Countries must strengthen rural activities that generate employment

Conclusions of the conference on “DR-CAFTA and rural employment" sponsored by FAO, RUTA and ILO

Agricultural employment is decreasing in all the Central American countries and this trend is expected to continue. Therefore, in the context of the Free Trade Agreement with the United States (DR-CAFTA), countries should try to develop different types of rural activities that may provide a major source of employment, among them rural tourism, agro-industry, non-traditional agriculture and, in the case of some countries, a more productive investment of family remittances.

Appropriate policies to generate agricultural employment

As the consultant Pablo Rodas noted in his summary, our countries are currently facing the fact that agricultural activities are unable to provide the jobs required by the rural population. The increased productivity demanded by international competition forces countries to mechanize and adopt technological changes that improve competitiveness, but not necessarily employment. Furthermore, many new production sectors - vegetables, fruits or other products - require a considerable labor force, but tend to be less labor-intensive than traditional agriculture. Consequently, and despite the fact that Agricultural GDP has increased in absolute terms, we are witnessing a continuous and irreversible contraction in agricultural employment.

Therefore, as part of their rural policy proposals, countries should try to develop rural activities that could be major generators of quality jobs.
 
One of the successful niches to which decision-makers are paying attention to is rural tourism, because it has the advantage of not requiring a large start-up investment and responds to environmental and conservation concerns. However, Rodas’ summary warns that although rural tourism has an important margin of growth, it is not realistic to assume that it can be applied to all rural areas; the possibilities for expansion are greater in areas close to major tourist destinations. Nevertheless, it is one of the three niche activities that should be enhanced.

A second strategy would be to promote a more productive investment of family remittances, which would be another potential generator of employment, mainly in countries with high emigration rates. Remittances have continued to grow in all the Central American countries and, as the migrant populations have consolidated their economic position, many of them no longer continue to send money for their relatives to subsist and may consider other uses: building homes or starting small and medium sized businesses. This new use of remittances could be another important generator of non-agricultural rural employment.

Agroindustry and dynamic products, other generators of rural employment

A third major source of rural employment would be agroindustry. The DR-CAFTA agreement will encourage producers to incorporate greater added value in their agricultural products. This is certainly a great challenge, since will also require producers to substantially improve the sanitary and phytosanitary conditions of their harvests. However, the summary adds that agroindustry is a real possibility that could develop gradually. When negotiations were taking place with the United States there was already concern among some US agroindustrial sectors over the agricultural potential observed in Central America, particularly because the region already has an appreciable agroindustrial sector. Although the isthmus currently focuses on intra-regional trade, if it could make the leap towards US markets.

In addition to the three above-mentioned activities, dynamic products such as vegetables or fruits will continue to generate employment. It is possible that producers will be forced to improve their staff training efforts in view of the stricter conditions imposed by the United States and other commercial partners, in terms of animal and plant health measures, which will obviously result in better salaries for those who manage to place themselves in these dynamic sectors. This would still be essentially agricultural employment, but with close links to agroindustry, since some producers would gradually make the transition.

A large percentage of the Central American workforce is still engaged in agricultural activities, the great majority being men, as shown in the adjacent table. In Nicaragua and Guatemala, this percentage represents almost 40% of the workforce, while in Honduras it exceeds 36%. In El Salvador, the percentage is 18%, and Costa Rica is the country with the smallest workforce dependent on the agricultural sector (4.4%).

Reducing child labor will not depend on DR-CAFTA

With respect to the issue of child labor and the implications that DR-CAFTA might have in this regard, the participants in both videoconferences concluded that despite the improved application of the labor laws and the fact that the Agreement would combat child labor, no dramatic changes should be expected as a result of the trade agreement.

Although increased regulation would result in stricter inspection processes and would attract increased foreign investment, it is not realistic to expect a spectacular boom in employment that would provoke an improvement in incomes and lead to a subsequent reduction in child labor. The most likely outcome of all trade agreements is a moderate improvement, which would have a moderate effect on employment. Therefore, reducing child labor in Central America will depend more on the social policies and internal measures adopted by the countries.