Formal Sector

Bolivia's official labor force reached 1.6 million in 1986, roughly half of the economically active population or about a quarter of the total population. Labor statistics varied widely because of methodological reasons and because of the large role of the informal economy, which contained both legal and illegal components. Men made up approximately 75 percent of the official labor force and 64 percent of the economically active population. In actuality, however, women played a greater role than suggested by official statistics, particularly in rural areas and in the urban informal sector. During the 1980s, the growth rate of the female labor force was nearly double that of males. The labor force as a whole grew 2.7 percent annually in the 1980s. In the late 1980s, nearly half of all workers were in agriculture (46 percent), followed by services (34 percent) and industry (20 percent). Although services had grown since 1950 at the expense of agriculture, Bolivia still contained the second most agricultural economy in South America in the late 1980s, behind Paraguay, and the second least industrial economy, after Peru. The nation's unemployment rate, which averaged just under 6 percent during the 1970s, climbed to 10.9 percent in 1982, 13 percent in 1983, 15.5 percent in 1984, and 18 percent in 1986. It was estimated at 21.5 percent in 1987. Unemployment in the highlands tended to be about double that of the eastern plains (llanos) or lowlands (Oriente).

Workers were concentrated in the cities of La Paz (40 percent), Santa Cruz (20 percent), and Cochabamba (20 percent). Salaries varied considerably by location and sector. Urban incomes were much greater than those in rural areas, and the lowest official salaries occurred in the southern highlands. Workers in the banking and hydrocarbon sectors were among the best paid, whereas those in mining, education, and services received among the lowest wages, depending on shifts in the economy and wage negotiations. The average real wage declined throughout the economy during the 1980s. Skilled and semiskilled labor was scarce, and inadequate training persisted.

Organized labor had been the most important interest group in the Bolivian economy since 1952. The country's labor unions were some of the strongest in Latin America and were characterized by their activism, militancy, discipline, violence, and political influence. One knowledgeable analyst estimated that Bolivia had as many labor strikes, protests, and demonstrations in proportion to its population as any country in the world. The Bolivian Labor Federation (Central Obrera Boliviana--COB), an umbrella organization for the country's more than 150,000 union members, dominated the nation's labor unions. The COB routinely mobilized member unions to stage roadblocks, marches, hunger strikes, demonstrations, and work stoppages over wage demands, working conditions, political issues, and job benefits. The COB's most powerful affiliate was traditionally the Trade Union Federation of Bolivian Mineworkers (Federación Sindical de Trabajadores Mineros de Bolivia -- FSTMB). Despite the power of organized labor in the mining industry, working conditions in the mines remained deplorable, and the average miner died of silicosis ten years after working underground.

NPE policies, particularly the Comibol layoffs, weakened the FSTMB. As a result, the General Trade Union Confederation of Peasant Workers of Bolivia (Confederación Sindical Ünica de Trabajadores Campesinos de Bolivia -- CSUTCB) was challenging the FSTMB's traditional dominance in the late 1980s. Approximately 90 percent of all small farmers were members of organizations affiliated with the CSUTCB. The Túpac Katari National Federation of Bolivian Peasant Women (Federación Nacional de Mujeres Campesinas de Bolivia Túpac Katari) was also widespread. Most nonunionized labor was in the informal sector.

Informal Sector

Definitions of Bolivia's informal sector varied in the late 1980s but generally included the nonprofessional, self-employed, unpaid family workers, domestic servants, and businesses with five or fewer employees. Although primarily associated with La Paz, the informal sector also included a rural component and an illegal component linked to the coca industry. The urban and legal informal sector was estimated to contribute about 12 percent of GDP and employ as much as 60 percent of the labor force in the mid-1980s. Most analysts believed that the sector increased in the late 1980s because of public sector layoffs and the depressed mining industry.

The informal sector was characterized by ease of entry, the family nature of work, the informal uses of credit, and the evasion of certain government regulations, especially regarding the sale of smuggled goods. Two household surveys of La Paz in the 1980s found that the income of small proprietors in the informal sector averaged as much as twelve times the minimum wage (which was equivalent to US$425 per month in 1988); the income of the self-employed, who made up about half of the informal sector, was twice the minimum wage. By contrast, salaried workers, unpaid family workers, and domestic servants typically made only onehalf of the minimum wage. Workers in the informal sector, however, generally endured the recession of the 1980s better than their formal sector counterparts, and there was a trend toward a convergence of incomes.

The most lucrative informal activity was in transportation, usually unregistered buses or taxis. Other informal services included laundry, mechanical repair, electrical services, black market currency transactions, and money lending. The most common activities were makeshift family grocery stores and the sale of food, clothing, and smuggled consumer items. Seamstresses, weavers, carpenters, and butchers performed the bulk of informal industrial work. The government's VAT was in part aimed at netting more revenues from small producers who remained outside government regulation.

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Source: U.S. Library of Congress