|LATIN AMERICA’S MISERY INDEX|
Oranjestad, 6 February, 2013 - Latin America has just got three more reasons to beat its chest. Unemployment has fallen to new or near-record lows in Brazil (4.6 per cent), Chile (6 per cent) and Colombia (10 per cent). No wonder the region’s domestic economies are powering along: have job, will spend. No wonder, also, that so many Europeans are beating a path to the new world in search of a job. Unemployment levels in Spain and Portugal are 26 per cent and 16 per cent respectively.
Still, it is not a uniform improvement. Take the famous “Misery Index” – which adds unemployment to inflation – and Venezuela and Argentina are among the world’s most miserable countries to live in.
Employment levels there may be high, in official terms. But, thanks to inflation, workers are also earning less in real terms every day. Venezuela’s misery rate is 25 per cent, Argentina’s is 18, while the eurozone’s as a whole is 14.
Even in more prosperous and better run Latin countries there are valid questions about the sustainability of the jobs boom. Take one of the most remarkable and promising aspects of Latin America’s changing fortunes over the past decade: its pan-continental decline in inequality. No other region has enjoyed the same. Why it has happened in Latin America remains a puzzle.
One possibility is that unskilled workers are now being paid proportionally more than they used to be. That is no bad thing in itself: it lies behind the rise of the region’s “new middle classes”. But it may also reflect the fact that the demand for unskilled workers – who predominate in services (such as shops) and the commodity sector (such as mining) – has increased. This in turn may be because of increasing commodity specialisation (so-called “Dutch disease”), plus a turbocharged consumer credit boom. Given that both of these often end in tears, this is a development worth paying close attention to.
The World Bank put it in its October 2012 report, “The Labor Market Story behind Latin America’s Transformation”: