Trade, investments and projects from China generate 1.8 million jobs in Latin America and the Caribbean
The ILO just presented their first study on the effects of economic relations between China and Latin America and the Caribbean on jobs in this region, indicating that from 1990 to 2016 at least 1.8 million net employment opportunities were generated as a result of trade, investment and infrastructure activities.
This amounts to almost 4% of the jobs created in the region over this period, and could possibly be an underestimation, affirms the study.
“This is an orphan theme, there is a big gap in knowledge. The objective of this first study, which is a pioneering breakthrough, is to begin to fill this gap,” said the ILO Regional Director for Latin America and the Caribbean, José Manuel Salazar, as he presented in the Mexican capital the technical report “Effects of China on the quantity and quality of jobs in Latin America and the Caribbean”.
This initial evaluation of the ILO regarding the impact of these economic relations on the world of work in the region includes a review of available statistics, as well as methodological recommendations for gathering more in-depth knowledge in this field.
“From the ILO perspective, we consider it important to have a proper understanding of both the opportunities and the challenges not only on economic matters but also in terms of labour-related matters“, said Salazar.
He emphasized the need to “put into perspective the realities of a relationship which, for various countries of the region, represents the main trade partner or primary source of overseas foreign direct investment or financing, especially because everything indicates that the presence and activities of China in the region are going to increase over the coming years”.
The report addresses the relationship between China and Latin America and the Caribbean starting from 1990, the decade during which it intensified and became more dynamic, and over time recorded “an increasing complexity which requires analysis, reflection and recommendations”, according to the two researchers who conducted this report, Enrique Dussel Peters and Ariel Armony.
The report separately analyses the impacts of trade, overseas foreign direct investment and infrastructure projects of China in Latin America and the Caribbean.
The document outlines that until 1992 China represented less than 1% of trade in Latin America and the Caribbean. Then the situation began to change and at present has become the second most important trade partner of the region. Inversely, this region is the fourth largest most important trade partner of China. Nevertheless, this process “has not been without contradictions”.
A high trade deficit which puts the region at a disadvantage, and a big gap with regard to the value added and technological content of trade with China, characterize this relationship. From 2007/08 Chinese foreign direct investment makes its appearance, with flows currently estimated at 10,000 million dollars annually, focussing significantly on minerals, oil, gas and other raw materials. Infrastructure projects emerge on the scene from 2013 onwards.
The authors indicate that for the net impact of trade on jobs, they worked with available data from four countries, while in the case of overseas foreign direct investment and infrastructure projects available information from the entire region was considered.
Of the 1.8 million new jobs created, almost two thirds correspond to job opportunities generated from commercial exchange.
The report highlights the following:
- During the period 1995-2011 trade generated 1.15 million net jobs (including those which were lost and gained) in four countries: Argentina, Brazil, Chile and Mexico.
- Between 2003 and 2016 Chinese foreign direct investment in the region had generated 260,000 jobs in 271 transactions for a total of 120,000 million dollars.
- Between 2005 and 2016, 60 infrastructure projects for more than 85,000 million dollars generated approximately 350,000 jobs in the region.
The information available is incomplete and merits further exploration, the authors insist. One of the aspects that they found necessary to consider in future studies was to determine the quality of the jobs created through this bilateral relationship with China, an aspect for which there are no comparative data available.
In some cases there is evidence of preference for Chinese nationals in mid-level and senior management positions; high costs of labour force training; learning difficulties; difficulties in adapting to local customs or labour regulations by some Chinese companies.
“The importance of China in the region and the increasing complexity of relationships make it essential to better understand the effects on the labour market in order to better determine its future”, cautioned Dussel Peters and Armony.