Mario Pozas

UNAH, Honduras

Globalisation and the Job Market

    Mario Pozas stated that globalisation is now a reality in today’s world. The principal contributors to this process are the major multinational companies that are able to export jobs to countries where labour is cheap. Multinationals can split the phases of production, setting up their plants in many locations. They are also legally permitted to choose where to design, produce and market their products and to negotiate tax incentives with national governments.

    He noted that in the case of Honduras, the free movement of capital, the search for cheap labour and the relatively flexible labour laws that fail to provide adequate protection for employees have opened up the job market in the assembly industry. In the first six months of 1998, this industry created 90,464 direct jobs, and the figure continues to rise. It is currently ranked the second highest exporter after coffee. The government is so optimistic about the growth of this industry that in April 1998, it declared the entire nation open for the creation of assembly companies.

    While the assembly industry has helped alleviate the problem of unemployment in the country, especially among young elementary school graduates, it is far from resolving the problem completely. According to 1997 statistics, 4% of the economically active population or 2,138,363 people are unemployed. However, the problem of underemployment, which affects 3.5% and 23.4% of the visible and invisible sectors respectively is more serious than unemployment.

    He noted that the informal sector is a major source of employment in the country. Micro-enterprises and small businesses in Honduras created a total of 371,305 jobs.

    It is important to point out that the informal sector and poverty go hand in hand. According to a 1996 poll, 76% of people employed in the informal sector are poor and 47% of them are indigenous people. Overall figures show that in 1988, in terms of income, 68% of families were living below the poverty line; in 1992, this figure was 72% and today it exceeds 80% (Guell Bográn, 1998). It is estimated that approximately 60% of these families cannot afford a basic food basket.

    It is creating opportunities in sectors, such as the assembly industry, that have a higher growth potential. However, it is competing with the traditional market of the local businesses that historically have operated at a disadvantage vis-à-vis local small, medium-sized and large enterprises as well as the large multinational businesses that characterise the current economic globalization process.

    Globalization plays a significant role in reducing the number of jobs in the formal sector and, as a result, increasing opportunities in the informal sector. The above is clearly recognised in the Programme of Action of the Copenhagen Summit. The Programme of Action states that job creation in many developing countries is increasing at a higher rate in small and medium-sized businesses as well as in the independent employment sector. In many of these countries, the unstructured sector is usually the primary source of job opportunities for people, especially women, who have limited access to paid jobs in the structured sector. The Programme of Action recommends the elimination of obstacles that hamper the operations of these businesses which should be given the support they need to create and increase job opportunities. This should be combined not only with the protection of basic rights, access to health care, security for employees and gradual improvement of work conditions in general, but also with increased efforts to integrate some of the companies in the structured sector.

    It is important to point out that the devastation that Hurricane Mitch caused to a large part of the road infrastructure and the activities of micro-enterprises in the informal sector heralds a future that is not very promising. The large number of people left homeless and who have had to turn to selling in the streets of Tegucigalpa have moved onto the very same streets. This is a sign of the resurgence of trade, one of the most important industries in the informal sector, and of the need to create new independent jobs to avert the impending economic crisis brought on by the destructive impact of Hurricane Mitch.


Mario Pozas is with UNAH in the Honduras.