Economic Opportunities and Indigenous Peoples in GUATEMALA

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Economic Opportunities and Indigenous Peoples in
GUATEMALA
Maria Victoria Fazio (World Bank) Georgetown
University, February 9 th, 2007
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Objectives

• To examine the economic opportunities available
  to indigenous in comparison to non indigenous
  Guatemalans in the rural and urban labor market.
• And to investigate the determinants of the
  patterns of employment of these groups with
  special emphasis on the role of social networks

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Motivation

• Indigenous Guatemalans have had historical
  restrictions in accessing crucial assets for
  human development such as land, labor, health and
  quality education
• Recent studies identified clear disadvantages of
  indigenous in terms of poverty reduction and
  human capital accumulation. (Hall and Patrinos,
  2006)
• Among disadvantaged groups the social networks
  appear as an asset that can help to overcome the
  lack of opportunities. (e.g. by reproducing a
  successful strategy to generate income).
• However, as sociologists (Granovetter, 1985) also
  emphasize, social interactions among
  disadvantaged groups may inhibit upward mobility
  (beyond their typical income generating
  activities).

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Outline

• Characterization of contextual framework
• Employment patterns of indigenous and non
  indigenous
• Job opportunities finding methods How do
  indigenous and non-indigenous find employment?
• The role of social networks
• Concluding remarks and policy options
• Main data sources
• Households survey ENCOVI(2000),
• Labor Force survey ENEI (2004)
• and Census (2002)

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Remarks on the context for indigenous peoples
Based on World Bank WDR(2000) and World Bank
(2004) analytical frameworks
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Guatemala The Multilingual, Multicultural and
Multiethnic nation

• 41 of population self-identified as indigenous
• 22 Mayan groups, and the Garifuna and Xinca
• 70 of indigenous live in rural areas

• Agriculture activities account for a quarter of
  the GDP in Guatemala.
• The economy is still predominantly based on
  traditional exports of coffee and sugar, despite
  the increase in Non- traditional agricultural
  exports (NTAE).
• High underemployment levels (16.5, 2004)
• Increasing amount of migrants to other countries
  (50,000 per year to the US, IOM,2005)

Accord on Identity and Rights of Indigenous
Peoples, 1995
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Employment Patterns

Source ENCOVI (2000)
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• Differential patterns of employment between
  indigenous and non indigenous
• Indigenous Guatemalans are typically employed
• in lower-paid, unpaid and informal jobs
• as self-employed (especially more than
  non-indigenous in urban areas)
• Agriculture (Subsistence in many cases) and
  handicrafts (traditional)
• In contrast, non-indigenous tend to be employed
• in salaried jobs,
• in larger firms and formal sector
• and in the public sector

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(No Transcript)
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• Although much of these differences can be
  explained by differences in backgrounds and in
  endowments of physical and human capital there is
  still evidence for discrimination between against
  indigenous Guatemalans. (See estimates with same
  data by Schapiro, 2006)
• gt Given these employment patternsHow
  did indigenous and non indigenous Guatemalans
  find these employment opportunities?What is
  the role of social networks ?

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How do Guatemalans find employment opportunities?
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How do Guatemalans find employment opportunities?

• The use of Social contacts (networking) is the
  most reported method
• 37 of workers report having found job
  through relatives or friends
• The contacts with relatives (tradition) are more
  frequent among indigenous, while the contacts
  with friends are more frequent among
  non-indigenous
• 35 of indigenous (20 relatives and 15
  friends or politicians)
• 38 of non-indigenous (16 relatives and 22
  friends or politicians)
• The use of formal methods (submitting CVs and job
  competition) is more frequent among the
  non-indigenous
• 15 of non-indigenous
• 8 of indigenous report formal methods

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• The reliance on social contacts facilitates the
  job seeking for individuals trying to
  differentiate from applicants with similar
  characteristics
• However, there are caveats identified in the
  literature
• Social contacts are more likely to facilitate the
  creation of low quality jobs
• As Holzer (1987, 1988) argues, these informal
  methods may allow race to become important in
  hiring, and so detrimental to minorities
• As Mazza (2005) points, the social contact
  channel can reinforce and reproduce the effect of
  the discriminatory practices in the labor market
  against certain groups (by transmitting the same
  occupation to the refereed job seeker)

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Different Job finding methods in rural and
urban areasFormal methods and contacts from
friends are more typical in urban areas
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• Conditional on workers characteristics
  (education, gender, age, etc) and on the
  characteristics of the jobs
• What are the propensities of indigenous vs.
  non-indigenous to find a job with social
  contacts/formal methods?
• Models at national, rural and urban levels and
  for specific occupations and education groups
• Of the Probability of finding a job with
• Social contacts, relatives, friends and formal
  methods

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The likelihood of finding a job with social
contacts varies across ethnic groups and areas

• Indigenous peoples are almost 7 more likely to
  find jobs using social contacts than the
  non-indigenous.
• In rural areas, the probability increases to 14
• While in urban areas, the non indigenous have
  almost 4 higher chances of getting a job with
  social contacts

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• Indigenous peoples have higher probabilities of
  finding jobs through Relatives in all areas, and
  friends only in rural areas
• While non indigenous have higher chances of
  finding a job through friends in urban areas
• In urban areas the indigenous are more likely to
  find a job using formal methodgttherefore, there
  is room for labor intermediation services

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Within specific occupations and levels of
education
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Remarks

• Social contacts are more associated with higher
  chances to work in informal and low-skill
  occupations and in rural areas among indigenous
  peoples
• Whereas among the non-indigenous, social contacts
  are more effective in high skill occupations and
  in urban areas
• In urban areas, it is more likely for indigenous
  people to find a job with formal methods rather
  than social contacts
• Therefore, there is room for intermediation
  services to increase opportunities for indigenous
  peoples in urban areas, where their networks do
  not seem to facilitate these jobs.

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• Using data of the census 2002 and an empirical
  measure of social networks we also find evidence
  of social networks effects among indigenous
  groups in
• the likelihood of engaging in off-farm activities
  like handicrafts, but no evidence of networks
  facilitating employment in non-traditional
  sectors.
• Also, social networks tend to encourage
  self-employment
• Access to public services can be relevant in
  providing complementarities with social networks
  for developing strategies to increase
  opportunities.
• For instance, the access to services like
  electricity was found as a factor that reinforces
  the role of social networks on the decision to
  move to off-farm activities (i.e. handicrafts)
  among indigenous peoples.

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Examples of social capital among indigenous
peoples within traditional sectors

• Organizations fostering access to markets
• CONIC (National Indigenous and Campesino
  Coordinating Committee)
• Provides access to infrastructure, training,
  market info to promote family enterprises based
  on food security and diversified agriculture
• MANOS CAMPESINOS Formed in 1997 in
  Quetzaltenango joining 7 coffee cooperatives and
  over 1000 farmers
• Provides Technical support for product
  diversification, conversion to organic
  production, improving administration
• Promotes participation of rural and indigenous
  women
• Fair trade agreements with international coffee
  purchasers like Starbucks
• gt POSITIVE EFFECTS increases in income,
• school attendance and health care

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• MAYAN HANDS (Since 1989)
• Aimed at providing female indigenous artisans
  (400) with quality raw materials
• and assistance in marketing for international
  trade
• POSITIVE EFFECTS improvements in nutrition,
  school attendance, housing and savings
• MAYAN TRADITIONS Working for 10 years in the
  Highlands
• Finds markets for indigenous womens handmade
  crafts
• Scholarship programs
• The increase of these cases of social
  interactions can foster more human capital
  accumulation and in turn more diversification of
  activities for indigenous peoples

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Policy options

• The role of social interactions should be
  strengthened in different ways.
• Providing information of Models of
  successful cases (i.e. NTAE).
• Technical capacity building on agency
  (association and representation) of
  organizations, marketing, new products, etc. -
  This implementation may have large positive
  multiplier effects through the social networks
• Increasing access to basic services and assets
  (land, credit, education) is crucial in providing
  complementarities to indigenous communities
  (Public investment can also generate more jobs)
• Public intermediation services can increase the
  number and quality of the labor market
  opportunities available to indigenous peoples in
  urban areas.
• Expand the coverage of bilingual education for
  the indigenous peoples
• Increase qualitative and quantitative data
  collecting on the living conditions and economic
  activities of indigenous peoples. There is not
  enough systematized data on the problems faced by
  these communities.

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• Policy design should be culturally appropriate
  for indigenous peoples.
• And should be enhanced with the inclusion of
  indigenous peoples as part of the global strategy
  for the country.
• 
  Thank you!