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### Viewing cable 04BOGOTA1563, COLOMBIAN UNEMPLOYMENT AT SEVEN-YEAR LOW

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
04BOGOTA1563 | 2004-02-17 13:01 | 2011-04-16 00:12 | UNCLASSIFIED | Embassy Bogota

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

` `

    id: 14017
    date: 2/17/2004 13:40
    refid: 04BOGOTA1563
    origin: Embassy Bogota
    classification: UNCLASSIFIED
    destination:
    header:
    This record is a partial extract of the original cable. The full text of the original cable is not available.

    ----------------- header ends ----------------

    UNCLAS SECTION 01 OF 02 BOGOTA 001563

    SIPDIS

    E.O. 12958: N/A
    TAGS: EFIN ECON ELAB CO PGOV
    SUBJECT: COLOMBIAN UNEMPLOYMENT AT SEVEN-YEAR LOW

    ¶1. (U) SUMMARY:  Reflecting the economy's 3.5 percent
    increase in 2003, Colombia's unemployment rate has fallen to
    12.3 percent, a seven year low.  Underemployment has
    increased slightly to 31.9 percent.  Unemployment continues
    to be a top issue among the public.  Some analysts, while
    praising the turn of events, see the new job creation as
    insufficient.  Others also question the quality of the new
    jobs.  The GOC understands these criticisms and is focusing
    efforts on export sectors that can generate more, and
    better-paying, jobs. END SUMMARY.

    ¶2. (U) According to the National Statistics Department
    (DANE), 1.2 million new jobs were created in Colombia in
    2003, bringing unemployment to a seven-year low of 12.3
    percent. The number of under-employed, however, rose 1.7
    percent to 6.6 million, or one third of the labor force.
    Unemployment in urban areas, where three quarters of the
    population lives, registered 14.3 percent in December 2003
    for the 13 largest cities, with a higher rate of 16.7 percent
    in Bogota. Urban underemployment dropped by 1 percent to 31.1
    percent, and DANE set rural unemployment at 9 percent.

    More Jobs, but More Underemployment

    ¶3. (U) The majority of the increases came in the construction
    and service sectors. According to a leading labor think tank,
    Externado University's Labor Market Observatory, higher
    paying manufacturing jobs decreased 2 percent in 2003,
    leading to a 4 percent drop in wages overall.  The
    Observatory notes that the mining sector and utilities showed
    important productivity gains, but little new employment.  The
    Labor Market Observatory's director, Dr. Stefano Farne,
    acknowledged that there were new jobs, but challenged the
    number of new jobs the government reported.  Farne also saw
    the increase in underemployment as worrisome.  He pointed to
    a recent study by the Observatory that 67 percent of jobs are
    "informal" in Colombia's thirteen largest cities, meaning,
    among other things, they are not registered with the social
    security system. (Note: This can be explained by the fact
    that 65 percent of new jobs were created by small and medium
    size enterprises, defined to have less than 25 employees.
    Officially, any company under ten employees is considered
    informal. Therefore "informal" sector jobs may not
    necessarily mean illegal or sub-standard employment. End
    Note.)

    Unemployment Rates High Among Public Concerns

    ¶4.  (U) In a poll of residents of the four largest cities
    published January 5 by leading weekly Semana, 40 percent of
    respondents rated unemployment as the most serious issue
    facing Colombia, trailed by corruption (29 percent), the
    security situation (24 percent) and narcotrafficking (5
    percent).  Sixty-one percent of the respondents said they
    were not working.  Other polls indicate President Uribe
    continues to enjoy high overall job ratings of close to 80
    percent.  His approval rating specifically for dealing with
    unemployment, however, runs at just 35 to 40 percent.

    Government Reforms Having a Positive Fffect

    ¶5.  (U) One of the causes for the employment upturn in 2003
    was 2002's labor reform that reduced the cost of layoffs,
    inserted flexibility into the scheduling of the workweek,
    lengthened the number of hours covered under daytime wage
    regimes and reduced Sunday labor rates.  DANE estimates that
    labor costs overall dropped 5.7 percent as a result of the
    reform, while labor costs in the textile and chemical sectors
    were reduced by 15 percent and leather industry labor costs
    dropped by nearly a third. Both these sectors grew in 2003 as
    a result of ATPADEA.  This reform was originally expected to
    generate 300,000 new jobs, but the data now suggests upwards
    of 600,000 new jobs resulted.

    ¶6.  (U) The minimum wage process has also had an effect on
    employment levels.  As of December 2003, the minimum wage is
    USD 126 per month, and it has not changed in real terms since
    ¶1990.  While businessmen argue that the wage is high by
    regional standards, wages in export industries, such as
    textiles, mining and light manufactures are significantly
    higher.  The real impact of the minimum wage is in the
    services sector, where more workers are pushed into
    informality as the minimum wage increases.  The minimum wage
    is insufficient to meet the basic needs of urban workers,
    however, as reflected by a January 5 Semana poll indicating
    that only 16 percent of workers felt they could run their
    household on 1.5 times the minimum wage (US$184).

    ¶7.  (U) The employment and job creation numbers are positive
    and reflect the success of labor reforms as well as
    ATPADEA-led export growth.  The GOC recognizes, however, that
    much more needs to be done and is focusing resources on
    export sectors since these sectors generally offer
    higher-paying jobs. The GOC is also looking to tighten its
    controls of the informal sector.
    WOOD

    =======================CABLE ENDS============================

`