War Destroying Prosperity
Conflict hurts Colombian economy
| The U.S.-funded war in Colombia continues to fail to stop the drug trade. On the other hand, the war is being very successful at ruining the Colombian economy and destroying civilians' lives and hopes for the future. Here are some excerpts from a recent Financial Times article. |
by James Wilson
Mauricio could hardly be a more typical Bogota taxi driver: a bright computer science student who had to drop out because he could not pay the university fees. Now he drives for a 12-hour shift and goes straight off to work as a nightwatchman. His wife, a trained accountant, sells clothes.Circumstances like these are all too common in Colombia, which used to lead Latin America for economic performance. These days, after its worst recession and with investment paralysed by fear of escalating armed conflict, the impoverished country has lost ground on its neighbours and feels more like a dropout with a bleak future.
Urban unemployment has rocketed from 9 per cent in 1994 to around 20 per cent. The younger generation of urban Colombians is especially hard hit. Some 35 per cent of those aged 18 to 24 are jobless.
Many here believe the economic crisis has aggravated the conflict, with the meagre salaries and subsistence offered by guerrilla and paramilitary groups an increasingly attractive option. Over the past two years, paramilitary numbers have grown from 4,500 to 8,150 and guerrilla forces have risen 16 per cent to more than 17,000, according to the government.
Javier Fernandez Riva, an economic analyst in Bogota, says: "Increasing unemployment is giving an unnecessary advantage to the guerrilla. It antagonises and distances people."
Recent research for the Bogota-based Fedesarrollo think tank found youth unemployment among society's poorest 10 per cent reached a staggering 62 per cent last year - "a serious problem for law and order", says the report.
Common crime is rising after a downward trend through most of the 1990s, says Jairo Nunez, a researcher at Los Andes university's Centre for Economic Development Studies. "There is a clear relationship: the biggest factor influencing crime figures is unemployment."
In the long term, says Mr Nunez, great damage is being done to the country's human capital. Universities are struggling to recruit students, since more and more people cannot afford to study.
"There has been a big blow to attendance rates at all levels of education," says Mr Nunez. "People are looking for work rather than studying and all it does is increase the unemployment rate. They are going from the classroom to the street."
With the average period out of work for unemployed people now up to 11 months, many people are losing skills, complicating their search for jobs.
At the same time, since competition for jobs is bidding down wages, growing numbers of those that do have marketable skills are leaving the country in search of better opportunities: a further problem for Colombia's future.
And the quality of employment has also suffered. Some 60 per cent of jobs are now classified as 'informal', compared with 52 per cent five years ago. That points to the growing numbers in what is already an army of street vendors, selling anything from furniture to paperbacks at traffic lights.
Just as worrying, few analysts believe the unemployment rate will improve quickly. Economic growth is not forecast to be strong enough to provide enough jobs for a growing workforce.
Despite the promises of Juan Manuel Santos, the finance minister - who on taking the post in July said his three top priorities were jobs, jobs and jobs - the government has been unable to do much to provide employment, hamstrung by fiscal problems that are forcing it to cut the public sector workforce.
The government does hope to employ 300,000 in temporary workschemes and provide training for 100,000 young unemployed as part of a $1bn social safety net financed largely by multilateral loans through until 2002.
But the scale of the challenge is daunting. According to the Fedesarrollo study, the country's urban economy - where most jobs will be needed - needs to grow at 3.2 per cent annually just to maintain the jobless rate at its current high level by 2005, even without any real wage increases.
The study concludes that to cut unemployment in half by 2005 while raising real wages by 2 per cent annually, Colombia will need average urban economic growth of 7.1 per cent annually. Such a performance seems far out of reach unless the country can finally end its 36 years of civil conflict.
What a disaster, and this mess makes the USA look stupid. The escalating war kills people, stigmatizes the USA, wastes taxpayer money. There is no benefit in ruining the Colombian economy. What's your opinion? Tell your views to The Progress Report:
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