brief. 1

Brief 1

By Alma Espino & Norma Sanchís1

Preamble

This series of briefs entitled The crisis’ impact on women’s rights, published by the Associa-tion for Women’s Rights in Development (AWID), includes sub-regional perspectives on the

impacts seen to date of the current crisis on women and women’s rights as well as those likely to come. These sub-regional analyses are a key input from women activists and analysts to inform development debates and decisions that are being made to respond to the crisis. The series also includes a cross-regional and global analysis.

We know that women are at the center of the fallout from the current crisis, which itself com-bines interlocking crises: a global economic recession, the devastating effects of climate change, and a deepening food and energy crisis. All of this is compounding the increasing poverty and inequality in different parts of the world, as well as the impacts of the HIV and AIDS pandemic. At the same time, traditional power relations among international players are shifting, the so-called ‘middle income countries’ with the BRICs (Brazil, Russia, India and China) assuming greater power (Brazil and China have become creditors of the United States, and important investors in the International Monetary Fund, and all of them hold some of the most important sources of reserves of the world). The current situation, a result of aggressive free-market capitalism pursued in the past decades, calls into sharp question dominant—and even many of the so-called alternative—models for development. The crisis is not new for most of the developing countries that have struggled with crises in the 70’s, 80’s, 90’s and begin-ning of 2000’s. This crisis, however, reached global proportions when it impacted hegemonic economies and their role in global arenas and put in evidence the interconnectedness of the diverse realities of countries in this globalized world.

1 Alma Espino and Norma Sanchis are from the International Gender and Trade Network (IGTN) - Latin American Chapter.

Latin America: Social and Gender Impacts of the Economic Crisis

The crisis’ impact on women’s rights: sub-regional perspectives

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The Systemic crisis’ impact on women: sub regional perspectives

This systemic crisis poses a huge challenge for governments, donors and every development practitioner, activist and policy-maker to reinvent the system in the long term, and reduce the negative impacts in the short and medium terms. In this sense, as many have said, the crisis also represents a historic opportunity to be bold, creative and attempt to right the wrongs of neoliberal development. As the crisis is now a driving force behind many development choices and processes (from the global to the local), and will shape approaches to development for years to come, the role of women and gender equality as a central goal must not be further overlooked. This is not simply because women are among those most negatively impacted by these crises, but also because they are key development players in most communities around the world, as well as relevant and vital actors in proposing effective approaches to mitigate the impacts of the crisis and expand the fulfillment of human rights, environmental sustainability and development commitments around the world. The exclusion of women, gender equality and women’s rights as central to these processes is unacceptable and should be used as an indicator of the seriousness of proposed responses.

In preparation for the United Nations (UN) High Level Conference on the World Financial and Economic Crisis and its Impact on Development (New York from June 24th to 26th 2009), sever-al women’s rights groups expressed their concerns about the impacts of the crisis on women’s lives2 and their rights and the limitations of the actual responses to the crisis implemented or proposed so far. The Women’s Working Group on Financing for Development, of which AWID is a member, has been very active and committed to promoting the UN’s pivotal role as the legitimate space to address the crisis from a truly inclusive multilateral perspective.3

AWID is committed to engaging with and supporting collective initiatives to influence this pro-cess, as well as building alliances with actors from other social movements. Solutions that have been defined by the same actors who produced this financial and economic meltdown are un-acceptable. Responses to the crisis must emerge from broad processes where both govern-ment and civil society engage in dialogue that is both enriching and makes decision-making more responsive to people’s needs and the fulfillment of human rights. Both civil society and governments from all countries of the world, including low-income countries, should be central actors included in this global policy dialogue process. Multilateral venues under the UN are the most inclusive and balanced spaces existing in the international system, and the only spaces with clear mechanisms for the participation of developing countries and civil society actors.

Whatever the proposals and responses that emerge from such high level processes - they must be informed by analysis on how these trends are playing out in communities and how the impacts are differentiated among women and men and across different sectors. Allocation of resources for these responses must also be implemented in a way that takes into account the gender dynamics at play, and ensures that key social development sectors, such as health or education, are not the ones to be defunded for the sake of economic growth and financial stability. The very social development achievements that have been made in the last two decades, as

2 See the statement: The G20 committed to save the global economy at the cost of women, November 17, 2008, 11th AWID International Forum, from http://www.awid.org/eng/Enjeux-et-Analyses/Library/LE-G20-DECIDE-A-SAUVER-L-ECONOMIE-MONDIALE-AUX-DEPENS-DES-FEMMES/(language)/eng-GB3 Women’s Working Group on Financing for Development, Statement from the Second Women’s Consultation convened by the WWG on FfD in New York from April 24-26, 2009 from http://www.awid.org/eng/About-AWID/AWID-News/A-call-for-struc-tural-sustainable-gender-equitable-and-rights-based-responses-to-the-global-financial-and-economic-crisis

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limited as they are, are currently at stake, if the focus of responses to the crisis is only eco-nomic growth and a return to ‘business as usual’. In this sense, women’s rights and gender equality commitments made by governments and other actors, such as the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW), the 1995 Beijing Platform of Action, the Millennium Development Goals must not be trade-offs in the definition of responses to the crisis.

It is in that spirit, that the authors of the briefs included in this series accepted the challenge to explore answers to the following questions:

• Considering the diversity of situations in which women live, what are the main challenges for women in your sub-region in the context of the current crisis? • Can you identify concrete actions or initiatives (responses to the crisis) that have already had either negative and/or positive impacts on women’s lives?• Are women’s groups in your region experiencing increased discrimination as a direct or indirect result of the financial crisis? • If stimulus packages are not inclusive of human rights and gender equality perspectives then are there any alternatives so that these packages are reshaped in order to include gender and rights dimensions?• If the governments of the region/sub region (or regional bodies) have not set up any stimu-lus packages or measures yet: what do you expect will be the impact of not tackling the crisis in a timely way at the national and regional level?• What are potential future impacts on women in your region in the context of a global reces-sion? Which are the most outstanding weaknesses of the region in regards to the economic crisis?• The UN Stiglitz Commission4 and the G20 are trying to identify international initiatives to re-duce the impact of the crisis on development. Do you think these global initiatives consider challenges confronted by women, and how to help women in your region face the crisis?

The sub-regional analyses presented in this Series are an initial attempt to contribute to iden-tifying challenges, potential responses and proposals from a women’s rights perspective, that builds on the different realities and impacts the crisis is having on different regions of the world. The analyses also aim to contribute to grounding responses to the crisis in gender equality and women’s rights and promoting a profound transformation for a more inclusive and democratic international system. Various regions raised common areas of concern that reflect common challenges for women’s rights around the world.

A lack of gender equality perspectives in the stimulus packages or policy responses to the crisis at the national level seems to be commonplace, as well as how women are particularly affected because of their strong participation in the informal economy, and the non-recognition of their unpaid and reproductive work, as well as the high levels of discrimination and inequality they face. Amongst other important issues raised, these common findings call for a new understanding of the role of the state and how it affects women in particular through the care economy (in

4 See the Women’s Working Group on Financing for Development Statements on the Stiglitz Commission from http://www.awid.org/eng/Issues-and-Analysis/Library/Women-s-Working-Group-on-FFD-Contributions-to-the-Stiglitz-Commission/(language)/eng-GB and the Stiglitz Recommendations from http://www.un-ngls.org/spip.php?page=cfr

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relation to the key reproductive roles that women play which sustain the current economic system at their peril), but also in terms of advancing the decent work agenda. When the role of the state was reduced, several of the social functions previously performed by the state - healthcare, caretaking and education - were absorbed by women across regions, usually in addition to their paid work. Thus, women have disproportionately shouldered the burden of the consequences of state reduction, particularly as they relate to the fulfillment of economic and social rights (such as housing, health and education).5

If a post-neoliberalism era is emerging, the new international system should build on community, national, regional and global experiences of development actors, and on historic women’s rights agendas. These longstanding struggles should be reinterpreted and communicated broadly to promote alternative thinking around responses to the crisis.

Today we call for holistic responses to the systemic crisis. In doing so, our own efforts (amongst women’s movements and organizations) for building alternative discourses and influencing the international system must be grounded in different kinds of knowledge (informal and formal). Our alternative discourse should also be based on a holistic/cross-cutting approach, ensuring full space for the voices of the most excluded groups.6

Association for Women’s Rights in Development (AWID)

5 HIGHLIGHTS FROM THE STRATEGY MEETING: To follow-up efforts on Aid Effectiveness, gender equality and the impact of the crisis on women, 6-7 August 2009, New York, Edited by Cecilia Alemany (AWID).6 HIGHLIGHTS FROM THE STRATEGY MEETING: To follow-up efforts on Aid Effectiveness, gender equality and the impact of the crisis on women, 6-7 August 2009, New York, Edited by Cecilia Alemany (AWID).

Copyright ©Association for Women’s Rights in Development (AWID), October, 2009Authors: Alma Espino & Norma Sanchís

Coordination: Cecilia AlemanyTranslation: Laura Pallares

Edition: Natalie Raaber and Rochelle JonesProof- Reading: Karen Murray

Production: Michele Knab Graphic design and layout: Miriam Amaro (sicdos.org.mx)

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Introduction

During the last quarter of 2008, an economic crisis - originating in the United States - spread and affected financial institutions and economies throughout the developing and developed world. This crisis, of which its ultimate magnitude and duration continues to remain unknown, has joined with other global crises such as the food, climate and energy crises. Without a doubt, all lead to serious consequences for quality of life. It is foresee-able that the effects of this crisis will spread at both the macro and microeconomic levels, with certain social groups - namely the most vulnerable – being most affected. One must therefore ask what immediate, medium, and long-term impacts of the crisis will be felt by: i) the countries in the region ii) different social classes and iii) between men and women? Which vulnerabilities exacerbate the negative impacts of the crisis?

Deregulation and the fundamentalist economic and social ideology which has dominated at a global level in the last decades, brought with it certain responsibilities to ensure that principles of sustainable development - such as guaranteeing human well-being, system stability and people’s destiny – were fulfilled. The current crisis demonstrates that sustain-able development – development that reduces poverty and promotes social inclusion and equity - has in fact not been achieved. This is particularly serious in Latin American and Caribbean (LAC) where a slowdown in eco-nomic growth has coupled with high initial lev-els of poverty and inequality (UNDP, 2009).

1. Globalization and the Crisis

Globalization has altered the relationship between local spaces and global markets as well as the power relationship amongst governments, transnational companies and international financial and regulatory organ-izations. Work conditions and opportunities,

labour and political culture, and inter-country economic phenomena have also been impacted by globalizing trends. For example, the opening up of economies paved the way for transnational corporations to increase their profitability through the employment of local cheap labour in different parts of the world. This required capital and goods and services markets to open up. Above all, it required a reduction in the mobility of labour in order to maintain low salaries. In many cases, due to gender inequalities in labour markets, the use of female labour guaranteed low salaries and labour costs.

Globalization is inseparable from accelerated technological innovation. As developed coun-tries have the capacity to create and expand technological capabilities and to generate competitive advantages, they have led this process. This redefines the exporting power of companies and as well as the positioning of different economies in the international market. The capacity to both adopt and adapt to innovations in production processes, product design and quality and commercialization strategies provides economies with the possi-bility to permanently improve their positioning and companies with the possibility of improving their profit rates.

The costs of maintaining a permanent innova-tion process are increasingly high, both for those that introduce the innovation (the latest innovation is out on the market before the investment has been recovered) and for those that use the innovation (Ugarteche, 2009). Additionally, neoliberal policies implemented in the last decade in much of the world have concentrated capital, creating an overproduc-tion crisis where demand does not keep up with the growth of supply, resulting in a de-cline in the earnings rate.

More precisely, “financialization” - the origin of this current global crisis - has been associated with the spread of new technol-ogy after a general productivity crisis.

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Financialization

Financialization refers to the financialization of capitalism—the shift in the weight of eco-nomic activity from production to finance.1 In other words: financialization is the trend of the economic system to grow through the use of financial tools, rather than through gains in the real economy. Rather than advancing in a fundamental and sustainable way, capital is trapped in a seemingly endless cycle of stagnation and financial explosion.2

Financialization has put a premium on speculative profits, often made out of fictitious money or credit, rather than where the emphasis should be – on production.3 In fact, trading in money (money markets, currency, arbitrage, hedge futures trading, financial intermedia-tion) constitutes almost 98% of all financial transactions; only 2% or less actually finance trade in real goods.4

A relatively recent phenomenon, large-scale financialization of the economy started during the 1970s.5 When owners of capital held immense surpluses in the face of a dearth of investment opportunities, their main solution was to expand their demand for financial products as a means of maintaining and expanding their money.6 On the supply side of this process, financial institutions stepped forward with a vast array of new financial instruments: futures, options, derivatives, hedge funds, etc. and were fuelled by - among other things – western economies all turning to debt creation.7 At the same time, national currencies, petroleum products, agricultural commodities and raw materials became fi-nancial assets.8

As a result of financialization, western societies have subjected a growing portion of revenue to the fluctuations in the value of financial assets.9 This has resulted in – at the macro level – growing exposure of the national product to financial market fluctuations and societies whose survival is increasingly at the mercy of financial products.10

Written by Natalie Raaber, AWID

1 Foster, J.B. (2007) “The Financialization of Capitalism,” Monthly Review, April 2007, Volume 58, Number 11, available at http://www.monthlyreview.org/0407jbf.htm2 Foster, J.B. (2007) “The Financialization of Capitalism,” Monthly Review, April 2007, Volume 58, Number 11, available at http://www.monthlyreview.org/0407jbf.htm3 Tandon, Y. (2009) “Putting Production over Trade and Finance,” South Bulletin, South Centre, February 1, 2009, Issue 31.4 Tandon, Y. (2009) “Putting Production over Trade and Finance,” South Bulletin, South Centre, February 1, 2009, Issue 31.5 Foster, J.B. (2007) “The Financialization of Capitalism,” Monthly Review, April 2007, Volume 58, Number 11, available at http://www.monthlyreview.org/0407jbf.htm6 Foster, J.B. (2007) “The Financialization of Capitalism,” Monthly Review, April 2007, Volume 58, Number 11, available at http://www.monthlyreview.org/0407jbf.htm7 Foster, J.B. (2007) “The Financialization of Capitalism,” Monthly Review, April 2007, Volume 58, Number 11, available athttp://www.monthlyreview.org/0407jbf.htm and Alliance for a Responsible, Plural and United World “Escaping from the Financialisation Maze: Finance for the Common Good,” Series Socio-Economy of Solidarity, Proposal Papers for the XXIst Century, coordinated by Paul H. Dembinski.8 Alliance for a Responsible, Plural and United World “Escaping from the Financialisation Maze: Finance for the Common Good,” Series Socio-Economy of Solidarity, Proposal Papers for the XXIst Century, coordinated by Paul H. Dembinski.9 Alliance for a Responsible, Plural and United World “Escaping from the Financialisation Maze: Finance for the Common Good,” Series Socio-Economy of Solidarity, Proposal Papers for the XXIst Century, coordinated by Paul H. Dembinski.10 Alliance for a Responsible, Plural and United World “Escaping from the Financialisation Maze: Finance for the Common Good,” Series Socio-Economy of Solidarity, Proposal Papers for the XXIst Century, coordinated by Paul H. Dembinski.

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Profitability was not secured on a real eco-nomic base such as, for example, the num-ber of products sold. Rather profitability was based on the financial management of “cash and banks” and on company liabilities (Ugarteche 2009).

Although opening up markets increases the need for surveillance by the State, the trend in the LAC region was to decrease State surveil-lance. This insufficient regulation of financial ac-tivities underscored the State’s lack of control. It was not only insufficient with regards to illegal practices, but also in relation to speculation, which became excessive. To a large extent the financial crisis and its severity can be attributed to the failure of the United States government to take on a supervisory role due to the “growing belief in the natural auto-regulation by the mar-ket economy.” According to Amartya Sen “the current economic crisis was in part generated by an immense overestimation of the wisdom of the market processes” (Sen, 2009).

2. Latin America: stronger than in previous crises?

According to the Economic Commission for Latin America and the Caribbean (ECLAC 2008), the present economic crisis is tak-ing place at a time when Latin America is stronger than in previous crises. Their evalua-tion is based on the sustained growth of the 2003-2007 acceleration which reached 5.7% in 2007, and maintained high levels in 2008 (4.5%). This economic peak in the region was sustained on three pillars: i) international valorization of raw materials such as hydro-carbons, minerals and metals ii) the abundant availability of external financing, liquidity, and low international financing interest rates iii) an increase in remittances from immigrants living in developed countries.

Additionally, during this period, LAC coun-tries implemented policies to accompany the favourable international context. Amongst others, these included policies such as financial surplus, declines in external debt in

relation to GDP, flexible exchange rates with currency markets operations, and reserve increases. These measures improved labour market indicators by increasing employment and waged work, improving labour conditions in the formal sector, decreasing unemploy-ment (7.5% as a regional average - more than three percent points below the rate at the start of the decade), and increasing labour income. According to 2007 figures (ECLAC 2008), an immediate consequence of these measures included a considerable decline in poverty (34.1%) and destitution (12.1%). Correspondingly, social spending also rose with important impacts in health and education. The conditional cash transfers programs in the region reached 85 million people.

Despite this promising panorama, important weaknesses prevailed such as a dependence on basic goods exports, high poverty and in-equality levels, and the lack of an integrated social protection vision resulting in low cover-age and highly segmented protection. For ex-ample, while health and education coverage increased, the quality decreased.

The Director of the United Nations Develop-ment Programme (UNDP) Latin American and Caribbean Regional Office (Grynspan, 2009) points out that these weaknesses in the region result from the fact that consumption volatil-ity is greater than GDP volatility. Therefore, when the economic cycle slows, poverty and inequality grow, and they recuperate more slowly when the economy later grows. For this reason, situational poverty is transformed into structural poverty as a consequence of the crisis.

3. The spread of the crisis

Due to a dependence on external demand and foreign investment, aggregated demand in emerging countries is currently vulnerable to the global economic activity contraction. For this reason, it is possible to forecast that

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the impacts of the crisis will be larger due to greater commercial and financial inter-connection between countries. In the case of Latin America, the effects will be stronger in countries with greater interconnection with the United States such as Mexico and those of Central America. It is possible that coun-tries where financial systems have been more regulated and better capitalized will suffer less. At the same time, the productive struc-ture of different countries will determine the relative importance of the effects of the crisis on different economies. Gender impacts will depend on the particular situation of a woman in the labour market and public spending policies, which affect social services related to care giving.

Fall in international liquidity

The liquidity crisis and concurrent decline in economic growth in developed countries have powerful implications for the rest of the world. The lack of liquidity limits the capacity of com-panies to finance mergers and acquisitions, which is the most important form of foreign direct investment (FDI) in Latin America and the Caribbean. Economic growth reduction reduces the use of FDI as a way to search for efficiency and resources in the region. At the same time, economies in the region – due to the deceleration – are feeling the impact of becoming less attractive to companies searching out new markets. Commercial financing7 scarcity generates difficulties for local companies looking for credit, as credit restrictions increase and global financial mar-kets become more expensive. These uncer-tainties also occur in internal markets. The rise in uncertainty will be even more problematic for small and medium sized businesses wish-ing to access financial resources.

According to (ECLAC, 2009d), FDI income in the region reached a historic high in 2008 (more than 128,000 million dollars), most of which was locked in before the start of the crisis. The countries that benefited most from

investment this year are Brazil, Chile, and Colombia, while the greatest recession oc-curred in Mexico and the Caribbean coun-tries. Due to changes in economic conditions caused by the crisis, FDI flows to the region have declined between 35% and 45% in 2009 (ECLAC, 2009d.) The landslide in FDI looks to deepen the regional recession and increase unemployment, affecting primarily the formal sector and, most likely, cutting back growth projections for the present year.

Decline in external demand

The slowdown of economies negatively im-pacts global commerce. The World Trade Or-ganization (WTO) estimates that the decline in global demand in 2009 will result in an approxi-mate 9% decline in the volume of exports. This is the greatest contraction of this type since the Second World War. For developing coun-tries - whose growth depends much more on commerce – the WTO predicts a decline of around 2%-3% in exports. Pascal Lamy, the Director General of the WTO, warned that the loss of jobs related to commerce and a rise in protectionist measures could “suffocate com-merce, the motor of recovery.”8

The flow of exports in the region will no doubt be affected, as well. Even though the composition of exports varies from country to country in Latin America and the Caribbean, generally their structure is dominated by primary prod-ucts from the agricultural or mining sectors.

In some Central American countries and in Mexico, manufacturers are more active due to the importance of contract manufacturing and tax free zones. Income generation from three sectors (tourism, remittances, and free trade zones and contract manufacturing) has been the basis of economic growth in the Central

7 24 March 2009. Available at http://www.wto.org/spanish/news_s/pres09_s/pr554_s.pdf8 24 March 2009. Available at http://www.wto.org/spanish/news_s/pres09_s/pr554_s.pdf

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American isthmus in the past 20 years. This income represented 65% of total goods ex-ports or 19% of GDP in 2007 (Renzi).

These sectors have an important relationship to work, and in particular to women’s lives in the region. Female participation is extraordin-arily important in free trade zones and con-tract manufacturing: “in mid 2001, contract manufacturing in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic generated a total of 585,138 direct jobs of which between 56% and 87% correspond to women. This figure could even be higher, since many women go unrecorded due to subcontracting and infor-mality in these countries” (Abramo, 2006).

Decline in remittances

A characteristic trait of the LAC region is the intensity of migratory flows, with the United States being the principal destination (al-though, over the past few decades, there has been a trend to diversify destinations). Re-mittances that immigrants send back to their home countries are one of the most important sources of currency in the region.

The weakened labour market in developed economies will have a negative effect on the money transfers that emigrant workers send home to their families. In Haiti, Honduras, Ja-maica, El Salvador, Nicaragua, and Guate-mala, for example, worker remittances repre-sent between 15% and 40% of the GDP. In Belize, Bolivia, Ecuador, Granada, and the Dominican Republic, these transfers repre-sent between 5% and 10% of GDP (ECLAC 2007). Consequently, any reduction in remit-tances will affect the situation of low-income families in these countries, many of which are headed by women. This is a determining fac-tor for the impact of the global economic and financial crisis on employment and poverty in the region. In 2005, 191 million people, or 3% of the world population, lived outside of their country of birth, with women making up 49%

of this figure (ECLAC, 2007). Women are at-tracted by the demand for non-specialized labour in developed countries and they become independent economic actors who contrib-ute to the reduction of poverty in their home countries through their remittances. Money transfers to Latin American and Caribbean countries this year represented 2.67% of the GDP of the region and reached 53,600 mil-lion dollars, which is 24.5% of the total of global remittances. Of the 9.9 million Mex-ican residents in the United States, 44% are women, of which 68% work as housekeep-ers, nannies, or elderly caretakers. In 2004, women contributed to 61% of all remittances received in the country (ECLAC, 2007).

Decline in the price of basic goods

A slowdown in global growth usually results in a decline in basic product prices. That is to say, the decline in global growth will worsen the terms of trade in the region as a whole, although with different impacts in different countries.

Terms of trade are forecast to worsen by ap-proximately 7.8% in 2009. In Chile and Peru, both metal exporters, it is estimated that the terms of trade will decrease by 30% in 2009 (ECLAC, 2009). Additionally, as a conse-quence of the fall in prices of primary goods such as gas, petroleum, and copper, there could be a fall in direct tributary income of between 7% and 8% of GDP (ECLAC, 2009).

With respect to the regional bloc MERCOSUR – or Mercado Común del Sur - where food makes up a large part of total exports - the rise in exports in 2008 will be almost completely offset by the projected decline of exports in 2009. While figures are currently lacking, it is expected that the terms of trade in Mexico will record a slight improvement in 2008 and a decline of more than 2% in 2009 (ECLAC, 2009). On the other hand, since Central Amer-ica and the Caribbean are net importers of basic products, the fall in petroleum, metal,

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Terms of Trade

The terms of trade reflect the ratio of export prices to import prices and developments in the terms of trade reflect how the ratio of export prices to import prices changes.1 So, if prices of exports rise more quickly than prices of imports, the terms of trade for that country improve. If, however, import prices rise more quickly than export prices, the terms of trade deteriorate for that country.

In a global downturn, global demand usually slows and, as a result, exports are impacted. As noted above, in the case of Latin America and the Caribbean, the decline in global growth will worsen the terms of trade.

Terms of trade have often been distorted in developing countries due to various struc-tural/policy factors.2 From 1980-2005, for many countries in Latin America and Africa, the overall impact of terms of trade shocks was negative; international trade, in this sense, continues to be a major source of instability in countries with weakly diversified econ-omies.3 That said, even least developed countries that have attempted to diversify out of commodities into low-skill manufacturing are increasingly competing against each other and encountering falling terms of trade.4

The decline in terms of trade also raises concerns around the impact of decreased ex-ports on export processing zones – the majority of which are comprised of women.

However, much of the work on gender and trade has so far amounted to piecemeal capacity building and market access initiatives for women, which do not challenge the mainstream macro policies5 that often lead to declining terms of trade in the first place. Mainstream trade policies need to change in order to acknowledge the gendered im-pacts of trade and to promote women’s access to resources, employment rights and decision-making on trade issues.6

The terms of trade can affect the real impact of Official Development Aid (ODA): the po-tential beneficial effects of predictable and scaled up ODA can be cancelled through, for instance negative terms of trade, high levels of debt servicing or excessive repatriation of profits.7

Written by Natalie Raaber, AWID

1 Statistics Netherland: http://www.cbs.nl/en-GB/menu/themas/dossiers/conjunctuur/publicaties/artikelen/archief/2008/2008-09-16-f.htm2 Pheko, Liepollo Lebohang (2006) Interlocking features of Trade, Gender and Poverty,” IGTN, Gender and Trade Net-work in Africa [GENTA], Presentation at Oxfam America Intraregional workshop Addis Ababa, June 21-24 2006.3 UN Department of Economic and Social Affairs (2008) “World Economic and Social Survey,” p. 6.4 See UNCTAD, The Least Developed Countries Report 2002: Escaping the poverty Trap, at iv–ix (2002). See also: http://www.bc.edu/schools/law/lawreviews/meta-elements/journals/bciclr/27_2/07_TXT.htm5 BRIDGE (2005) “Gender and Trade,” Gender and Development: In Brief, December 2005, Issue 17, available at http://www.bridge.ids.ac.uk/dgb17.htm6 BRIDGE (2005) “Gender and Trade,” Gender and Development: In Brief, December 2005, Issue 17, available at http://www.bridge.ids.ac.uk/dgb17.htm 7 Francisco, Gigi (2009) “Intervention on increasing financial and technical cooperation for development,” made on behalf of DAWN, Women’s Working Group on FFD, and the CSO Group for the Doha Preparatory Process on Financing for Development at the United Nations General Assembly Informal Consultations on Financing for Development being held in New York from 8 - 10 September 2008, available at http://www.choike.org/2009/eng/informes/7036.html

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and cereal prices alleviates and, in part, com-pensates for the consequences of the global economic slowdown and the abovementioned reduction in remittances.

4. What are the social and gender impacts of the crisis?

The ILO Report on Global Employment Trends for 2009 estimates that the current crisis could generate some 50 million new unem-ployed persons in the world, of which 22 mil-lion would be women. In the case of Latin America, the Labour Panoramic 2008 set out some scenarios that project that unemploy-ment in the region could rise from 7.3% in 2008 to between 7.9% and 8.3% in 2009. This means that in 2009, the Latin American region could have between 1.5 and 2.4 million newly unemployed people.9 In the same report, the ILO estimates that the number of people who are active in the labour market but who earn an income below the poverty line of two dol-lars a day (which the ILO calls “poor workers”), could rise from 6.8% in 2007 to 8.7% in 2009. This implies a rise of five million poor workers in Latin America and the Caribbean.

ECLAC forecasts that the crisis will have a dif-ferential gender impact in Latin America, much in the same way that the insertion of men and women in the labour market is differential. The gap in the employment rate between women with low and high income (first and fifth quin-tiles) is greater than between low and high income men and reflects the presence of obstacles for the poorest, which could worsen in a crisis situation. In general, unemployment and employment in the informal market are higher among women, implying a lack of social security and income instability. However the conditions are more serious amongst the poorest women, with both the rates of un-employment and informality increasing. It is important to note that historical data places a higher percentage of women in low produc-tivity sectors than men.

In the contract manufacturing sector, direct employment in Central America at the start of 2008 was 411,502 (Trucchi 2009). At the end of the same year, the textile industry lost 51,538 jobs, with an average decline of 13.5% and with the highest losses recorded in Nicaragua (21.47%) (Trucchi 2009). Ap-proximately 65% of the people who lost their jobs were women. During the first trimester of 2009, 27,400 jobs were lost. Consequently the total number of jobs lost in 2008-2009 in Central America was 78,938 (Trucchi 2009). Prior to the crisis other factors led to a decline in female labour, such as the emergence of new industrial sectors (barring the clothing industry) where female participation is lower. Additionally, several companies left the region citing cost reasons.

Gender segregation by both sector and occupation means that some sectors have a disproportionately high level of female partici-pation. These sectors - such as formal trade, financial services, and the manufacturing industry (especially textile manufacturing and contract manufacturing generally) – could find themselves strongly affected by the economic crisis. Workers in the tourism sector – a sector marked by extreme elasticity with respect to income – may find themselves amongst the worst hit by the crisis. These workers include those involved in the production and commer-cialization of crafts and gastronomy, hotel and gastronomic services, tourism operators, and craft vendors, as well as the domestic help within restaurants and hotels. The fall in de-mand for labour in larger companies will in-crease the proportion of employment in low productivity sectors, most likely increasing the rate of informality, which currently stands at around 57% in LAC (ECLAC, 2008). Addition-ally, the decreased availability of fiscal resour-ces could negatively impact social spending.

9 OIT (2009) “América Latina y el Caribe frente a la crisis financiera: Recomendaciones de la OIT e iniciativas de los países,” 2 March 2009, available at http://www.ilo.org/public/english/support/lib/financialcrisis/featurestories/story3.htm

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This could mean greater pressure on home caregivers, the majority of whom are women.

5. Poverty: a further consequence

Food prices are forecast to rise, provoking an increase in poverty. In particular, the price of food is estimated to rise 15%, inducing a 2.8% rise in poverty (Grynspan, 2009). This took the figure of 35.1% of the population living in a situation of poverty in 2007 to 37.9% in 2008 (Grynspan, 2009). Without public policy inter-vention, destitution could also increase from 12.7% to 15.6% (Grynspan, 2009). Additional-ly, it is possible that the region will back pedal on its advances in reducing malnutrition and child and maternal mortality in recent years (Grynspan, 2009).

Women have historically been at a disadvantage in the labour market. Concomitantly, poverty and deteriorating health intensifies the care-giving activities that women undertake in the home to alleviate the consequences of poverty.

The economic policies implemented in the re-gion during the last decades have worsened women’s situation, increasing fragility and workload. An integral feminist analysis points not only to the disadvantages and inequality in the social and labour insertion of women, but also evaluates how certain political decisions have been made feasible by the elasticity which characterizes the work load supported by women in the market and in the home.

In order to estimate the foreseeable impacts of the current crisis, it is useful to revisit the effects of previous crises such as the “debt crisis” in the 1970s and 1980s, which occurred when Mexico announced a moratorium on external debt. At that moment a series of structural adjustment measures were imple-mented. Similarly, austerity measures were used to combat the Mexican crisis in 1994, in those countries affected by the Asian crisis in 1997, and in the Russian crisis in 1998. The

consequences of these adjustments had dis-parate and unequal impacts across popula-tions; poverty indices worsened and income became less equitable, leading to an increase in socioeconomic polarization (Beerier, 2003). The political response to the Asian financial crisis in 1998 has been criticized for impos-ing cuts in public spending and promoting greater liberalization in the markets.10

One of the impacts of this was that women were disproportionately affected in the labour market.

Historically, men and women have been positioned differently in the market due to constructed norms in behaviors and attitudes. In part, this explains why the costs arising from economic recuperation differ between men and women. Women are doubly affect-ed; their condition as women and their social group membership shape their experiences of crises. Basically, women become adjust-ment variables of a crisis in both the family and in the labour market. At the family level, in order to provide basic services and sup-plies (as State compensatory measures are withdrawn) domestic work intensifies. With respect to the labour market, female partici-pation tends to increase – particularly in very precarious, poorly paid jobs, with deteriorat-ing conditions - in order to compensate for male unemployment. The double labour load is therefore present both inside and outside of the household. In this way, the adjustment is based on the elasticity of the load which falls onto women.

In addition to the financial costs of an economic crisis, other, less visible, costs - such as stress and domestic violence – are incurred and, indeed, appear to increase during these

10 Interactive expert panel: Gender perspectives of the fi-nancial crisis,” 53rd session of the Commission on the Status of Women, available at http://www.un.org/womenwatch/daw/csw/csw53/papers/Emerging%20issue-%20financial%20cri-sis%2023Feb09.pdf

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periods. To complicate the situation further, public policies to address historic feminist demands are weakened during these times. Reduction in social spending and cuts in budgets negatively impact on the health sys-tem: free contraceptives are no longer available and public health care provision for abortions is no longer provided. The same thing occurs in the education system and with human rights programs addressing violence against women (Beneria, 2003).

Taking into account prior crisis experiences as well as the initial impacts of the current crisis, it is clear that the fall in income and loss in jobs from the export industries and other activities – caused by the fall in global demand - will affect the LAC region’s popula-tion, including women, and especially those employed in sectors such as tourism where female participation is high. Credit restric-tions that affect microcredit will have serious impacts on female entrepreneurs and women in the agricultural sector. In those countries where households maintain themselves with remittances from abroad, a decline in remit-tances will also impact household incomes where family members are looking for work or where alternative income generation will be more difficult.

6. What measures are being taken by Latin American governments?

To a greater or lesser degree the LAC govern-ments are addressing the crisis and its con-sequences with a diverse range of policies. The measures differ according to the particu-lar impacts that are being experienced, the availability of resources, and the capacity to take on counter-cyclical policies. There are large differences between South American countries and those in Central America and the Caribbean, however. America has sub-stantial reserves available, or has already made adjustments to the financial sector in prior crises.11 The second group – which, in

11 Such as the case of Argentina in the 2001 crisis, when the most committed banks left and the remaining banks con-centrated into a system that today is solid and suffciciently liquid.

general, experiences more severe impacts -does not have the same instruments or re-serves available. In any case, in all countries in the region there is a consensus on the need for counter-cyclical cost and investment pack-ages by the public sector and measures that reactivate demand, generate consumption, and maintain production and, indirectly, em-ployment.

ECLAC, (2009c) has compiled a list of the policies adopted by governments in the re-gion into the first trimester of 2009, grouping them in the following manner:

• Monetary and financial policies, directed to-wards achieving liquidity such as the reduc-tion of bank reserves and interest rates.

• Fiscal policy with greater reactivating power than those destined to increase spending, which are based on the reduction of taxes.

• Currency and commerce policies, with distinct subsidy measures for lowering ex-port taxes, increasing tariffs or import tariff measures, etc., a type of competitive curren-cy exchange for local currencies, and credit management in international organizations.

• Sectoral policies, on a case-by-case basis, to encourage housing, support small and medium enterprises (SME), the agricultural sector, tourism, and industry.

• Labour and social policies.

• The ILO worryingly observes that, beyond the maintenance of or increases in conditioned cash transfer programs, labour market policy responses in some countries lag behind the impacts of the crisis and face greater political and operational challenges. A diverse spec-

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trum of measures has been observed in this regard, with public works as the predominant employment creating measure. This approach disproportionately favours male labour, pouring money into the construction and infrastructure sectors – sectors dominated by men. Nota-bly, measures specifically directed towards creating female employment have not been observed.

7. Final thoughts

Employment protection and creation pro-grams and unemployment insurance must be political options during this time of economic crisis. It is important to go beyond public infrastructure projects that do not take into ac-count the gendered segregation of the labour market. If measures are taken to promote the infrastructure sector, one alternative is to gen-erate self-managed jobs in associative types of businesses to provide goods and services in small localities. These policies could sup-port activities that women undertake in the market – sometimes as livelihood strategies – as well as others linked to the caregiver economy which socially and economically value their traditional tasks. Although critical – as it would, for example, reduce pressure on non-remunerated work - concern for social investment in care-giving services is lacking.

Support and encouragement for employment will fail to meet equity objectives if reproductive activities are not considered as the responsibility of all of society. The benefits of investing in healthcare, education, child-care, and other social services must be underscored. These investments generate jobs for women, due to their high participation in these sectors, and help women with their care-giving load thereby lessening some of the negative effects of the crisis on them and their children (Seguino, 2009).

Measures to mitigate the effects of the crisis

should not exclude those individuals in slightly higher socio-economic groups. Programs are needed that reach the vulnerable middle class, a population that does not usually receive sup-port from the State. This is important in order to prevent more individuals from moving into situations of relative or extreme poverty. The redesign of social security systems is essen-tial to prevent movements toward social frag-mentation and to improve the quality of public services, such as care-giving.

Finally, there is an urgent need to develop and present alternatives to the current crisis that go beyond and encourage human develop-ment and sustainability. The current aspects are not negligible, since they can compensate the immediate negative impacts with longer term impacts, and for this reason, the design of compensatory policies is important. Never-theless, now more than ever it is important to debate development and gender equity. Gender equity is not unrelated to the wider social and economic impacts involved in this debate. On the contrary - feminism can make a contribution to the search for new strategies towards human development, when the ob-jective of economic activity is to provide and reproduce a life worth living. Feminism can help us visualise an economy that works for all people. Current proposals for change should not be vertically introduced but rather stem from democratic debate that includes ordinary people – not just as producers or consumers – but as their holistic selves. The market has clearly shown itself to be incapable of recog-nizing and valuing the diversity of needs and interests of the global community.

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References

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Buvinic, M. (2009) “The gender perspectives of the financial crisis,” written statement submitted by the World Bank to the Interactive Expert Panel on Emerging Issues, 53rd Session of the Commission on the Status of Women, New York: March 2-13, 2009.

ECLAC (2007) “El aporte de las mujeres a la igualdad en América Latina y el Caribe,” LC/L.2738-P/E, August 2007, Santiago, Chile: p. 136.

ECLAC (2008) “América Latina: Panorama Social 2008,” Santiago, Chile.

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Renzi, R. (w/date) “Género y Transformaciones del Mercado de Trabajo,” available at http://147.83.15.91/Doc/cols_new/contenidos/downloads/obtener?id=1522&artcl=&artcr=2

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Brief 1 Latin America

Social and Gender Impacts

of the Economic Crisis.

By Alma Espino & Norma Sanchís

SUBREGIONAL BRIEFS

The crisis’ impact on women’s rights: sub-regional perspectives

Brief 2 Caribbean

The Impact of the Crisis on Women

in the Caribbean.

By Rhoda Reddock & Juliana S. Foster

Brief 3 Asia


in Developing Asia.

By Jayati Ghosh

Brief 4 Pacific Islands

The Impact of Crisis on Pacific

Island Women: A Snapshot.

By Karanina Sumeo

Brief 5 Central Asia

The Impact of the Global Crisis

on Women in Central Asia.

By Nurgul Djanaeva

Brief 6 Western Africa

The Global Financial Crisis and Women

in West Africa: Developing Impacts and

the Implications of Policy Responses.

By Dzodzi Tsikata

Brief 7 Western Europe

The Impact of the Crisis

on Women in West Europe.

By Wendy Harcourt

Brief 8 Eastern Europe


in Central and Eastern Europe.

By Ewa Charkiewicz

Brief 9 United States of America

Impact of the Crisis on Women

in the United States of America.

By Rania Antonopoulos and Taun Toay

Brief 10 Eastern Africa


in Eastern Africa.

By Zo Randriamaro

brief. 1

Documents

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energy crisis

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development choices

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