Colombia's unemployment problem

Underreported by English language media (I wonder why?) was this week's unemployment report from Colombia's DANE stats office (sidebar: DANE is one of the very few gov't run stats offices in South America that gives out unbiased, statistically solid reliable data and has not buckled under the pressures to manipulate data from gov't circles, as so obvious in places like Argentina and Peru). The 12.6% unemployment rate announced was a full percentage point up from the June figure and means there are some 2.7m Colombians out of work right now.

Not a good start for President Santos, who made job creation one of the mainstays in his recent election campaign. In fact, his repeated "More Jobs" mantra that started when up against poll pressure from Mockus and became the central theme of his succesfully retooled campaign far outweighed any talk about anti-terrorism, human rights and all the things we gringos wring our hands about when it comes to Colombia. Even in South America it's the economy, stupid.

So Santos, who promised to created up to 2.5 million new jobs and make half a million informal jobs official during his 2010-2014 mandate, gets his cold bucket of reality that's made even icier when the 34.2% underemployed rate is added to the mix. That's a lot of people not putting in a full day's work, people. But as the chart above shows, he's up against an unemployment issue that's long ingrained into Colombia's economy. The current 12.6% jobless rate may be high but it's not unusual either in a country that has rarely seen a sub 10% level (and never for any significant period of time).

Finally, it's worth reflecting that fighting unemployment is one of the best ways of fighting terrorism, too. Those 12% jobless are fodder for the paramilitary and FARC who can offer them food, lodgings and even salaries in exchange for shooting up villages and extorting businesses.

Chile's econostats: Is that the smell of male bovine waste material in the air?

So on drudging through the stats department of the Chilean Central Bank website this morning...y'know....just like any normal and well-adjusted person on a Monday morning...it suddenly occurred to this humble scribe that Chile must be some sort of laboral Nirvana, a Panacea of hope set aside from the normal abusive labour practices and gouging companies only interested in their bottom lines more common in this continent.

Why so? Well take a look at this chart that compares country inflation (the consumer type) and the indexed average salaries paid to the workforce. The only adjustment made is mathematical (and easy), as one set of figures is indexed at 100 to 2006 and the other to 2008, so a quick adjustment brings them both to the same starting point.

What we see is that salaries have increased over this period at a pretty regular rate, but the main benefit came in 2009 onwards when, thanks to that deflationary impulse from abroad, inflation levels dropped and things got cheaper (or didn't get any more expensive at least), while salaries apparently kept on rising. The result? More buying power in the hands of the average Joe Chileno and the world is a beautiful place.

But then I got to thinking why that should be, especially cos of this:

Because Chile didn't escape from the effects of the Lehman/Subprime plunge, as the unemployment numbers clearly show. So hey wow!! Chile must be a special place right? It's the wonderful exception where unemployment rises sharply but bosses are still willing to pay extra to the people that are still employed.

Or maybe...just perhapsy...the Chile CenBank is statistically full of shit. YOU BE THE JUDGE!

News roundup (we nibble at the applecores that others nonchalantly toss over their shoulders)

US GDP third quarter GDP revised down. Krugman got the insight needed. We got a cool chart above. Dow coming back down? Pimco seems to think so, judging by the bonds trade Billy G has just made.

Peru's Shining Path scumballs are trying to get themselves into the next set of elections by setting up a 'democratic' party. How anyone can even consider this as viable is beyond me. These people are responsible for tens of thousands of murders, some in the most horrific ways possible. There is a case for censorship in modern society and these people do not deserve a voice or the right to free speech.

Today's 'No Shit Sherlock' award goes to the government of Paraguay, which called the recently uncovered coup plot against Fernando Lugo "illegal". Ain't gonna hear many arguing the use of that adjective, dudes.

In a clear communist plot to take over the world, Venezuela donates 5.1 million energy saving lightbulbs to Ecuador to help lighten the energy crisis load brought on by the local drought.

Argentina's INDEC stats office does something unheard of in more than two years of macro country reporting and tells the truth. Unemployment is recorded up at 9.1% in Argentina for the third quarter, up 1.3% YoY.

Don't worry 'bout jobs, Statesiders...could be worse....you could be Colombia

Here's how the latest unemployment data stack up, from Nunavut to Tierra del Fuego:

click to enlarge

Reports are now coming through of tall, overweight, white-skinned people trying to sneak across the border and into Tijuana in an attempt to find gainful employment. Locals were later spotted showing them how lawnmowers work.

Reap = Sow

US employment figures: Jack Crooks of Black Swan Capital said it best this morning

Here's the link (good free daily letter, by the way. Sign yourself up) and here's the quote (that was written before the number hit, btw):

I ask now: will the jobs report really tell us anything? I mean, will it tell us anything besides the fact that fewer jobs were lost this month than last month? It’s like telling a car accident victim before the paramedics arrive that he lost less blood this last minute than he did the previous minute.

Unemployment in Venezuela: Sssh! Don't tell anyone!

This week Venezuela announced a further cut in its headline unemployment rate, with the percentage dropping to 7.3%. Ten years ago the country's unemployment rate ran at 14.6%.

Fortunately for all you non-Spanish speakers, Associated Press managed to ignore any comparison with the ever-rising 8.9% US headline rate (or UK rate, or Spanish rate, or Mexican rate, or German rate, or Peruvian rate....I could continue), forget to report the figures and decide to concentrate on this story which has 22,000 oil workers that "may lose their jobs".

Gotta laugh.

Things wot caught my eye

I agree with Salmon's take on the US unemployment figures. He picks one sub-category to highlight (i.e. male unemployment) but there are others. Basically, away from the headline number things are far worse than they seem (yes, we know about the lagging indicator theory of unemployment figures). I also noted with a nod of the head the commenter on the post, who pointed out the US Bank stress test model called for US unemployment to top out at 8.9%...we're already there, folks! 10.5% here we come.

This Bloomie headline about Vale (VALE) made me smile. "Vale "Ready to Explore" Alternative Iron Ore Pricing". I mean, do you really need me to translate that into real English?

Chile's CenBank drops rates 0.5% to 1.25%...a record low.

Peru's CenBank drops rates 1% to 4%...plenty more to come, too.

But it's not all bad, folks. Brazil's telco Vivo (VIV) posted strong results. Notice that VIV is now managing to feed the bottom line from its revenue pile..the sign of a maturing telecoms market in Brazil. Basically, the major investment period is over and its payback time...we've seen this pattern many times before (Argentina, Mexico) and now Brazil, a country that has (somewhat surprisingly) lagged other regional telco markets is getting its turn at bat.

US unemployment chart

The data is from this interesting post by Mish.


1. Downward revision on the way

2. You honestly think that last week saw the end of the recession? Wanna buy a bridge?

Brazilian unemployment doomsayers need to look more closely

Amongst all the usual morning financial newsflow down here today one story is getting put head and shoulders above the rest headlines-wise. Brazil's unemployment rate has shot up from 6.8% at end December to 8.2% at end January 2009.

Here's the Bloomberg version of events in English, and oh my how breathless it is, telling the world how it's "the biggest jump in seven years" (help!) how "Brazilian companies are slashing output" (HELP!), how the "crisis chokes demand and commodity prices plummet" (HELP!!!!).

Argentina is trying its dose of Shadenwhatnot, too. Clarin for example reports that qualified technicians are very much included in this round of redundancies, with the 4,000 layoffs at Embraer yesterday (not included in the January figures, of course) a typical example.

OK, cut the crap here. I may not know Brazil as well as guestblogger Lime Slime, but I know when I'm being fed a ton of statistical BS. Look at this chart, please.

Oh look! (part one): Unemployment is way down in the last 18 months. Yep, we're a long way from those 9% and 10% numbers, aren't we? And if you bother to look back further, Brazil's headline PME unemployment rate was still topping 13% as late as 2004.

Oh look! (part two): Unemployment always drops in December and climbs sharply in January. If you bother to think about it for more than a second, it does make sense. There's something called "summer" this time of the year down this way, which can involve things like "vacation" and "factory closedown" and "black market job selling corn on the cob or shrimp kebabs on a sunny beach". It also implies, "That temporary Christmas job is open for you next year. Thanks for doing a good job as usual, Joachim."

Etc etc. I'm not saying that Brazil has miraculously escaped the world recessionary pressures. I am saying that the prophets of doom, as usual, will find enough information to spin their 'end of humanity as we know it' stories. Be careful out there and use your own brain, as the media still has this habit of lying through its teeth at you.

If this chart doesn't scare you even just a bit.......

........you are a Zen Buddhist.


Deserved and necessary hat tip to Barry Ritholtz's blog The Big Picture for this image.

Chile: Gotta love the unions

With Chilean newspaper La Tercera this morning announcing that Chile's unemployment rate has climbed abve 10% and layoffs in the mining industry at 12,000 and climbing rapidly, the labour market in mapuchelandia is becoming a serious issue. So how do the local mining unions react? By threatening strikes! Here's an extract from this BN Americas report:

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"Continued layoffs in Chile's mining sector will cause workers to go on strike this year, copper miners federation FMC president Pedro Marín told BNamericas.

"If the layoffs continue, 2009 will be marked by strikes, work stoppages and protests," Marín said.

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LOL! I can just imagine the conversations between mining unions and Codelco management on this one:

Union: "If you don't stop laying us off from work, we're going to stop work."

Mgmt: "Great! Thanks! Go ahead! We're producing too much anyway, and this means we can avoid paying you without any of that mucking around with redundancy charges."

Union: We're not kidding you know...this is serious....we'll do it."

Mgmt: We can provide banners and stuff for your marches if you like.

Can somebody please take these unions leaders aside and explain to them the difference between a buyer's market and a seller's market? It's way too late to start complaining about the horrors of your country's neoliberal employment policies when it all goes sour.

Another thought on Peru's "growth" in 2009

"Maybe next year, hey?"
(Click to enlarge by the way. Nice Hi-res)

Despite all that we have been led to believe by the delusionary Standard&Poors, still desperately trying to justify hiking Peru to "investment grade" last year, Peru has not diversified itself away from reliance on commodities. In 2008, metals such as copper, gold, zinc, etc accounted for 60% of the country's total export revenue. Because of this, the country's trade balance will certainly be negative in 2009. And if you take away the motor, the car stops running. No more construction boom, people. No more new cars sold. No more midweek treats at the new all-you-can-eat Chinese restaurant that just opened. Et cetera ad infinitum.

We're already seeing the effects of this deficit. Yesterday the Central Bank (BCRP) sold U$213m dollars into the forex market to shore up the local currency, the Nuevo Sol. With Peru's international currency reserves standing at U$32Bn at end 2008 it doesn't take a mathematics professor to work out they won't be able to do that kind of stunt too many times on the trot before people start asking "Hey? Where's all that money gone?", and the only answer the gov't will have is "Err well, big businesses wanted to buy a lot of dollars so we had to sell them else watch the currency weaken."

The idea of the currency safety net is to protect Peru and Peruvians, not the multinational mining companies that remit profits back to the USA, Canada, Australia, Switzerland and the UK, isn't it?

Add to the mix the other sectors already under pressure. Asparagus, fresh fruits, fish meal (Peru is the world biggest in this sector and once again it's nearly all foreign controlled) and last but not least in this quick role call, tourism. When gringos tighten their belts, The Sacred Valley of Cuzco suddenly becomes two weeks at the beach in a 3star.

Finally, let's once again point out the lack of connection between GDP figures and bleedin' reality. The same week that Peruvian mining companies lay off 5,561 workers the government insists the country is growing. Notice anything odd about that?

Unemployment datapoint du jour

Just saying, ya knows.........


First person who writes to tell me I'm a Commie is the winner.

otto.rock1 (AT) gmail (DOT) com

Update (four minutes later): We have a winner! Thanks 'FL'

Colombian unemployment is up

Acccording to its DANE stats office today, Colombian urban unemployment hit 10.4% in November, up from 8.9% in the same month of 2007. The underlying national unemployment figure is 10.8%, up from the 9.4% of November 2007.

All this on the back of the 3.1% GDP growth in 3q08, which was half the expected number and is clearly slowing towards recession. It'll be interesting to watch the people's reaction to Uribe going forward, as alongside his well publicized fight against the FARC, his economic management has been the other pillar to his enduring success. 'It's the economy, stupid' is just as valid on this side of the Darien Gap.

Correction

I have been informed by Bloomberg and Reuters (so far) that they did in fact report on the Venezuela unemployment figures on Wednesday 19th November. The information was not passed on to the open internet, but kept for customers who pay the monthly subscription for their service (about $1,200 or $1,500 per month if memory serves for the Bloomberg service, but I am happy to be corrected on that, too. Please advise).

In other words, the Venezuela unemployment figure is extra special information for extra special people, but they aren't going to make it available to the wider world. That's the job of others.

Kinda sums them up, I think.

Anyway, thank you both for the stuffy e-mails and.....apologies. And thanks for caring about this crappy little blog more than actually informing people about what's going on in South America on the most basic of levels.

Unemployment factoid du jour

In the USA we have October unemployment at 6.5% and rising, with today's jobless claims making further rises a lock. AP has "many economists" (who are never wrong of course) calling US unemployment at 7% by year's end and 8% by YE 2009.

In Venezuela we have October unemployment at 6.7% and dropping. Amazingly, incredibly, stunningly, the only English language newswire reporting yesterday's number was lefty Prensa Latina. No Bloomie, no Reuters, no AP, no AFP, no DJNW. It must have slipped their minds...........

Here's the PL note in full (short'n'sweet)

Caracas, Nov 19 (Prensa Latina) The unemployment rate in Venezuela ended October in 6,7 per cent, which means a 0.5 percent drop compared to equal period in 2007, the National Statistics Institute said.

A NSI report said that 122,015 Venezuelans found jobs from October 2007 to October 2008, increasing the number of workers from over 11.77 million (92.8 percent) to over 11.89 million (93.3 percent.)

This shows a clear trend of sustained growth in the number of people in employment in Venezuela, the text says, while noting that 55.9 percent of the people work in the formal sector.

US unemployment 6.1%

Y'know, I'm trying my hardest not to get sucked in by the US election yada, but when I see numbers like this then reflect that the Republicans are still being taken seriously in this Presidential election it all gets a bit Kafka.

However, it does go a long way to explain how a couple of guys can freeze a monkey suit in a block of ice, say it's Bigfoot and actually sell it.

Gold shot up $16 on the news. You'd better sell that spike, cos in the Pachakuti that you guys live in 6.1% unemployment will be seen as dollar bullish.

UPDATE: I've been asked already via mail, so just for the record "pachakuti" translates pretty fairly as "upside down world" in Quechua. Tradition states we are currently living in pachakuti, and that the time is drawing near when the world will be turned back upright (the year 2012 according to the Q'eros people around Cuzco, which coincides with the date pencilled in by the more famous Mayan calendar). Spooky stuff, no?