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New Political Economy

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Neoliberal and neostructuralist perspectives on labour flexibility, poverty and inequality: A critical appraisal
Fernando Ignacio Leiva
a a

Department of Latin American, Caribbean and US Latino Studies , University at Albany State University of New York , 1400 Washington Avenue, Albany, NY, 12222, USA Published online: 23 Jan 2007.

To cite this article: Fernando Ignacio Leiva (2006) Neoliberal and neostructuralist perspectives on labour flexibility, poverty and inequality: A critical appraisal, New Political Economy, 11:3, 337-359, DOI: 10.1080/13563460600840175 To link to this article: http://dx.doi.org/10.1080/13563460600840175

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New Political Economy, Vol. 11, No. 3, September 2006

Neoliberal and Neostructuralist Perspectives on Labour Flexibility, Poverty and Inequality: A Critical Appraisal
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FERNANDO IGNACIO LEIVA

Over the past three decades, neoliberal and Latin American neostructuralist ideas have contributed to the restructuring of Latin American capitalism from import substituting industrialisation (ISI) to an export oriented pattern of accumulation. While neoliberalism played the leading role in the 1970s and 1980s, Latin American neostructuralism has emerged more recently as the preferred approach for ensuring the continuity of this transformation.1 Launched in 1990 with the publication by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) of Changing Production Patterns with Equity, neostructuralist ideas have steadily gained inuence, contributing to a reformulation of the development discourse of governments, progressive political parties and international development institutions. Neoliberal market fundamentalism has thus given way to renewed concern within international development agencies for the role of institutions, politics, culture and the indispensable supportive role of the state.2 Notwithstanding their eminent success in formulating guidelines and policy packages supporting far reaching economic, social and political reforms in the region, both neoliberal and neostructuralist schools also display agrant incoherencies. These are nowhere illustrated more clearly than in the outcomes of labour reform policies. It is precisely in the domain of labour policies and labour/capital relations that neoliberal and neostructuralist policies have foundered most visibly. Despite their notable differences, both neoliberalism and neostructuralism have promoted labour exibility and the restructuring of labour market institutions as crucial components of the economic reform process and the quest for greater international competitiveness. Assurances that labour reforms and increased labour exibility would bring about substantial reductions in unemployment, poverty, inequality and social conict in Latin America, however, have not been borne out.
Fernando Leiva, Department of Latin American, Caribbean and US Latino Studies, University at Albany State University of New York, 1400 Washington Avenue, Albany, NY 12222, USA.
ISSN 1356-3467 print; ISSN 1469-9923 online=06=030337-23 # 2006 Taylor & Francis DOI: 10.1080=13563460600840175

Fernando Ignacio Leiva Though such incoherencies and policy failures can be re-interpreted and discarded as successes because they strengthen the class processes fundamental to capitalist accumulation,3 neoliberal and neostructuralist labour policies merit further examination. Such analysis can throw light not only on the resilience of the dominant paradigms in maintaining a semblance of coherence in light of mounting analytical inconsistencies, but also on the relevance of radical political economy for explaining some of the unexpected labour market outcomes that have confounded mainstream economists.4 After decades promoting the legalisation of xed-term contracts, sub-contracting, facilitating employers dismissal of workers, reducing employers social security contributions, and designing policies to make labour and labour markets more exible, neoliberal and neostructuralist predictions simply have not come to pass. In light of such failures, economists afliated with the neoliberal and neostructuralist camp have expressed surprise and perplexity. Joseph Stiglitz, Nobel laureate and the World Banks former Chief Economist and senior Vice President for Development, forthrightly acknowledged that: As part of the doctrine of liberalization, the Washington Consensus said make labour markets more exible. That greater exibility was supposed to lead to lower unemployment . . . lower wages would generate more investment, more demand for labour. So there would be two benecial effects: the unemployment rate would go down and job creation would go up because wages were lower. The evidence in Latin America is not supportive of these conclusions. Wage exibility has not been associated with lower unemployment. Nor has there been more job creation in general.5 ECLAC underscores that changes in job markets over the 1990s contributed to the creation of a new kind of employment stratication that does not favor social mobility, nor does it improve income distribution. Precarious employment is now more generalized. A growing sense of social vulnerability affects most of the population . . . .6 More recently, the Inter-American Development Bank (IADB) in Good Jobs Wanted: Labour Markets in Latin America, one of its most in-depth studies of recent years, concedes that reformers have been startled by the dismal dynamics of labour markets and the bleak situation faced by many of the regions workers. The authors admit that structural reforms did not alter labour markets in the expected ways.7 After an exhaustive review of this divergence, IADB staff conclude that (t)he lesson from this series of surprises is one of modesty for economists and moderation for critics.8 Arguably modesty has been indeed a scarce commodity among the economists who have been behind the vast process of economic reforms experienced by the countries and peoples of the region. Yet the scale and scope of the inadequacy displayed by these two dominant paradigms call for a considerably more substantial remedy than just a dash of modesty here and a pinch of caution there. Rather, what seem to be required are mega-doses of theoretical self-awareness, undoubtedly still the scarcest of all intellectual commodities within the discipline of 338

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Labour Flexibility, Poverty and Inequality economics. By drawing attention to the gaping discrepancy between rhetoric and reality, and by examining how neoliberalism and neostructuralism conceptualised the linkages between increased labour exibility on the one hand and, on the other, decreasing unemployment, inequality and poverty, this article contributes to an important and necessary discussion. Rather than presenting formal models or reexamining the historical experience of Latin American labour markets, which has been already well covered in the literature,9 this article highlights the manner in which neoliberal and neostructuralist economists theorise labour and labour exibility and link it to reduction of poverty and inequality. In brief, I argue that in order to decipher the current dynamics of Latin American labour markets, an important rst step is critically to reevaluate the basic assumptions of neoliberalism and neostructuralism. A growing body of evidence suggests that some of the core operative notions of neoliberalism and neostructuralism namely the cause effect relationship between labour exibility and reduced unemployment, poverty and inequality must be revised thoroughly, if not altogether discarded. The root cause of these shortcomings is to be found in the following paradox: the two paradigms that have guided the transition from ISI to an export-oriented pattern of accumulation in Latin America promote societal transformation at the same time that they actively marginalise key power dimensions of economic relations from theorisation. Neoliberalism and neostructuralism thus fail to address the centrality of labour capital relations in the restructuring process, as well as in the consolidation and protable performance of current export-oriented models of capital accumulation that prevail in the region. Promoting societal restructuring while excluding power relations from analysis creates a crevice in the discourse of neoliberalism and neostructuralism that provides a useful point of entry for probing the internal coherence of both schools of thought. In the next section, I provide an overview of neoliberal and neostructuralist perspectives, going from the very general concepts about economic development to those regarding labour. I begin by reviewing the contending notions of competitiveness, the role of the state and the mechanisms for managing social conict, proceeding then to examine the contrasting labour policies endorsed. This rst section concludes by tracing how neoliberalism and neostructuralism construct the causal linkages between labour exibility, poverty and inequality. The second section probes the paradox of neoliberal and neostructuralist formulations by contrasting them with a radical political economy (RPE) perspective that does not eschew the analysis of power in economic analysis and locates labour capital relations at the centre of analysis. The third section contrasts neoliberal predictions with the outcomes observed in Latin American labour markets. I then provide a brief discussion of labour outcomes in Chile, because Chile is presented as the successful model of capitalist restructuring and has had more than a decade and half of experience with neostructuralist-inspired policies n governments. Finally, the concluding under the centre-left Concertacio section offers some reections about how to move forward in this critical reassessment of neoliberal and neostructuralist conceptions of labour reform and labour exibility. Some might question the characterisation of Chile during the 1990 2005 period as an example of neostructuralist policies, arguing that only under the 339

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Fernando Ignacio Leiva Ricardo Lagos administration (2000 2005) did such policies gain predominance and that, even then, such inuence was more at the rhetorical than the practical level.10 Although space limitations prevent me from fully addressing this issue here, I argue that neoliberalism and neostructuralism are not wholly conicting paradigms but rather, thanks to their differences, play complementary roles at different stages of the restructuring process. The analysis presented below adopts a specic and restricted denition of neoliberalism. The term has been used in the literature with different meanings, leading to great confusion: as a set of economic ideas; as a particular economic model; and as the all-encompassing mode of experiencing the economic, political and cultural existence under contemporary capitalism. In this essay, I use neoliberalism (and Latin American neostructuralism) in the restricted sense of a set of economic ideas, and use the term of export-oriented regime of accumulation when referring to the new economic model that replaced ISI in most countries in the region. Such a clarication has important consequences for current debates, the analysis of Chile after the dictatorship of Augusto Pinochet and discussions of the patterns of change and continuity observed in the performance of centre-left governments that have come to ofce since 2000 in Latin America. Without making the clear distinction I suggest, such assessments can veer off track towards two equally unrealistic n governments. claims, as has been the case in discussions of Chiles Concertacio Either Latin American socialists and progressives, unwittingly, have ideologically converted to neoliberal ideas and it is this conversion which explains their continued support for the neoliberal model, or, alternatively, they have remained true to the convictions but, deploying a wider set of equity-enhancing social and productive modernisation policies, have been able to reform radically and signicantly the neoliberal model, infusing it with new levels of equity and transforming into a different, as yet unnamed, economic model. The separation that I propose between neoliberalism understood as a set of economic ideas and the export-oriented regime of accumulation, in the establishment and consolidation of which both neoliberal and neostructuralist ideas play critical but different role allows for a more grounded assessment and cuts through such confusion. Armed with the concept of comparative advantage and a zealous defence of the free market, neoliberals contributed to the elimination of those mechanisms that under ISI provided individuals and social groups with important levels of autonomy from the iron laws of the market. However, neostructuralists, wielding the concept of systemic competitiveness, emphasising social harmony and political interventions to generate consensus and participatory governance around the export drive, contribute to the consolidation of the new order, subordinating politics and political space to the logic of transnational capital and the export-oriented economic model. Instead of protecting individuals, communities and rms from the market, neostructuralists deploy a vast palette of policies aimed at ensuring their adaptability to the laws of an increasingly asymmetric, concentrated and transnationalised system of capital. Seen as a tag team rather than as antagonists, neoliberals and neostructuralists deploy policies that radically transform the class and gender constellation of forces in society, making it possible to complete the transition from ISI to an exportoriented regime of capital accumulation. It is this historical role, along with the 340

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Labour Flexibility, Poverty and Inequality analytical limitations analysed below, that call for the revitalisation of an RPE approach. Neoliberal and neostructuralist perspectives In the 1970s and 1980s, wielding the concept of comparative advantage, neoliberals formulated policies that sought to make markets and competition at the local and international levels the only accepted form of economic and social interaction. During this period, liberalisation, deregulation and privatisation policies sanctioned by the International Monetary Fund (IMF) and the World Bank were instrumental in promoting the neoliberal agenda across Latin America and the Caribbean. Under General Augusto Pinochet (1973 1989), Chile became the test-site and, later on, the showcase for the purported success of the neoliberal economic project. In the 1990s, in the context of a return to civilian elected regimes in the region, a new conception of international insertion emerged in the form of Latin American neostructuralisms systemic competitiveness.11 Through this formulation and their support for productive transformation with social equity, neostructuralists asserted that changes in productivity and the absorption of technical progress were overwhelmingly determined by institutional and political factors. In their view, an economys technological performance and degree of international competitiveness depended to a much greater degree on the presence of whole series of differing types of synergy and externalities than it does on the optimization efforts of individuals (sic) rms in response to changes in the price system.12 The election in 1989 of Patricio Aylwin, as Chiles rst civilian president since 1973, gave the emerging paradigm its rst opportunity to inuence public policy. By the mid 1990s, the neoliberal imprint on economic policy in the region began to give way to a more neostructuralist orientation. By the end of the decade, international development agencies were talking about the emergence of a post-Washington Consensus, emphasising the synergy, and not the trade-off, between increasing equity and economic growth.13 Such a shift did not imply a rupture with the previous export-oriented model imposed by neoliberals, but rather acknowledged the need to use a wider set of policies to achieve international competitiveness. Succinctly stated: whereas neoliberals insisted that market and price signals remained the fundamental tools for achieving international competitiveness, neostructuralists argued that, although market forces remained essential, government intervention in economic and political processes was critical in fostering the necessary coordination for gaining entry to and successfully competing in world markets. Whereas neoliberals see markets and undistorted prices as the prime levers for ensuring efcient resource allocation and international competitiveness, neostructuralists contend that getting the prices right is not enough. They strive for a smooth and synergetic interface between political and social institutions and the market. In their view, this systemic approach is a fundamental prerequisite for ensuring that economic restructuring takes place with the required speed imposed by global markets. Only such a systemic approach can succeed in moving Latin American economies beyond a model competitiveness based 341

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Fernando Ignacio Leiva on low costs and cheap labour, which traps countries in the slowest growing niches of the international economy (raw materials with low levels of processing). Avoiding this form of spurious competitiveness and accessing the high road to globalisation demands highly coordinated trade, nancial, productive development and exchange rate policies. Only through such coordination, neostructuralists argue, can linkage with international markets beget a process of technical change that spreads from the export sector to the rest of the economy.

Neoliberal and neostructuralist views on labour exibility Underlying these contrasting paths to achieve the commonly sought objective of international competitiveness one nds different modalities of conceiving labour, labour exibility and the role of labour reform. Neoliberals argued that, by removing rigidities, labour market deregulation would lead to increased employment, reduced wage inequality and a decline in poverty levels. Neostructuralists countered that only a proactive labour exibility that enhanced the adaptability of workers to global markets through improved training and investment in human capital, rather than relying on cost reduction via lower real wages or exchange rate devaluation, would create conditions for competing internationally through productivity-led export growth. Rising exports would expand quality jobs, achieving growth with equity and greater social integration. Both of these notions were based on particular conceptions of labour as well as to how greater exibility in labour markets and labour institutions would contribute to overcome the problems sluggish economic growth, poverty and inequality. Cast from the neoclassical mould, neoliberals see labour as one more commodity, the labour market being no different from the market for potatoes or marmalade. Faced with the tasks of implementing economic reforms, neoliberals belatedly acknowledged the pivotal role of labour market deregulation in a successful structural adjustment program. Labour deregulation becomes essential if the labour market is to act as an efcient mechanism for reallocating labour from inefcient sectors to those that are expanding. In the sequencing of reforms, labour market deregulation should not be left out, . . . because under most circumstances an early reform of the labour market is highly benecial, helping reduce the transitional costs of adjustment. If labour markets are not deregulated, there is a danger that the effects of other reforms will be minimal even negative.14 Neoliberals identied many of the institutional arrangements undergirding labour markets during the previous ISI regime as the roots of inefcient and distorted market allocation. Consequently, during the neoliberal period, labour reform and labour exibility to overcome the rigidities of ISI labour institutions became a key component of neoliberal discourse and policy formulation. A crucial claim is that the set of benets provided by the welfare state constitutes a disincentive to work, to search for employment, and consequently the welfare state tends to perpetuate the very things it seeks to remedy, namely, unemployment and poverty.15 342

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Labour Flexibility, Poverty and Inequality Neostructuralist conceptions of labour, labour markets and labour institutions differ to an important degree from neoliberals, given that they are the product of a complex intellectual trajectory that transformed Latin American structuralists into neostructuralists.16 The conceptual itinerary from structuralists into neostructuralists was punctuated by deferral to neoliberal criticisms and public mea culpa for mistaken policies, leading nally to the reformulation of their development strategy unveiled in 1990 as productive transformation with social equity.17 One important self-criticism by erstwhile structuralists was the recognition that ISI created a great number of new jobs with relatively high productivity in manufacturing, but that it had also pushed a large share of the labour force into urban centers plagued by underemployment and into jobs with very low productivity, thus generating the phenomenon of marginalism or, as it is now known, the informal sector.18 Accepting blame for the informal sector ushered in the neostructuralist conviction that, for successful transformation of productive structures, specic labour policies were necessary. According to ECLAC, in order to generate productive employment it would be necessary to introduce major changes in labour relations, one of which had to be greater exibility. However, the justication for labour exibility was constructed very differently from that in neoliberal thinking. The core neostructuralist concept of systemic competitiveness, calling upon the state to generate a consensus behind the export drive and actively improve the interface between societys different sub-systems (education, infrastructure, public administration, and so on) and private exporters efforts to penetrate international markets, also had an important consequence for labour. Systemic competitiveness had to promote worker involvement in production. Success in changing Latin Americas export prole towards manufactured goods with greater value-added would be achieved to the extent that worker consent and active worker involvement in the struggle for competitiveness were forthcoming. Moving towards differentiated and better quality products, therefore, called for replacing vertical and hierarchical labour relations with more horizontal and exible ones, characterized by an intensive exchange of information, so that the initiative, creativity and responsibility of the labour force can be [harnessed].19 In addition to generating consensus behind the export drive, neostructuralists advocated at least three interrelated directions for state action: the need for encouraging a new type of labour movement; reliance on a new type of wage system that emphasised increases in productivity; and a new type of proactive labour exibility. The need for a new type of labour movement. State and political initiatives had to be undertaken to create a labour movement supportive of systemic competitiveness. This assumed the existence of a technically-prepared labour movement, conscious that its adversary was not the employer as such, but competition, and, therefore, that the movements objectives should also include improving productivity.20 In many countries, this explicitly meant having to renounce classbased traditions that in previous decades had oriented the leadership of the labour movement. 343

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Fernando Ignacio Leiva Variable wages linking payment to performance. Such a shift away from confrontation towards cooperation should also be facilitated by a wage system that makes use of participatory wages, the neostructuralist bon mot for variable wage system: Paying a portion of wages in variable form (as a function of prots, sales or analogous arrangements), not only fosters improvements in productivity, but what is even more important, it tends to stabilize and even increase the level of employment. Therefore, even though its application is just beginning in the region, this mode of payment should be explored further since it has already generated great interest.21
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Expand and improve labour exibility. Finally, state action must be oriented to ensure the transition from defensive to offensive or proactive policies to achieve labour exibility. Neoliberal policies had encouraged the former by emphasising reduction in labour and non-labour costs, and making it easier for employers to adjust the number of workers to uctuating market and technical conditions. Neostructuralist policy, it was argued, should go beyond such a limited vision, actively supporting more proactive forms of exibility: This offensive or active approach, while not dismissing the need to introduce higher degrees of exibility into the labour market, questions many of the rigidity-based assumptions and stresses the need to provide the workforce with training and new skills in order to facilitate their adaptability to changes in the production process.22 At the time neostructuralist policies were initially formulated, most Latin American countries were still caught in the wake of military regimes and neoliberal Structural Adjustment Programmes (SAPs). Passage from vertical to more horizontal labour relations, as advocated by neostructuralism, confronted obstacles at all levels of society. Successful implementation of the above policies required the state to play a crucial political role, building consensus between the public and private sector, between worker and employer organisations and among enterprises from the same sector. The need for this type of state involvement was further justied for the sake of guaranteeing exibility and ability to adapt to an extremely changing dynamic of technological change.23 An impression of the changing role of the state in terms of ensuring labour exibility can be gleaned from the Chilean case. As one analyst pointed out, If the key element to labour exibility during the 1980s was wage cost exibility, given the competitive requirements faced by the economy, other components of exibility should become more prevalent in the decade of the 1990s. Flexibility of employment via increases in labour supply confronts the limitation of having to rest upon the incorporation of female labour, which is limited by legislation, costs and traditional practices within enterprises. Thus, once again, functional exibility, linked to training and management systems, becomes potentially more fruitful.24 344

Labour Flexibility, Poverty and Inequality Implicit in such formulation is the belief that, just as spurious forms of competitiveness would have to give way to more genuine forms, a similar transition would also take place in the realm of labour relations. The more harmful forms of labour exibility wage exibility, external numerical exibility, internal numerical exibility and sub-contracting had to give way to superior forms namely, functional exibility purported to be less deleterious to workers. The labour exibility-employment-poverty-inequality nexus With the above background, we can now explore how neoliberals and neostructuralists have conceptualised the linkages between labour exibility, employment, poverty and inequality. As we shall see below, both theorisations have proved to be seriously awed. Neoliberals see labour exibility as a key component of both successful structural reform of the macro-economy and of enhanced efciency and competitiveness at the level of each individual enterprise. At a macro level, during the 1990s, labour market exibility was touted as the often overlooked precondition for successful structural reform. A dynamic and exible labour market is an important part of market-oriented policies. It helps reallocate resources and allows the economy to respond rapidly to new challenges from increased foreign competition.25 A exible labour market is not only important for ensuring the success of the reform program, but also critical in the long run so that the benecial effects of comparative advantage can kick in. Moreover, freeing the labour market of distortions improves the distribution of income because it encourages employment expansion and wage increases in the poorest segments of society.26 Labour exibility is conceived primarily as putting an end to limitations on temporary hiring and exible contracts. Such measures are a critical objective because restricting temporary hires increases labour costs, discourages employment and introduces rigidities, slowing responses to changes in the international competitive scene.27 In the neoliberal view, legislation relating to minimum wages distorts factor allocation and punishes informal sector workers, high unemployment benets reduce work incentives, job protection provisions and the high costs of dismissal make restructuring difcult and slow, and high non-wage labour costs and payroll taxes act as tax reducing incentives to expand employment and the international competitiveness of local rms.28 By eliminating rigidities, labour deregulation/exibility will tend to increase employment. Freed from articial non-wage labour costs, exible labour markets will promote the hiring of unskilled workers, thereby reducing poverty and income inequality. The neoliberal outlook on labour exibility manages to perform two important discursive manoeuvres. First, it equates exibility with deregulation. Second, it shifts the blame for economic sluggishness and poverty to organised labour and 345

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Fernando Ignacio Leiva legal norms protecting formal sector workers. Both arrangements are seen as detrimental to increasing the employment and income of unskilled and informal sector workers and the poor. Poverty and inequality, then, are not structural phenomena rooted in the capitalist accumulation process, neoliberal reforms or even the investment decisions of employers; rather, they exist and persist as a result of the excessive power of unions and the selsh, self-interested behavior of formal sector workers. A corollary to this manoeuvre is the view that, by allowing temporary contracts, easier dismissal rules, a reduction of payroll taxes and social security contributions, the demand for temporary workers would increase. Consequently, deregulation of the labour market and implementation of policies aimed at creating labour exibility would tend to decrease the number of workers in the informal sector or the number of workers involved in non-registered work. As a result, wage differentials would fall and employment levels would rise; labour exibility would lead to a decline in levels of unemployment, poverty and income inequality (see Table 1). Without rejecting the need for labour exibility strategies that reduce costs, neostructuralists place emphasis on the need to move onto a second stage, one where systemic and not spurious competitiveness can take root. In their view, the opening of the economy eventually forces not only rms but also entire societies to compete on the basis of increases in productivity, not merely an initial reduction of labour costs brought about by labour repression or devaluation of the exchange rate. In the medium and long terms, if rms are to increase productivity they must rely on technological innovation. The complex process of introducing new technologies at the level of the rm can be more successfully implemented on the basis of better labour relations. As more and more rms take the high road to globalisation (competitiveness via increases in productivity), opting out of the neoliberal low road (competitiveness via reduction of costs), each individual rm itself can become the preferred site for social dialogue and consensus building between management and labour. Thus a virtuous circle is established: better labourcapital relations allow rms to become more competitive internationally. In turn, as the rm becomes more competitive, wages can increase so that workers become more willing to engage in the struggle for productivity, and the process reproduces itself in an ever-expanding spiral that assuages class and distributional conicts. Thus, neostructuralist policies for labour exibility are able to achieve not only reductions in unemployment, poverty and inequality, but also a growing consensus between capital and labour. Greater equity leads to faster economic growth, which, in turn, leads to greater equity. However, for an economy to make successful passage from the low road to globalisation, based on passive labour exibility and spurious competitiveness, to the high road, based on offensive labour exibility and genuine competitiveness, there exist both macro-social as well as rm-level imperatives. As international competition fosters a process of technological innovation, increased incorporation of workers in the struggle for productivity, improvement of wages and concerted action at the rm level, globalisation with a human face will be the outcome. 346

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TABLE 1. Three perspectives on the linkages between labour exibility, poverty and inequality Neoliberal Labour exibility, globalisation and policy imperative Reduce production costs Neostructuralist Increase productivity and technological innovation Increases employment Improved training and adaptability of labour force Radical political economy Modify socio-technical basis of production to ensure valorisation of capital Increases precarious employment Labour market deregulation ! Increase in xedterm and temporary labour

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Labour exibility-employment linkage Transmission mechanism

Increases employment Reduction of wage and non-wage labour costs permits labour market to reallocate labour from declining to expanding sectors Reduces poverty Elimination of bloated social welfare provisions reduces disincentive to work Deregulation and change in relative prices increases demand for unskilled labour in tradable sector Reduces inequality Informal sector workers get access to formal sector jobs

Labour exibility-poverty linkage Transmission mechanism

Reduces poverty Increased employability and adaptability of labour force

Labour exibility-inequality linkage Transmission mechanism

Wages rise for poorest workers

Reduces inequality International competitiveness based on technological innovation leads to rising productivity and wages Virtuous circles Each rm becomes site for labour-capital cooperation

Increases poverty Labour market reproduces new type of poverty: working poor Privatisation/Elimination of social services reduces working class familys autonomy from dictates of labour market Increases inequality Two and three-tiered working class

Wage polarisation increases

Fernando Ignacio Leiva An alternative perspective: radical political economy Three decades of neoliberal and neostructuralist labour policies in Latin America have failed to deliver the promised results and display a veritable theoretical paralysis when confronted with the most important trends characterising labour markets in the region: the inability of export-led growth to create employment, a steady shift towards tertiary activities, rising informality and increasing precariousness of waged employment (low paying xed-term, temporary or noncontract).29 The inadequacy of neoliberal and neostructuralist conceptualisations in adequately explaining these trends highlights the need for alternative theoretical formulations that do not neglect the analysis of capital labour relations or capitalist production by conceiving them as a black box. Such a search should lead us to re-evaluate what can be described as an RPE approach. Drawing from the rich heritage of the three decades of Marxist, feminist and critical scholarship, such an approach can contribute to examining the complexity and changing nature of the capitalist labour process and the restructuring of the spheres of production and reproduction fostered by the current process of globalisation.30 It is the RPE approach, not neoliberalism and/or neostructuralism that can provide fruitful analytical tools for understanding capitalist production in general,31 but also, more importantly, for examining what happens to labour-capital relations during the restructuring of production from one regime of accumulation to another. Finally, it can offer a much more potent set of tools to examine the nexus between state and employer strategies to achieve labour exibility, on the one hand, and persistent unemployment, poverty and inequality, on the other. While neoliberals and neostructuralists conceive of opening the economy to international competition, deregulated labour markets and labour exibility as the fail-safe recipe for eradicating unemployment, poverty and inequality, an RPE approach envisages these measures in a very different light. The valorisation of capital enabled by labour market exibility is seen as the cause, not the solution, to rising poverty, inequality and unemployment in the Latin American region. Such contrasting views result from the fact that the RPE perspective scrutinises and does not paper over key characteristics of the labour process under capitalism, both in general and during the process of profound capitalist restructuring experienced in Latin America and the world economy over the past three decades. Five propositions derived from the RPE approach offer to ll the major shortcomings of the dominant neoliberal and neostructuralist approaches: (1) given the nature of labour power, labour control is a central, unavoidable and dening component constituting the very base of the structure and functioning of the capitalist economy; (2) the control of labour exercised exercised by capital has a dual dimension encompassing both the workplace and the sphere of reproduction of labour; (3) the forms under which labour control is exercised changes historically with the rise, predominance and decline of different forms of production;32 (4) the capitalist labour process represents the unity of the valorisation of capital and the socio-technical organisation of production; and (5) labour control and the labour process are gendered processes.33 The importance of these propositions is that the realm of production is understood as both a technical and a social process, where capital must exercise its 348

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Labour Flexibility, Poverty and Inequality control and domination over labour within specic conditions of valorisation and class struggle.34 The organisation of industry and the labour process are not reduced to the immanent requirements of technical change, but rather are seen as the outcome of the need to control labour as well as organise it through diverse labour control and monitoring systems. This need is exercised in the context of increased capitalist competition and the accumulation of capital takes place under certain specic social and political conditions. The precise form assumed by labour control depends on these conditions.35 An RPE approach is attentive to the process through which the valorisation of capital takes place extension of the workday, lowering of the value of labour power and intensication of the labour process as well as some more recent forms utilised in exible accumulation strategies that have become generalised in the era of capitalist gobalisation, namely, transferring the costs of production and reproduction onto workers and their families through the informalisation of labour capital relations. These elements alert us to the fact that beneath the neoliberal and neostructuralist rhetoric on labour exibility and economic reforms lies a far-reaching process that entails the redrawing of power relations in society so as to enable the reorganisation and relaunching of a new process of valorisation of capital. The strategies observed in Latin America during the past decade and a half combine some old as well as relatively new strategies for achieving this goal. Labour outcomes 1990 2005: selected indicators Contrary to the optimistic projections of neoliberals and neostructuralists, at least in terms of improving the well-being of workers, the deregulation and exibilisation of labour markets did not yield the promised results. Data from Latin America attest to the failure of labour reforms in reducing unemployment, inequality and poverty. Below, I sketch how the outcomes in Latin American labour markets reect the crash of neoliberal promises and how the case of Chile illustrates the shortcomings of neostructuralist intentions. Trends in Latin American labour markets The International Labour Organization (ILO)s Regional Ofce for Latin America and the Caribbean, with headquarters in Lima, publishes annually the Labour Overview informing on the condition of workers and the evolution of labour markets in the region. Along with the IADBs report Good Jobs Wanted, noted earlier, they offer more than enough information to draw a composite picture of the major trends over the last decade and a half and how these counter each one of neoliberalisms predictions.36 Rising unemployment despite growing economies. Despite a recuperation of gross domestic product (GDP) growth rates during the 1990s, unemployment in the region has tended to increase (see Table 2). The fact that GDP and export growth rates have recovered in comparison to the 1980s and the 1998 2002 slowdown has not implied an equivalent capacity to create jobs in sufcient numbers or reduce unemployment levels. Researchers afliated with the IADB found that the 349

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Fernando Ignacio Leiva rise in unemployment over the 1990s is not driven by a higher proportion of women, adults or urban workers in the labour force, nor can it be attributed to an increasing demand for skilled workers.37 The current pattern of exportoriented growth has proved incapable of generating jobs in sufcient volume. Growing informality. Instead of declining, the informal sector grew signicantly during the 1990 2003 period from 42.8 per cent of urban employment in 1990 to 47.4 per cent in 2003. At the same time, most job creation took place in the informal sector: six out of ten jobs created in the 1990 2003 period were in the informal sector.38 The unexpected persistence and expansion of the informal sector has led World Bank economists to re-paint the phenomenon of informality rather than re-examine their basic assumptions. Michael Maloney, Lead Economist in the World Banks Ofce of the Chief Economist of the Latin America and Caribbean region (LCRCE), has proposed that we should think of the informal sector as the unregulated, developing country analogue of the voluntary entrepreneurial small rm sector found in advanced countries.39 Falling wages. ILO data on the real wage index shows that real wages rose at an average yearly rate of 3 per cent during the 1990 94 period, 0.7 per cent during 1995 99, to decline at 2 1.2 per cent during the 2000 2003 period. Measured in purchasing power parity (PPP)-adjusted US dollars, other studies show that average wages remained constant or declined throughout the decade both in the Mexico and Central America region and in the Andean region. . . . Wages in dollars increased in the Southern Cone, in particular in Chile and Brazil, relative to their values in the early 1990s despite the sharp increase in unemployment registered in this group of countries. Nonetheless, wages did decline somewhat towards the end of the decade in Brazil and Chile.40 Increasing wage polarisation. Neoliberals predicted that wage inequality between skilled and unskilled workers would be reduced as demand for the
TABLE 2. Latin America: labour market indicators, selected years (1) GDP (%) 2 0.6 1.1 4.0 2 0.8 2.0 5.9 2.8 2.56 2.28 (2) Urban unemployment (%) 8.0 9.1 10.5 11.7 11.5 10.9 8.5 9.6 11.8 (3) Real wages (Index 1990 100) 100.0 111.4 118.8 121.0 114.9 3.0 0.7 2 0.2 (4) Informal sector (%) 42.8 46.1 46.9 46.5 47.4 (5) Workers contributing to social security (%) 66.6 65.2 65.7 63.7 63.6

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Year 1990 1995 2000 2002 2003 2004 1990 1994 average 1995 1999 average 2000 2004 average

Source: Compiled by author on basis of the ILOs 2004 Labour Overview and Panorama Laboral 2005: America Latina y el Caribe: Primer Avance (ILO, 2005). GDP Data for 1990 and 1990 1994 averages from ECLAC, 2004 Statistical Yearbook for Latin America and the Caribbean, in 1995 constant prices.

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Labour Flexibility, Poverty and Inequality more abundant unskilled workers increased and the barriers that prevented unskilled workers from entering the formal sector were removed through labour market deregulation. Data collected by the IADBs 2004 study shows the opposite trend: wage differentials increased substantially in most countries.41 Growing precariousness of jobs. One dominant and unexpected trend has been the growing instability and precariousness of employment as measured by the high rates of turnover and the growth of jobs that do not enable workers to climb above the arbitrarily dened ofcial poverty lines, much less adequately reproduce their labour power. In a study of twelve Latin American countries, the IADB found that job turnover ranges from 16 to 35 per cent. In the case of Brazil, for instance, a change of 1.1 per cent in the unemployment rate hides an impressive amount of activity in the labour market; gross ows indicate that each year one out of three jobs is either created or destroyed, meaning total job turnover is 31 per cent.42 Data from the ILOs 2004 Labour Overview provide another indicator of the growing insecurity that workers face: the proportion of workers contributing to a social security has declined from 66.6 per cent in 1990 to 63.6 per cent in 2003, and these gures, as the case of Chile illustrates, signicantly overestimate the percentage of the labour force that has effective social security coverage.43 Persistently high number of working poor. At the same time, the number of workers earning poverty wages remains extremely high in the region (see Table 3). Using as a measure the number of workers employed in jobs earning one PPP-adjusted US dollar per hour or less, IADB researchers nd that the percentage of workers earning poverty wages ranges from under 40 per cent in Chile, Panama, Costa Rica, Mexico and Uruguay to over 70 per cent in El Salvador, Bolivia, Nicaragua and Honduras.44 They nally acknowledged what has been obvious to critics in the region for many years: that entry into the labour market does not ensure exit from poverty, given the nature of the regions exible labour markets.45 Fracture lines in Chiles growth with equity Chile has been the rst Latin American country to undergo the neoliberal reform process, and the rst to successfully complete the basic three-stage restructuring process prescribed by the World Bank of shock therapy (1975 1978), structural transformations (1979 1989) and consolidation and restoration of investment levels (19902005).46 After a 13 year economic boom driven by exports (1986 1998) and a recession and slowdown (19992002) in the wake of the Asian crisis, the Chilean economy is showing signs that it will once again recover relatively high growth rates (see Table 4). Most macroeconomic and development indicators present Chile as a model of success: high rates of export growth, rising foreign direct investment, higher than average (for Latin America) productivity growth and xed capital investment rates, along with a high level of consensus among business and political elites in addition to pro-capital legislation and institutions, have transformed Chile into an investors dream. The centre-left coalition in power since 1990 can also display signicant reductions in ofcial poverty rates from 38.6 per cent in to 1990 to 20.6 per cent 351

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TABLE 3. Latin America: percentage of workers in urban areas earning poverty wages Country (period) Argentina (1993, 1996, 1999) Bolivia (1993, 1996, 1999) Brazil (1993, 1996, 1999) Chile (1992, 1996, 1998) Colombia (1993, 1995, 1999) Costa Rica (1993, 1995, 1998) Dominican Rep. (1996) Ecuador (1998) El Salvador (1998) Guatemala (1998) Honduras (1992, 1996, 1999) Mexico (1992, 1996, 1998) Nicaragua (1998) Panama (1991, 1995, 1999) Paraguay (1998) Peru (1991, 1994, 2000) Uruguay (1992, 1995, 1998) Venezuela (1993, 1995, 1999) Early 1990s 17.8 73.3 72.8 44.6 49.4 31.7 na na na na 71.8 29.0 na 43.8 na 64.6 51.0 9.5 Mid 1990s 15.2 65.5 54.6 40.4 61.0 34.5 na na na na 73.2 44.3 na 55.9 na 60.8 57.5 21.6 Late 1990s 19.0 65.9 55.4 40.3 49.6 42.3 48.5 51.8 73.7 57.6 78.9 40.8 78.5 40.1 75.5 63.9 41.7 21.1

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Source: Table 83, Inter American Development Bank, Good Jobs Wanted: Labour Markets in Latin America (IADB and Johns Hopkins University Press, 2004). Includes males and females aged 15 64. Poverty wages as dened as less than US$1 PPP per hour.

in 2000 and 18.8 per cent in 2003.47 Chile seems to be an all-round success story. On the one hand, the Davos-based World Economic Forum lists Chile as the top Latin American country in terms of its Global Competitiveness Index (GCI), ranking it in 23rd place above Malaysia, Luxembourg, Ireland and Israel.48 At the same time, in terms of its Human Development Index (HDI), the UNDPs 2005 Human Development Report ranks Chile in 37th place, second in Latin America only to Argentina (34th). An analysis of selected indicators shows that GDP has recovered from the 1998 1999 recession, although this did not signicantly reduce unemployment levels as rms increased output with the recessionlevel number of employees,49 real wages for manufacturing continued rising although at decreasing rates, the size of the informal sector declined, at the same time that the number of workers contributing to a social security system rose (see Table 4). However, beneath this surface success, in which both the desires of transnational capitalists and objectives of human development appear to have been met, lies another, often neglected but equally important component of present Chilean reality: that of one of the highest levels of inequality in Latin America, already the most unequal region in the world.50 Equally, not captured by these classications is the fact that Chiles working class is one of the most exploited in the hemisphere. This situation, initially structured by neoliberalism and state terrorism under Pinochet, has been maintained by the centre-left, neostructuralist-inspired civilian coalition that has held ofce since 1990. Flexible labour markets the 352

Labour Flexibility, Poverty and Inequality

TABLE 4. Chile: labour market indicators, selected years (1) (2) Urban unemployment (%) 7.4 6.6 9.2 9.1 9.0 8.5 8.8 7.0 6.7 8.7 (3) Real wages manufacturing sector (Index 1990 100) 100 128.5 144.2 144.8 146.8 148.1 150.0 5.4 4.4 1.3 (4) Informal sector (%) 37.9 38.8 38.0 35.8 (5) Workers contributing to social security (%) 79.0 67.0 62.8 76.4

Year 1990 1995 2000 2001 2002 2003 2004 1990 1994 average 1995 1999 Average 2000 2004 average

GDP (%) 3.3 10.8 4.5 3.4 2.2 3.7 6.1 6.7 5.36 3.98

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Source: Data from Statistical Annex of ILO, Panorama Laboral 2005. Averages calculated by author from time series. GDP Data for 1990 and calculation of 1990 1994 GDP average from ECLAC, 2004 Statistical Yearbook for Latin America and the Caribbean (in 1995 constant prices)

cornerstone of the economic models success have steadily increased the level of precarious employment, heightening the lack of protection and vulnerability for a growing number of male and female workers. Numerous indicators suggest that economic growth has not generated highquality jobs and, to the contrary, has tended to transform existing jobs into precarious ones. Data for Chile strongly indicates that, during the 1990s, economic growth expanded the number of unstable jobs, additionally characterised by low levels of benets and remuneration. One indicator of the quality of employment is whether or not a worker has a labour contract. Social security, health, vacation and other benets are directly associated with the existence of a written contract between a worker and an employer, and additionally with the type of contract (permanent or temporary). Using a broader denition of precarious employment that which is unstable, can be interrupted at any time, is not for a single, identiable employer, does not necessarily take place in the establishment of the employer, has low or no access to social security and is performed with scant protection for the physical and psychological integrity of workers51 we can gauge the signicant role of such jobs in the Chilean economy. Based on the 1994 National Socioeconomic Survey (CASEN), Chiles Labour Bureau concluded that 33 per cent of all salaried workers and 56.6 per cent of all unskilled workers suffered precarious employment.52 According to Labour Bureau statistics, the percentage of workers with precarious jobs represented in 1996 a signicant portion of export sector workers 55 per cent of agricultural workers, 52.1 per cent of workers in forestry, 50.7 per cent of workers in lumber extraction and 36 per cent of workers in the shing sector precisely the most dynamic sectors constituting the main pillars of Chiles export model. 353

Fernando Ignacio Leiva Chiles exible labour market and labour legislation continues to provide rms and employers with an incentive structure that encourages transferring the costs of social reproduction as well as the risks of production onto workers and their families. The institutional matrix underpinning Chiles exible labour markets has been an important factor stimulating the adoption of productive strategies based on cost-reduction and cost-externalisation through the hiring of xedterm, short-term workers and the use of sub-contracting,53 instead of technological innovation and investment in capital and equipment. At best, data for Chile shows that employers have combined spurious neoliberal strategies with very limited genuine neostructuralist forms of competitiveness. No indications exist that, at the level of the rm, the clear dichotomy posited by neostructuralists leads to a transition from the savage authoritarian neoliberal phase to a more consensual neostructuralist phase. Processes of greater economic globalisation economic concentration and nancialisation have all intensied over the past decade, increasing the volatility, precariousness and uncertainty faced by Chilean male and female workers. Recent studies carried out by the Research Department of Chiles Labour Bureau indicate that all of the above traits already present during the mid 1990s have reached alarming levels. Using an innovative approach of conducting longitudinal studies of employment trajectories, rather than just examining the cross-sectional data offered by periodic employment and household quez, and surveys, the head of the Bureaus Research Department, Helia Henr her collaborators have produced a valuable set of quantitative and qualitative data depicting the volatility and insecurity faced by Chilean workers.54 By following employment trajectories during an 18-month period in 1998 2000 through a special processing of the National Employment Survey (ENE), they provide a picture of the magnitude and gendered nature of high turnover rates, structural volatility and uncertainty experienced by the majority of Chilean workers. If those that never reported themselves as belonging to the labour force are excluded from the data, and the remainder is classied according to shifts in their employment status (employed, unemployed, inactive) as well as by class of workers (waged/salaried, self-employed), a more accurate picture of the insecurity and volatility emerges (see Table 5). They nd that 78 per cent of the labour force changed job location at least once in terms of one or both of the variables studied (employment status and class of worker). Only 42 per cent of the labour force remained employed throughout the 18month period, reecting the high level of instability present in the labour market. Fifty seven per cent of those in the labour force remained as waged and salaried workers and 16 per cent possessed only self-employed jobs. More than a quarter of the labour force moved back and forth between the categories of dependent and autonomous workers. A relatively small minority (31.8 per cent) of the labour force remained employed throughout the period and did not change their occupational category. The precariousness and instability experienced by the majority of workers in the 1990 2005 period, portrayed briey above, illustrates the emerging patterns in a country that has been successful in completing a wrenching process of capitalist restructuring. These also illustrate how Chiles neostructuralist-inspired 354

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TABLE 5. Instability and volatility of Chilean workers: patterns of employment trajectories according to employment status and dependency, 1998 2000 Types of trajectory according to employment status and class of workers Only wage and salaried jobs Always employed From employed to inactive From employed to unemployed Total Wage and self-employed jobs Always employed From employed to inactive From employed to unemployed Total Only self-employed jobs Always employed From employed to inactive From employed to unemployed Total Total Population at least once holding a job Frequency 1,100,490 751,744 714,457 2,566,691 541,333 274,694 363,878 1,179,905 324,221 317,132 91,968 733,321 4,479,917 Percentage 24.6 16.8 15.9 57.3 12.1 6.1 8.1 26.3 7.2 7.1 2.1 16.4 100.0

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quez & Vero nica Uribe-Echevarr a, Trayectorias Laborales: La Certeza De La Source: Helia Henr n del Trabajo, 2004), Table 15, n, No. 18 (Direccio Incertidumbre, in Cuadernos de Investigacio p. 53.

policy makers have failed in achieving three promised goals: the creation of quality productive jobs, the basis for an expanding process of social integration; the promotion of growth with equity so as to signicantly improve income distribution; and the establishment of the microeconomic foundations within each n productive establishment for a self-propelling process of equity and concertacio social. Despite some positive trends in the 1990 2005 period a decline in poverty and rising real wages (though at decreasing rates and below the rate at which productivity increased) there is another reality of precariousness, volatility and turnover rates that has been less captured by existing indicators. The fact that neoliberal and neostructuralist labour exibility policies exhibit profound shortcomings even in a country like Chile should be a call to rethink the original assumptions. Moreover, the deep transformations experienced in labour capital relations, the organisation of production, the conditions of existence and reproduction of the working class, the functional distribution of income and the productive strategies adopted by private rms can best be interpreted through the analytical lens provided by an RPE approach. Neoliberal policies destroyed the foundations of the ISI regime of accumulation and, by relying on state terrorism, radically realigned class forces in Chilean society. Neostructuralist rhetoric and policy intervention during the 1990 2005 period complete the historical task initiated by neoliberalism: the consolidation and legitimisation of a new export-oriented regime of accumulation, by constructing a new set of mediations which ensure 355

Fernando Ignacio Leiva that the distortions created by the accumulation of capital are kept within limits which are compatible with social cohesion within each nation.55 Constructing an effective mode of regulation, rather than signicantly transforming the export-oriented regime of accumulation, has been the major contribution of n governments. Latin American neostructuralism under Chiles Concertacio Conclusion The predicted decline in unemployment, poverty and inequality that would result from deregulating the labour market and creating a exible labour force failed to materialise. Although such neoliberal and neostructuralist failures can also be interpreted as successes because they have strengthened class processes fundamental to capital accumulation, it is important to take stock of the incapacity of neoliberalism and neostructuralism to explain some of the dominant trends in Latin American labour markets. From a RPE perspective, state and rm-based strategies to achieve labour exibility have extensive repercussions upon multiple dimensions of economic and social life. In brief, in the era of globalisation greater labour exibility is gained at the expense of the income, employment, job and skill security, and health of workers and their families. The trends characterising Latin American labour markets in the 1990s the fragile basis of poverty reduction, the growing precariousness of jobs, rising inequality, and the absence of a self-propel n social and the informalisation of labour capital ling process of concertacio relations can be better explained by insights drawn from an RPE perspective than neoliberal or neostructuralist conceptualisations. Consequently, we need to confront the theoretical and empirical inconsistencies of neoliberal and neostructuralist conceptualisations by critically examining the linkage between labour exibility, poverty and inequality. Neoliberalisms meltdown in Latin America and the inherent contradictions of the rising neostructuralist paradigm supported by ECLAC should reinforce awareness that the contradictions of society cannot be wished away with paeans to prices, markets and technology, or by invoking the purported healing powers of new production paradigms and globalisation. The failure of these two mainstream paradigms create both the opportunity and the challenge of constructing alternative perspectives capable of elucidating the transformation engendered by the current forms of capitalist development in Latin America. Such an effort should incorporate a revitalisation of the labour process approach and the analysis of class, gender and power relations in a transnational perspective, each one of them core components of a revamped and much needed RPE approach. Notes
1. By neostructuralists or neostructuralism, I am referring specically to the Latin American variant that ourished after 1990 under the auspices of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), better known by its Spanish acronym of CEPAL. A number of books have discussed the emergence of Latin American neostructuralism. Patricio Mellers The Latin American Development Debate: Neostructuralism, Neomonetarism and Adjustment Processes (Westview Press, 1992) and Osvaldo Sunkels Development from Within: Toward a Neostructuralist Approach for Latin

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America (Lynne Rienner, 1993) are outdated and woefully one-sided. More recent works such as Duncan Greens Silent Revolution (Latin American Bureau/Monthly Review Press, 2003) Robert N. Gwynne & bal Kays Latin America Transformed: Globalization and Modernity (Arnold, 2004), and Peadar Cristo Kirbys Introduction to Latin America: Twenty-First Century Challenges (Sage, 2003) offer a more useful description without deeply probing Latin American neostructuralisms conceptual underpinnings and societal outcomes. The World Banks 1997 World Development Report: The State in a Changing World, and its 2002 World Development Report: Building Institutions for Markets, both represent a turn away from dogmatic neoliberalism. David Ruccio, When Failure Becomes Success: Class and the Debate over Stabilization and Adjustment, World Development, Vol. 19, No. 10 (1991), pp. 131534. I borrow the term Radical Political Economy from James Rebitzers article Radical Political Economy and the Economics of Labor Markets, Journal of Economic Literature, Vol. 31, No. 3 (1993), pp. 1394494. Some of its early US proponents have abandoned RPEs original thrust by embracing neoclassical concepts and methodology. For an account of this process, see David Spencer, The Demise of Radical Political Economics? An Essay on the Evolution of a Theory of Capitalist Production, Cambridge Journal of Economics, Vol. 24, No. 5 (2000), pp. 54363. Nonetheless, I believe that the term should be preserved, along with its original intellectual aim of understanding power relations in capitalist production, expanding it also to the reproduction of labour, both with a transnational perspective. The Unraveling of the Washington Consensus: An Interview with Joseph Stiglitz, Multinational Monitor, Vol. 21, No. 4 (2000), pp. 1321, emphasis added. ECLAC, Social Panorama of Latin America 19992000, ECLAC Notes, No. 12 (September 2000), p. 1, emphasis added. Inter-American Development Bank (IADB), Good Jobs Wanted: Labor Markets in Latin America (IADB & Johns Hopkins University Press, 2004), p. 2. Ibid., p. 166 Among the many studies, the following four are representative: Eduardo Amadeo & Susan Horton, Flexibility and Productivity in Latin America (Macmillan, 1996); Sebastian Edwards & Nora Lustig, Labor Markets in Latin America: Combining Social Protection with Market Flexibility (Brookings Institution, ges, Latin American Labor Markets in the 1990s: 1997); Suzanne Duryea, Olga Jaramillo & Carmen Pa Deciphering the Decade, Inter-American Development Bank Working Paper, No. 486 (IADB, 2003); and IADB, Good Jobs Wanted. n ministries and economic posts started in 1990 The migration of ECLAC functionaries into key Concertacio n administration led by Patricio Aylwin and continued under the Frei (19941999) under the rst Concertacio n administration, Andre s Bianchi, who and Lagos (20002005) governments. During the rst Concertacio had been Director of ECLACs Economic Development Division and ECLAC Deputy Executive Secretary, was named Central Bank president; Ricardo Ffrench-Davis was named Director of Research at the Central Bank (19901992); Carlos Massad, who had held numerous posts at ECLAC, was named Minister of Health in 1993, and then Central Bank governor (19962007). Other prominent ECLAC functionaries that have n administrations have been Roberto Zahler (Central Bank), Nicolas served in different Concertacio Eyzaguirre (Minister of Finance), Osvaldo Rosales (Director of General of External Economic Relations), Ernesto Ottone and Eugenio Lahera (both as advisors on public policy and strategic issues to President Lagos). Of these, Ffrench-Davis, Rosales and Ottone have returned to their posts at ECLAC. The notion of systemic competitiveness was introduced into Latin American neostructuralism through the work of Fernando Fajnzylber of the Joint ECLAC/UNIDO task force. See his seminal article International Competitiveness: Agreed Goal, Hard Task, CEPAL Review, No. 36 (1988), pp. 7 23. It was adopted as ECLACs discourse in 1990 with the publication of Changing Production Patterns. ECLAC, Changing Production Patterns, p. 71. Antonio Ocampo, Rethinking the Development Agenda (ECLAC, 1998); Nancy See, for example, Jose Birdsall, Carol Graham & Richard H. Sabot (eds), Beyond Tradeoffs: Market Reform and Equitable Growth in Latin America (Inter-American Development Bank & The Brookings Institution, 1998); and s Solimano, Augusto Aninat & Nancy Birdsall (eds), Distributive Justice And Economic Development: Andre The Case of Chile and Developing Countries (University of Michigan Press, 2000). World Bank, Latin America and the Caribbean: A Decade After the Debt Crisis (World Bank, 1993), p. 4. Keith Grifn, Alternative Strategies For Economic Development (Macmillan/OECD Development Centre, 1989), p. 39.

2.

3. 4.

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5. 6. 7. 8. 9.

10.

11.

12. 13.

14. 15.

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16. For an analysis of the passage from structuralism to neostructuralism see James Petras & Fernando Ignacio Leiva, Democracy and Poverty in Chile: The Limits to Electoral Politics (Westview Press, 1994), ch. 4. 17. ECLAC, Changing Production Patterns. 18. Osvaldo Sunkel & Gustavo Zuleta, Neostructuralism versus Neoliberalism in the 1990s, CEPAL Review, No. 42 (1990), p. 38 19. CEPAL, Equidad y Transformacion Productiva: Un enfoque integrado (Naciones Unidas, 1992), p. 23, my translation. 20. Ibid. 21. Ibid., emphasis added 22. Ricardo A. Lagos, Labour Market Flexibility: What does it Really Mean?, ECLAC Review, No. 54 (1994), p. 93. rica Latina, 23. Gustavo Zuleta, El Desarrollo Desde Dentro: Un Enfoque Neostructuralista Para Ame Pensamiento Iberoamericano, No. 21 (1992), p. 311, my translation. n de Estudios CIEPLAN, 24. Pilar Romaguera, Flexibilidad laboral y mercado de trabajo en Chile, Coleccio No. 43 (1996), p. 12, my translation, emphasis added. 25. World Bank, Latin America and the Caribbean, p. 92. 26. Ibid. 27. Ibid., p. 92. 28. Alejandra Cox-Edwards, Labor and Economic Reforms in Latin America and the Caribbean (World Bank, 1995). 29. International Labour Organisation, Regional Ofce for Latin American and the Caribbean, 2000 Labour Overview of Latin America and the Caribbean (ILO, 2000). 30. See Chris Smith & Paul Thompson, Reevaluating the Labor Process Debate, in Mark Wardell, Thomas L. Singer & Peter Meiksins (eds), Rethinking the Labor Process (State University of New York Press, 1999), pp. 20531; Berch Berberoglu (ed.), Labor and Capital in the Age of Globalization: The Labor Process and the Changing Nature of Work in the Global Economy (Rowman & Littleeld, 2002). 31. Classic works on this topic are Harry Braverman, Labor and Monopoly Capital: The Degradation of Work in the Twentieth Century (Monthly Review Press, 1974); The Brighton Labour Process Group, The Capitalist Labour Process, Capital and Class, No. 1 (1977), pp. 326; and Michael Buroway, Manufacturing Consent (University of Chicago Press, 1979). 32. The historical evolution of labour control systems has been studied, extensively. Two studies of its evolution in the US economy are Richard Edwards, The Contested Terrain (Basic Books, 1977) and Christopher Gunn, Workers Participation in Management: Capitals Flexible System of Control, Review of Radical Political Economics, Vol. 26, No. 2 (1994), pp 11926. 33. John Humphrey, Gender and Work in the Third World: Sexual Divisions in Brazilian Industry (Tavistock Publishers, 1987). See also Leslie Salzinger, Genders in Production: Making Workers in Mexicos Global Factories (University of California Press, 2003). 34. John Humphrey, Labour Use and Labour Control in the Brazilian Automobile Industry, Capital and Class, No. 12 (1980), pp. 4358. 35. Ibid. 36. These shortcomings have been analysed by Latin Americanists using a multi-disciplinary perspective. Insightful critiques can be found in Viviana Patroni & Manuel Poitras, Labour in Neoliberal Latin America: An Introduction, Labour, Capital and Society, Vol. 35, No. 2 (2002), pp. 20720. See also Ronaldo Munck, Introduction, Latin American Perspectives, Vol. 31, No. 4 (2004), pp. 320. These two essays introduce very useful special editions of these two journals dedicated to the topic of labour exibility and its impact on workers and labour markets in Latin America. 37. Duryea et al., Latin American Labor Markets in the 1990s, p. 2. 38. International Labour Ofce, 2004 Labour Overview of Latin America and the Caribbean (ILO/Regional Ofce for Latin America and the Caribbean, 2004). 39. William F. Maloney, Informality Revisited, World Development, Vol. 32, No. 7 (2004), p. 1159, emphasis added. 40. Duryea et al., Latin American Labor Markets in the 1990s, p. 20. 41. See Table 82 in IADB, Good Jobs Wanted. It compares the hourly wages between workers in the 9th decile (D9) to those of the rst decile (D1). For example the D9/D1 ratio in Argentina went from 6 in 1993 to 8.4 in 2001; for Mexico it went from 4.95 in 1990 to 6.96 in 2001. For Bolivia it went from 12.60 in 1990 to 39.07 in 2001.

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42. IADB, Good Jobs Wanted, p. 6. 43. The fact that a worker contributes or is afliated to a social security system does not imply that he or she has effective coverage. Chile, the paragon of a privatised social security system, provides a good example. See Fernando Leiva, Chiles Privatized Social Security System: Behind the Free-Market Hype, Network Connection, May June 2005 (http://www.networklobby.org/connection/index.html). 44. Duryea et al., Latin American Labor Markets in the 1990s, p. 22. n social en Chile, 45. Fernando I. Leiva & Rafael Agacino, Mercado de trabajo exible, pobreza y desintegracio 19901994 (Universidad ARCIS, 1994); Marcus Taylor, Interrogating the Paradigm of Labour Flexibilization: Neoclassical Prescriptions and the Chilean Experience, Labour, Capital and Society, Vol. 35, No. 2 (2002), pp. 22251; Patricio Escobar, The New Labour Market: The Effects of the Neoliberal Experiment in Chile, Latin American Perspectives, Vol. 30, No. 5 (2003), pp. 70 8. 46. Marcelo Selowsky, Stages in the Recovery of Latin Americas growth, Finance and Development (June 1990), pp. 28 31. as, Chile: Monitoring Socio-Economic Conditions in 47. Paula Giovagnoli, Georgina Pizzolitto & Julieta Tr Argentina, Chile, Paraguay and Uruguay, Documento de Trabajo No. 19, Centro de Estudios Distributivos, Laborales y Sociales, Universidad de la Plata, 2005. 48. World Economic Forum, The Global Competitiveness Report 20052006 (Palgrave, 2005), p. xiv. 49. Escobar, The New Labor Market. 50. David de Ferranti, Inequality in Latin America: Breaking with History? (World Bank, 2004). a, Mejores Condiciones De Trabajo: Un Desaf o Actual, Temas Laborales, No. 2 51. Magdalena Echeverr n del Trabajo, 1996), p. 5. (Departamento de Estudios Direccio lisis de encuesta de 52. Malva Espinosa, Sindicalismo en la empresa moderna: Ni ocaso, ni crisis terminal. Ana n n, No. 2 (Departamento de Estudios, Direccio empleadores y trabajadores, 1996 Cuadernos de Investigacio del Trabajo, 1997), p. 10. a & Diego Lopez, Flexibilidad laboral en Chile: las empresas y las personas (Depar53. Magdalena Echeverr n del Trabajo, 2004). tamento de Estudios, Direccio quez & Vero nica Uribe-Echeverr a, Trayectorias laborales: La certeza de la incertidumbre, 54. Helia Henr n del Trabajo, 2004); Eduardo Acun n, No. 18 (Direccio a & Ernesto Perez, Cuadernos de Investigacio nsito entre el trabajo asalariado y el empleo independiente, Cuadernos de Trayectorias laborales: el tra n del Trabajo, 2005). n, No. 23 (Departamento de Estudios, Direccio Investigacio 55. Michel Aglietta, A Theory of Capitalist Regulation: The U.S. Experience (Verso, 2000), p. 391.

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