1994 , pp. 713 - 736
Copyright
Copyright © Cambridge University Press 1994

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References

1 Open unemployment is usually defined by applying three criteria: (i) a person is not in work in the reference period (usually between one and seven days), (ii) has actively sought work over the same or a longer period (often between 7 and 30 days), and (iii) is available for work. For a discussion of definitions of unemployment and how they are operationalised in different countries, see International Labour Office, ‘Labour Force, Employment, Unemployment and Underemployment’, Report II, 13th International Conference of Labour Statisticians (Geneva, 1982).

2 Turnham, D., ‘Empirical Evidence of Open Unemployment in Developing Countries’, in Jolly, R. et al. (eds.), Third World Employment (Harmondsworth, 1983), pp. 45–7Google Scholar.

3 The NHSS data were available on tape and the author has made his own tabulations. Details of the author's survey can be found in the Appendix.

4 There are a number of refinements to this line of argument. Stark suggests among the reasons why migrants remain unemployed rather than take up informal sector work are (i) that they have to engage in ‘the resource- and time-consuming operation of acquiring preferential treatment’, and (ii) that temporarily working in the informal sector might devalue their qualifications and personal traits in the eyes of potential formal sector employers. Stark, O., ‘Research on Rural-to-Urban Migration in LDCs: the Confusion Frontier and Why We Should Pause to Rethink Afresh’, World Development, vol. 10, no. 1 (1982), pp. 66–7CrossRefGoogle Scholar.

5 Mazumdar, D., The Urban Labour Market and Income Distribution (Oxford, 1981), p. 265Google Scholar.

6 Ibid., p. 266.

7 Berry, A., ‘Open Unemployment as a Social Problem in Urban Colombia: Myth and Reality’, Economic Development and Cultural Change, vol. 23, no. 2 (1975), p. 227CrossRefGoogle Scholar.

8 Berry, A., and Sabot, R., ‘Unemployment and Economic Development’, Economic Development and Cultural Change, vol. 33, no. 1 (1984), p. 111CrossRefGoogle Scholar.

9 PREALC, Employment in Latin America (New York, 1978), p. 2Google Scholar.

10 Ibid., p. 12. One of the problems with this kind of assertion is that income is often used in the definition of underemployment. When this is done, the poverty-underemployment relation becomes, in part, an effect of the definition.

11 García, N. and Tokman, V., ‘Changes in Employment and the Crisis’, CEP AL Review, no. 24 (1984), p. 110Google Scholar.

12 Turnham, D. and Eröcal, D., ‘Unemployment in Developing Countries: New Light on an Old Problem’, Paris, OECD Development Centre, Technical Papers no. 22 (1990), p. 25Google Scholar.

13 Ibid., p. 25.

14 García and Tokman, ‘Changes in Employment’, p. 110.

15 Mazumdar, D., ‘The Rural-urban Wage Gap, Migration, and the Working of the Urban Labour Market: an Interpretation Based on a Study of the Workers of Bombay City’, Indian Economic Review, vol. 18, no. 2 (1983), p. 170Google Scholar.

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17 Mazumdar, D., ‘Microeconomic Issues of Labor Markets in Developing Countries’, World Bank, EDI Seminar Paper No. 40 (1989), p. 40Google Scholar.

18 Turnham and Eröcal, ‘Unemployment in Developing Countries’, p. 31.

19 This is not to say that such movements do not take place even in the largest cities. In the early 1980s in São Paulo there was a slackening of migratory inflow as a result of the recession: Baltar, P. and Neto, L. Guimarães, ‘Mercado de Trabalho e Crise: Notas para uma Abordagem’, unpublished paper, São Paulo, ANPEC/INPE, 1987Google Scholar. There is also some evidence of return migration; Hirata, H. and Humphrey, J., ‘Workers' Response to Job Loss: Female and Male Industrial Workers in Brazil’, World Development, vol. 19, no. 6 (1991)CrossRefGoogle Scholar.

20 Berry, ‘Open Unemployment’.

21 Tenjo, J., ‘Opportunities, Aspirations and Urban Unemployment: the Case of Colombia’, Economic Development and Cultural Change, vol. 38, no. 4 (1990), p. 747CrossRefGoogle Scholar.

22 Turnham and Eröcal, ‘Unemployment in Developing Countries’, p. 52.

23 Ibid., p. 52.

24 Sabóia, J., ‘Transformações no Mercado de Trabalho no Brasil Durante a Crise – 1980–1983’, Revista de Economia Política, no. 23 (1986), p. 83Google Scholar.

25 In 1981, there was a net reduction of 216,000 jobs in formal sector manufacturing industry (as defined by submission of employment data to the Ministry of Labour) in the State of São Paulo. The reduction was the result of 1,194,000 people leaving jobs, and 978,000 entering jobs (Anuário Estatístico de São Paulo, 1983). Only a fraction of those leaving jobs did so because of death or retirement. Many of the rest might have found fresh work as one of those admitted to a job in the course of the year.

26 Hirata and Humphrey, ‘Workers' Response to Job Loss’, pp. 679–80.

27 In this text, some data are presented in terms of headship because the available survey data are classified in this way. Like many surveys, the NHSS refers to headship and defines persons in the household or family according to their relation to the head. However, the notion of head is ill-defined. The NHSS interview manual defines the head as the ‘person responsible for the household or the person considered to be head by the other inhabitants’, but it provides no instructions on how this information on headship should be obtained. IBGE, Pesquisa Nacional por Amostra de Domicílios: Manual de Entrevista das Pesquisas, Básica e Suplementar, PNAD de 1989 (Rio de Janeiro, 1989), p. 55Google Scholar.

28 Rodgers, G., ‘Trends in Urban Poverty and Labour Market Access’, in Rodgers, G. (ed.), Urban Poverty and the Labour Market (Geneva, 1989), p. 17Google Scholar. Similar data are available for São Paulo. In 1983, 71 per cent of unemployed family heads lived in the poorest 15 per cent of families.

29 See the Appendix for details of the Santo Amaro survey.

30 Two further items – electricity supply and cookers – have not been included in the index because over 99 per cent of households in São Paulo have them.

31 The weighted per capita income of the head is his/her income from all sources divided by the number of people in the family weighted as follows: age 0–9 (0.5), age 10–14 (0.75), 15 or older (1.0).

32 Harriss, J., Kannan, K. and Rodgers, G., Urban Labour Market Structure and Job Access in India: a Study of Coimbatore (Trivandrum/Geneva, 1990), p. 91Google Scholar.

33 PREALC, Creación de Empleos y Absorción del Desempleo en Chile (Geneva, 1972), p. 55Google Scholar.

34 Total household income from all sources divided by the number of persons resident in the household weighted according to age, as in note 31.

35 The equation is computed from a regression of work income on age, years of education and sex for a sample of 11,044 cases. It gives an adjusted R2 of 0.507, explaining half the variance in income in the sample. The large sample size means that inevitably all coefficients are significant at the 1% level.

36 Alternatively, it might be the case that some adults were already mobilised, hence the low inactivity rate. If this were the case, the extra incomes obtained did not offset the loss of the head's income.

37 See Schmink, M., ‘Household Economic Strategies: Review and Research Agenda’, Latin American Research Review, vol. 19, no. 3 (1984)Google Scholar, for a discussion of the household survival strategy literature in Latin America.

38 Similar results were found in a survey of households in the Santo Amaro district of São Paulo in 1990 (see the Appendix for details of survey). This survey found that while only 5.5 per cent of heads of households were unemployed at the time of the survey, 25.2 per cent of heads had been unemployed at some time in the previous year. While only 3.1 per cent of heads had been unemployed for three months or more at the time of the survey, 11.2 per cent had been unemployed for at least three months in the previous twelve.

39 Tokman, V., ‘Urban Employment Problems: Research and Policy in Latin America’, PREALC, Documentos de Trabajo 315 (Santiago, 1987), pp. 17–18Google Scholar.