THE real problem in the Third World is not lack of work, but lack of income The poor simply don’t make enough from the work they do. And unemployment is not an issue - they can’t afford not to work. The kinds of protection against economic hardship that exist in the West (unemployment insurance and welfare assistance) are almost unknown in the under-developed countries. Poor landless peasants and small subsistence farmers make up nearly one-quarter of the world’s population. The quality of their lives has changed little over the last twenty years; they are still overworked, underfed and underpaid. And they still suffer from diseases the West associates with the Middle Ages. Typically, they work 12-15 hour days, seven days a week.
Whereas in the industrialized countries nearly 80 per cent of the labour force relies on wage employment, more than 60 per cent in the Third World are self-employed. The poor tend their own small plots and pick up money wherever they can manage. Sometimes they plant or harvest crops for large farmers; or they may labour on building sites, sell homemade handicrafts, even hawk water by the cup, a thousand-and-one tasks that are a testimony to their ingenuity.
Development specialists, international aid agencies and many Third World officials are convinced that ‘rural development’ (improving standards of living in the countryside) is the only way out of a frustrating cud-de-sac of poverty. But while officials nod in agreement, most poor countries are steaming off in a completely different direction. Their governments are still mesmerized by the siren-like appeal of Western industrial growth: showcase hydro-electric dams, vast thundering factories and plentiful consumer goods.
Even though 60-80 per cent of all Third World people depend on farming, the countryside is routinely ignored when the money is passed out. Barely 20 per cent of government spending earmarked for development funds finds its way into agriculture. As a result while the rural poor scratch about on their small plots, the cities grow fat and plump. Why is it then that Third World countries continue to place all their development eggs in one ‘industrial’ basket? On the face of it, a slavish imitation of Western models just doesn’t add up. Even if the rate of growth in factory employment miraculously doubled overnight, it would still only absorb a third of the new job-seekers every year. Although Third World production has increased seven per cent yearly since the Second World War (a record that often surpassed the developed countries), the number of job-seekers has increased even faster. And the Third World’s labour force will almost double again in the next twenty years. By the year 2000 Asia’s workforce will expand by 60 per cent, Africa’s by 86 per cent and Latin America’s by 103 per cent.
The chance of industry absorbing these vast new armies of poor is effectively nil. Part of the reason is imbedded in the very nature of imported technology. Bluntly, industrialization eliminates jobs. Gandhi put it another way: ‘Men go on ‘saving labour’ till thousands are without work, thrown on the open streets to die of starvation,’ he wrote in 1924.
Present day India is a prime example of industry sucking up scarce investment dollars. From 1966-76industrial employment hovered between six and seven million while new capital investment in imported technology increased substantially. Meanwhile, the number of landless farm workers rose by 90 per cent. The overall result? More industrial output, more profits and more wages for some, but no new jobs and twice as many poor landless labourers.
Improved farm machinery hasn’t helped most peasants. The benefits have tended to gravitate to those who are already well off. When the vast majority of good farmland is owned by a small minority, as it is in most Third World countries, new tractors and combine harvesters can do nothing but harm small-holders. In the early 1960s large farmers (more than 50 hectares) used 90 per cent of all tractors in Chile and over 60 per cent in Colombia. As a result thousands of peasant farm workers were deprived of an important source of income. Western technology has also helped to destroy scores of jobs in traditional village industries: pottery, weaving, leatherwork, blacksmithing and the like. Artisans who depend on their skills to supplement meagre earnings during the slack farming periods are forced out of business by cheap, mass-produced plastic pots, footwear and farm tools.
Examples of the disastrous impact of new technology are legion: three from the island of Java in Indonesia are striking.
Mechanized rice huskers imported from Japan by wealthy farmers in the early 1970s displaced thousands of women who used to husk the rice by hand. The total loss of family income was estimated at $50 million.
Power-driven cultivators imported by the same farmers may do away with nearly one million jobs according to a World Bank estimate.
Handlooms that employed 200,000 women in the early 1960s have been replaced by computerized modern weaving equipment.
Third World planners, despite facts undercutting them at every turn, remain stuck in the capital-intensive, high-technology groove, Those at the top of the decision-making pyramid have nothing to lose. More to the point, they have a lot to gain. If they don’t actually own or manage a business, they are likely in partnership with foreign investors. Either way they are winners.
Ex-colonial powers also have to shoulder some blame. Most Third World countries were set on their present course by colonial administrations which systematically discriminated against exports of anything but raw materials, while flooding their colonies with manufactured goods. At independence those who stepped into the positions of leadership had been educated and trained along Western lines. Having seen their own countries’ manufacturing potential stifled, is it any wonder they decided to march their countrymen into the future double-time?
As always the least fit and the least protected wind up as stragglers. The fittest are where they began, in front, and the distance between those in the vanguard and those trailing is lengthening.
Process of change
Western nations emerged as industrial powers by a slow process of change over several hundred years. Agrarian societies were not transformed into industrial giants in one fell swoop. Industry grew slowly bolstered by increased agricultural productivity. Cities expanded rapidly, but by and large there were enough jobs created to take care of new arrivals from the country. As agriculture and industry increased in productivity more people could be fed and their needs met with less effort. Gradually ‘service’ workers who didn’t produce anything could be supported. Instead they supplied a whole range of essential services, everything from public transit to office work. That’s roughly the pattern Western nations followed, although in practise industrialization was still a bitter pill. It caused suffering every bit as soul-destroying and physically wrenching as exists today in the Third World.
There, industrialization is tacked on to economies already seriously warped by colonialism. Industries are force-fed while wealthy farmers and large land-owners continued to produce cash crops for export. Mechanization and the ‘Green Revolution’ increases yields and income, but only for those who can afford to risk the initial expense. Cheap food policies are often adopted to benefit city-dwellers - civil servants, politicians, bureaucrats, small shop-keepers and industrial workers. However, for small farmers a cheap food policy is disastrous. They consume most of what they grow. What’s left to sell must compete with big farmers, who produce for urban consumers. Government policies make sure the small farmer receives the lowest price for whatever he does manage to sell. According to economist Michael Lipton* this bias towards urban areas is a straight-forward result of differences in power. Industrialists, urban workers, even big farmers, all benefit if agriculture gets squeezed, provided its few resources are steered, heavily subsidized, to the cities… All the powerful are satisfied; the labour-intensive small farmer stays efficient, poor and powerless, while the economist congratulates all concerned on resolutely extracting an agricultural surplus to finance industrialization.’
Industrial growth in the final analysis incapable of mopping up the flood of Third World job-seekers. Nonetheless, more jobs could result if Western nations sere not so hostile to manufactured reports from underdeveloped countries. When the Group of 77 (the code name or the United Nations Third World lobby) stormed out in a huff at the recent negotiations on tariffs and trade in Tokyo, hey did so with justified anger. GATT the General Agreement on Tariffs and ‘rode) is still basically a rich man’s club. Western countries continue to do most if their business with each other. In fact, Third World countries account for less than two per cent of Western manufactured imports.
In Tokyo the rich nations stuck adamantly to their guns. Tariffs on exports from developing countries were cut by only one-quarter- compared to an average of _one-third on other products. The poor countries still account for only seven per cent of total world manufacturing: the figure hasn’t budged in 25 years.
Despite the odds, a handful of Third World nations have followed the industrial road with some success. South Korea, Taiwan and the two city-states o f Singapore and Hong Kong now export half of all manufactured goods from underdeveloped nations.
Even so their range of products is united - mostly textiles, footwear and electrical goods. Cheap -labour has been their main tool in cracking Western markets. In addition, European, American and Japanese multinational corporations have brought their technology and investment dollars, happy to find these cheap ‘export platforms’ from which to export goods back to Western consumers. Keen competition and oppressive union laws combine with efficient equipment to keep wages and export prices low.
Other countries like Malaysia, Indonesia and the Philippines are now attempting to climb aboard the same bandwagon. But with vastly bigger populations and their Asian neighbours already one jump ahead there’s little hope of a repeat performance.
And Western nations, caught on the cleft stick of rising unemployment and recession, have their own problems. Cheap Third World-manufactured imports are an easy target to blame for unemployment - even if the attack is misdirected. More critical according to recent studies are changes in productivity due to new technology. One British government report examined 24 different areas affected by Third World imports and concluded four and a half times as many jobs were lost due to new technology than were lost through Third World imports.
Recent job losses from improved automation techniques are just the tip of the iceberg compared to what’s to come. Micro-electronic computers based on silicon chip technology are heralded as a new industrial revolution - this time replacing brain power instead of muscle power. The visions of 1920s futurologists are coming true in fully-automated assembly lines. One government ‘Think Tank’ estimates even if output were doubled in the British car industry by 1985 there would be 55,000 fewer jobs than in 1975. Fiat and Volkswagen already use computerized ‘robots’ to assemble some of their cars. A French research report warns that banking and insurance companies may lose 30 per cent of their workforce through automation by 1990.
But technological breakthroughs don’t have to be a cause for despair - as long as the benefits of increased wealth and decreased labour redistributed equitably.
Rather than searching for a scapegoat in the poor world, Western governments should begin by examining the sinews of power that bind together their own economies. At this level the employment crisis in the Third World and the industrial countries are both parts of a similar problem.
In the Third World the political clout of urban elites is used to obstruct change that would steer wealth and income to the poor. In the West jobs and the security of ordinary working people are secondary concerns to corporate and government decision-makers.
In both instances the employment issue is fundamentally a question of power: who wields it and for whose benefit.
*Why Poor Countries Stay Poor