August 6, 2000

Colombians Protest IMF-imposed Austerity Measures

by Garry Leech

In the most dangerous country in the world for union leaders and labor activists, organizers successfully implemented a 24-hour general strike on August 3, 2000, that saw 15,000 workers marching through the streets of Bogotá. The government responded to the protest against the International Monetary Fund (IMF)-imposed austerity measures being implemented by the current administration of President Andres Pastrana by deploying soldiers and tanks onto the streets of the capital.

During the 1990's, more than one-third of all unionists assassinated in the world were Colombians. In 1998, Colombians accounted for 80 percent of the 129 union leaders killed worldwide. Colombia is by far the most dangerous country for activists fighting for workers' rights and yet, labor organizers succeeded in bringing thousands of workers out onto the streets of the country's four largest cities. They protested the 20 percent unemployment rate--the highest in Latin America--and the government's intention to continue its implementation of austerity measures required under the terms of the $2.7 billion IMF loan approved in December 1999.

The future impact of these measures is evident in the 2001 budget recently announced by the new Finance Minister, Juan Manuel Santos. In what he calls a budget of "sweat and tears," 5,000 public-sector jobs will be eliminated and wage increases will be kept below the rate of inflation. The government not only touts these neoliberal policies as a solution to the nation's economic problems, it also claims they will help solve the problem of drug trafficking and its related violence (see, Plan Colombia: A Closer Look).

The current high-level of unemployment attests to the fact that there aren't enough jobs being created in the private sector to absorb all the workers that have already been laid-off, never mind the thousands that are about to join them in the ranks of the unemployed. Furthermore, the lower wage increases mean the number of middle-class Colombians in a gradual downward slide will continue to rise, as will the number of working-class citizens who are sinking below the poverty line. To add insult to injury, cutbacks in government spending will inevitably erode what vestiges of a social safety net still exist.

Colombia survived the economic and debt crises that ravaged most Latin American countries during the 1980's in comparatively good shape. It had maintained a relatively closed economy and had not become burdened by excessive foreign debt. But even though Colombia's economy was not in the same dire straits as many of its neighbors, it was deteriorating. The "solution" for this decline was the implementation of neoliberalism, which, at the end of the Cold War, had become the economic medicine being prescribed for virtually all the developing nations of the world.

In 1990, the administration of President César Augusto Gaviria began adopting neoliberal policies by opening up Colombia's economy to increased foreign investment and goods. According to the World Bank, "The average tariff decreased from 44 percent at the end of 1989 to less than 12 percent by the end of 1993." This resulted in lower prices for imported goods, which hurt the medium-sized domestic producers who found it difficult to compete with the wealthy high-tech companies of developed nations.

World Bank statistics show that in 1987 Colombian exports totaled $6.4 billion and imports $5.7 billion, resulting in a trade surplus of almost three-quarters of a billion dollars. However, only 11 years later the country suffered from a trade deficit when exports of $13.3 billion were surpassed by imports totaling $17.5 billion. This clearly illustrates how the government's policies have sacrificed domestic producers at the altar of globalization. A representative of Colombia's largest union, the Unified Workers Central (CUT), Patricia Buriticá, told the Colombia Media Project publication, Voices from Colombia, that, "The opening market economy has provoked the closing of 20,000 commercial enterprises in our country."

The economic figures for 1995 foreshadowed what lay in store for the Colombian worker at the end of the decade. In that year the economy expanded by 5.2 percent; such a strong economic growth suggests an increase in, or at least a maintaining of, employment levels. However, unemployment increased from 7.6 percent to 8.7 percent that same year. If workers were losing their jobs when the nation was displaying impressive economic growth, it is hardly surprising that when the economy crashed in 1999, unemployment skyrocketed to 20 percent.

Also, as a result of lower tariffs, the amount of government revenue earned from import taxes declined, as did the revenue gained from taxing the many medium-sized domestic companies that had gone out of business. A further loss of revenue has resulted from the former employees of these companies who are now unemployed or working in the informal sector and, therefore, no longer paying taxes.

While government revenue was declining throughout the 1990's, expenditures remained fairly stable, which resulted in a fiscal imbalance. This imbalance became unmanageable when, in 1999, the Colombian economy experienced its worst year since the Great Depression. It had taken 10 to 20 years longer than the rest of Latin America, but Colombia finally reached the point of economic desperation that provides the IMF with the leverage it needs to impose policies favoring multinational corporations and the nation's economic elite.

The conditions laid out in the $2.7 billion IMF loan require Colombia to further open its economy, privatize public companies and cutback government spending. As occurred during the 1990's, the opening of the economy will reduce government revenue and hurt both medium-sized businesses and workers. The privatization of public companies, such as banks, utilities, communications and mining companies will be a bonanza for those who can afford to purchase them, namely, multinationals and the Colombian economic elite. But this privatization process will result in massive lay-offs as private investors streamline operations in order to maximize profits with little regard for the public welfare.

Furthermore, the government will be unable to cope with the inevitable increases in unemployment and poverty due to the public spending cuts required under the terms of the IMF loan agreement. Clearly, more hardships lie ahead unless public protests succeed in forcing the government to change its current policy. Although any change would inevitably result in a backlash from the IMF, the multinationals and the governments of developed nations.

It is not clear whether the new clandestine political front of the rebel Revolutionary Armed Forces of Colombia (FARC), the Bolivariano Movement, played a role in the strike. However, one of the Movement's goals is to forge closer ties with unions, student groups and urban organizations in order to increase support for the FARC in Colombia's cities. In this respect, the implementation of economic policies that alienate Colombia's urban poor and working-class can only undermine the government's war effort against the still predominantly rural-based insurgency.

Meanwhile, unionists are now devising plans for an indefinite strike in the near future. It is clear that these labor leaders, who risk death at the hands of right-wing paramilitaries, will continue to fight against economic policies that harm those that can least afford to suffer the consequences of neoliberalism. As has been the case throughout Latin America, the implementation of neoliberal policies, rather than creating economic opportunities and, consequently, social stability, has instead resulted in rising unemployment and poverty, which in turn has lead to social unrest and increased political instability.

This article originally appeared in Colombia Report, an online journal that was published by the Information Network of the Americas (INOTA).

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