EMPLOYMENT AND REAL MACROECONOMIC STABILITY: THE REGRESSIVE ROLE OF FINANCIAL FLOWS IN LATIN AMERICA

The author examines economic reforms carried out in Latin America since the 1990s. Price stabilization was achieved, but there has been insufficient growth and economic instability has been detrimental to productive investment and employment. Frequent crises have had a severe recessionary effect and have discouraged capital formation and the creation of decent jobs. Financial capital flows were the chief causes of this general economic situation. A positive recovery in 2010 resumed the climb towards progress begun in the 2004-08 period, but still high levels of precarious employment and serious deficiencies in macroeconomic policy prevail. Precarious employment has long been a feature of Latin American societies. Although progress has been made in reducing poverty since the 1990s, there is yet to be a sustained and robust move towards a situation in which more stable jobs predominate and workers have social protection, are organized and can engage in collective bargaining, in keeping with the decent work concept of the International Labour Organization (ILO). The countries of Latin America undertook sweeping economic reforms in the context of what is known as the Washington Consensus − including far-reaching trade and financial liberalization, privatization, and the introduction of fiscal discipline − in the belief that this would ensure stability and economic growth. Employment and equity, it was supposed, would improve markedly. The reality is that the past 20 years have seen price stability (inflation has generally been kept under control), but also low GDP growth and instability in the real economy, i.e. in output and employment. The significant progress made during the recent period of economic and social recovery (2004-08) notwithstanding, precarious employment was an acute reality even before the contagion of the global financial crisis; the contagion of