Public Employee Press

The World of Work
Pro-labor shift in Latin America

By GREGORY N. HEIRES

A leftward wave has engulfed Latin America.

Voters are demanding deep changes after struggling to get by for more than 25 years under conservative economic and political policies that depressed living standards for the vast majority.

Sworn into office Jan. 15, President Rafael Correa, 43, of Ecuador became the latest in a new crop of Latin American leaders.

The U.S.-educated economist beat the nation’s richest man, billionare banana magnate Alvaro Noboa, in the election. Correa pledged a “citizens’ revolution” to address the needs of the country’s poor majority, root out corruption, renegotiate the debt and rework oil agreements with foreign companies.

More than 300 million of the region’s 520 million citizens now live in countries whose elected leaders are adopting policies variously described as social democratic, populist, nationalistic or leftist. The countries are Argentina, Bolivia, Brazil, Chile, Ecuador, Nicaragua, Venezuela and Uruguay.

Correcting the deep poverty and economic inequality that afflict their people is a top priority for the new wave of leaders, who are generally supportive of the labor movement.

They stand atop a half century of economic change in the post-World War II era, the prevailing economic model was based on full employment and the social safety net, said Sean Sweeney, director of the Global Labor Institute. From 1960 until 1980, government policies stimulated high growth in economic output, which pushed up average income (adjusted for inflation) by 82 percent.

Under pressure from the United States, governments adopted conservative policies and growth plummeted to 9 percent from 1980 to 2000 and 4 percent from 2000-2005. “Neo-liberalism” — the economic medicine prescribed by banks, international lenders and the U.S. government — eliminated millions of full-time jobs, cut real income and increased inequality.

Neo-liberal tactics included:

• privatizing and shrinking government services
• eliminating labor protections and weakening or destroying unions
• austere economic stabilization programs overseen by the International Monetary Fund and
• deregulation and free trade.

These policies produced “25 years of the worst economic growth in a century,” said Mark Weisbrot of the Center for Economic and Policy Research in Washington, and led to today’s swing to the left. The “pink tide” began sweeping Latin America when Venezuela elected Hugo Chavez in 1998.

Challenge to creditors
Reelected last year to his third term with 63 percent of the vote, Chavez uses the country’s oil riches to provide free health care, better education and food subsidies for the poor — instead of profits for a wealthy few. The result: In 2006, Venezuela had the highest growth in the region for the second year in a row.

Chavez has cultivated stronger ties with poor nations in Latin America, such as Cuba and Bolivia, by providing them with cheap oil and an alternative source of credit. Crippling debt had forced many to surrender control over their policymaking to international lending institutions.

In what Knight Ridder Business News described as the “biggest sovereign debt restructuring in history,” Argentine President Nestor Kirchner repudiated the country’s $100 billion of external debt in 2005, forcing international lenders to take unprecedented losses by accepting 30 cents for each dollar the country owed. His unorthodox economic policies have helped 8 million Argentineans escape poverty.

Analysts point out that the ideological leanings of the progressive leaders do not fit the socialist model of the Cold War. Like the European social democracies, their governments generally embrace free-market policies but provide a strong safety net. Brazil’s Lula has disappointed many in his Workers Party because he has failed to reverse many of the austere economic policies of his predecessor, though he has promoted regionalism.

The more pragmatic leaders include Chile’s Michelle Bachelet, a single mother and physician whose father was killed and who herself was imprisoned under Gen. Augusto Pinochet’s U.S.-backed right-wing dictatorship. She supports free-trade policies and has strengthened Chile’s safety net. While Tabare Vasquez’s first act as president of Uruguay was to reestablish ties with Cuba, he shares the cautious center-left economic policies of Brazil’s Lula.

Evo Morales of Bolivia, like Lula, is another worker-president. A former coca-leaf grower and trade union leader, Morales is an Aymara Indian from a poor family, and he has appointed several indigenous Indians to cabinet positions. With Chavez, Morales is identified among the more leftwing leaders to assume office in recent years.

Chavez, Morales and Correa came together Jan. 10 to celebrate the inauguration of the former leftist guerrilla, Daniel Ortega, as president of Nicaragua. Ortega’s agenda focused on cutting illiteracy, stopping privatization of Nicaragua’s water, bringing electricity to the country's poor and expanding economic cooperation with other progressive Latin American governments.