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Structural adjustment and agriculture in Guyana:
From crisis to recovery

IV. Employment, incomes and poverty profiles and changes

We turn in this section to look at the employment and incomes situation in the country and changes that have occurred therein. Profiles of the labour force, incomes and poverty will be drawn up for the start of the decade based on the Household Income and Expenditure Survey (HIES) of 1992-93. Statistics on wage employment and wages will be used to then depict changes in employment and incomes.

Employment profile

Table 7 shows the employment profile of the country during the period of the HIES of 1992-93. The economy is still highly dependent on wage labour -- i.e. highly for a country whose per capita income is around US$600. Over one-half of the labour force was counted in the "regular salaried" category while two-fifths were found in the "self-employed" category. Significant differences existed by race. Over three-fifths (63 per cent) of Afro-Guyanese were enumerated as being in the salaried category, compared to 50 per cent of the Indo-Guyanese and, correspondingly, proportionately fewer of the former were self-employed (31 per cent) compared to the latter (40 per cent). The importance of regular salaried employment is explained by the high urbanization of the economy and by the dominance of large estates in the rural areas. Thus, if we look at the last two columns in the table, agriculture employed only 27 per cent of the labour force, and agriculture was fairly highly organized on a formal basis, with 38 per cent of the labour force in the salaried category and 11 per cent in the casual labour category. In the urban areas regular jobs dominated, leading to the domination of this category of employment. Yet it is worth noting that self-employment occupied over 35 per cent of the non-agricultural labour force. The overall racial profile of the labour force can be explained this way: a majority of the Afro-Guyanese live (and work) in the urban areas, regular salaried jobs, particularly in government, being their main type of employment. The Indo-Guyanese on the other hand are still much more agricultural than the Afro-Guyanese, many of them remaining on family farms. In the urban areas too, many more of them undertake petty trading and other informal occupations compared to the Afro-Guyanese.

Table 7. Employment status by race and agriculture/non-agriculture, 1992-93

	All	Indo-Guyanese	Afro-Guyanese	Total agriculture	Total non-agriculture
Employed (=100)	245 492	119 144	87 732	66 605	178 887
Per cent				27.1	72.9
Of whom (%)
Self-employed	39.6	39.8	31.1	51.6	35.1
Regular salaried	52.4	50.1	62.6	37.7	57.9
Casual labour	8.0	10.1	6.3	10.7	7.0
Unemployed	32 586	15 545	13 824
Per cent	13.3	13.0	15.8
Inactive	189 095	108 221	59 311
Total	467 173	242 910	160 867
Notes: (1) Employed + unemployed = total active labour force. (2) Unemployment percentage expressed in relation to the above. (3) Inactive labour force consists of housewives (59.3 per cent of inactive), students (19.9 per cent), pensioners (12.1 per cent), and others. Source: BOS, HIES, tables 1.5.1 and 1.7.1.

The total potential labour force was estimated at 467,173 (last row of table 7), but 40 per cent were in the inactive category, being housewives, students and pensioners, leaving a total labour force available for employment of 278,078. Of these, 13.3 per cent were estimated to be unemployed. The rate was significantly higher among the Afro-Guyanese (15.8 per cent) than the Indo (13 per cent), again a reflection of the higher dependence of the former on regular salaried jobs. This dependence is not only lower amongst the Indo group, leaving them less prone to unemployment, but their higher dependence on self-employment also means that those who actually fall into unemployment may easily be absorbed into family businesses.

Table 8 shows the employment profile by occupations and by poorest and richest quintiles. Around one-fifth of the labour force was counted in the former category, and with another 11.7 per cent in the agricultural labour category, agriculture as a whole could be said to occupy around 30 per cent of the labour force, about the same as shown in table 7, column 4. Significant differences appear by quintiles: over 56 per cent of those in the poorest quintile were in the agricultural sector compared to only 15.4 per cent in the richest quintile. A conclusion is possible that being agricultural is a cause of poverty. The informal sector, contrary to expectations, is not: a higher proportion of the rich were in this sector than of the poor. The rest of the sectors follow expectations, with craftsmen, office/retail workers, professionals, etc., all more heavily represented among the rich than the poor. Overall, the occupational profile is significant for the lower than expected role of the agricultural and the informal sectors, this observation being in relation to the stage of development of the economy: in a poor country such as Guyana we expect to see a much larger agricultural labour force overall and a much larger informal sector in the urban areas. The former does not transpire because of the previously noted dominance of the large estates, which are much less labour-intensive than smallholders, while the latter could be attributed to the dominance hitherto of the public sector in employment. An expansion of the informal sector should be envisaged with the contraction of the public sector.

Table 8. Employment by occupational groups (%)

	Total	Poorest quintile	Richest quintile
Agriculture (farmers)	19.5	42.4	9.8
Agricultural labour	11.7	13.8	5.6
Informal sector/service	14.1	11.0	17.3
Craftsmen/operatives	23.3	15.6	26.3
Office/retail	15.9	7.2	18.0
Professionals	10.4	5.4	21.2
Nursing/construction/labour	5.1	4.6	1.8
Source: World Bank, table 8, based on HIES.

Incomes profile

Table 9 shows a hierarchy of incomes in Guyana as well as sources of income. Self-employed in urban areas have the highest income, followed by self-employed non-agricultural in rural areas. This goes to show that the "self-employed" category in table 9 should not be equated with the informal sector; in Guyana's case it includes large business groups and professionals apart from the petty traders of the informal sector. Regular wage earners in urban areas were the next richest group, followed by self-employed farmers, urban casual workers and agricultural labourers. The high position of "self-employed in agriculture", or farmers, is noteworthy. Although farmers figure heavily amongst the poverty groups in Guyana (table 2), farming as a whole is not a poor sector, the dichotomy being explained by the co-presence of the large estates and the smallholders in the agricultural sector.

Table 9. Incomes and sources, 1992-93

	Income per household per month (G$)		Income sources (%)
			Paid employment	Self- employment	Property	Transfers
Rural
Self-employed, non-agricultural	36 619		7.1	80.8	4.4	7.6
Agricultural labour	19 602		75.5	7.0	3.0	14.5
Self-employed in agriculture	24 126		6.8	78.7	4.0	10.5
Urban
Self-employed	47 589		7.1	72.3	8.5	12.1
Regular wage	29 419		57.2	4.1	6.1	32.6
Casual labour	23 612		47.0	9.8	5.3	37.9
Total	26 298		33.4	39.0	5.7	21.9
Source: BOS, HIES, table 3.3.

The rest of table 9 shows the sources of income for the country as a whole and for each of the major occupational groups. Taking the former first (last row of the table), income from self-employment dominated total incomes, followed not too far behind by income from paid employment. Transfers -- i.e. remittances from overseas -- contributed a significant share of incomes in the country, being particularly important for wage earners and casual workers in urban areas. While each occupational group derived a major part of its income from its chief occupation -- wage earners from paid employment, etc. -- some diversification is nevertheless discerned. For example, the self-employed group in urban areas obtained over one-quarter of its income from sources other than self-employment. Diversification is particularly evident for the urban workers and most of it comes in the form of transfers.

Poverty

Poverty line

Drawing up a poverty profile requires establishing a poverty line. Certain objective criteria are available for this -- e.g. in terms of minimum calories, yards of cloth, cubic metres of space -- but each of these is ultimately indeterminate, and how much is specified and what type depends on the judgement of the researcher. For example, a clothing standard can be formulated based on the notion of "decency", from which then a minimum could be established in terms of two sets of clothing per year and therefore X metres. But X is ultimately subjective and it would still leave the question of deciding on the fabric. Although the "X" for food is widely accepted -- 2,100-2,300 calories per capita per day -- the standard is even more indeterminate than is often realized because the required number of calories can be derived from a vast number of sources which differ greatly in terms of price per calorie. A judgement has to be made how to compose the food basket. The basic criterion should be that the bulk of the calories should come from the cheapest foods, which everywhere and at all times means starches -- cereals, roots and tubers. Any household budget survey in a developing country will show that people at the bottom of the income distribution obtain >67 per cent of their calories from rice and/or cassava, etc., and any cross-section of countries will show that in poorer countries a similar proportion of calories is derived from such foods. Any acceptable poverty line should reflect this. We expect to see little meat in a poverty line because all meats are expensive sources of calories. Prawns should be out of the question. By the same token a nutrition institute's poverty basket would be on the high side since nutritionists by their very mandate will suggest a minimum number of proteins and vitamins. These are no doubt essential for long-term health, but the choice facing poor people is a day-to-day one: how to obtain as many calories as possible from the income available to them. The trade unions' minimum basket could also be on the high side, because their mandate is to show the inadequacy of the current minimum wage.

In Appendix I a discussion is provided of the two most widely used poverty lines in Guyana -- one by the World Bank and one by IICA. Many of the points made in the preceding paragraph are illustrated there. Both poverty lines are found to err on the high side and the reason is they used respectively the baskets provided by the Guyana Agency for Health, Environment and Food and the Federation of Trade Unions. These baskets, as argued before, are more in the nature of "aspirational" baskets and therefore on the high side for deriving estimates of poverty. The appendix then proposes a poverty line based on the cheapest calorie criterion. This poverty line is around three-quarters of the two existing ones and the poverty estimates are correspondingly lower. Table 10 shows the comparison.

Table 10. A comparison of three different food poverty lines for 1992-93

		Loxley/Jamal	World Bank		IICA
Rice % calories % cost		50.00 18.10	9.90 2.70		38.40 10.50
% calories of other starchy foods		20.00	20.10		7.50
Food poverty line (G$ p.c. p.d.)		66.29	97.11		83.12
Cost/1,000 cals.		30.13	40.46	a	37.78
Food poverty (%)b		13.60	27.60
a Uses 2,400 calories as the norm; others 2,200. b Households. Source: Appendix I.

The World Bank's poverty basket contains less than 10 per cent of calories from rice and then another 20 per cent from other starchy foods which are more expensive than rice although less so than non-starchy foods (see table A.I.1). IICA has 38 per cent of calories coming from rice and 7.5 per cent from other starches. One-half of calories in our proposed poverty line comes from rice, with an expenditure allocation of 18.1 per cent, which latter is in conformity with the expenditure pattern of the third quintile in the HIES (see table A.I.3). The food poverty incidence figure is then only one-half of that of the World Bank. If by "food poverty" is meant that anybody below that threshold would be going short of calories -- and that is what it should mean -- then the World Bank's standard is manifestly not at that "table" since it leaves a lot of room to shift down to cheaper calorie foods. For example, the Bank devotes more expenditure to shrimps than rice at the cost of sacrificing potential calories. Most of those found food poor by the Bank would simply give up their G$2.75 per day worth of shrimps and put that into rice, swapping 14 shrimp calories for 251. People have to have calories before variety and calories before nutrition.

Having gone through the detailed discussion in Appendix I and highlighted its main findings, it behoves us to recoil a little and insert some disclaimers. Poverty lines have a lot of vested interest in them -- by the nutrition authorities, the trade unions, the Government itself, but the thing to recognize here is that poverty lines can be easily padded up and just as easily pared down. Our own poverty line, though significantly lower than the World Bank's, could easily be scaled down to one-half of its level by omitting vegetables and meat. The important thing in a poverty line analysis is to show exactly what is in the poverty bundle so that a judgement can be made as to its propriety. The second disclaimer then is that a poverty line should not be taken as sacrosanct -- and certainly not as a basis for arguing with the nutritionists or bargaining about the minimum wage, or a country's position in the international poverty ladder, although a comparison would certainly be enlightening in the second case. Our food poverty line is quite a way above the 1992-93 minimum wage, assuming that the minimum wage earner suppports a 3.5 member family and that the minimum wage is the only source of family income. By 1996 some parity is restored, but still it is a parity between the minimum wage and a basic food basket.

On the side of the Government, a low estimate of poverty arising from a newly derived lower poverty line may cause unease since poverty is two-edged -- while countries do not want to appear to be too poor, they also do not want to appear to be richer than hitherto thought for fear of losing foreign aid. The problem here, of course, is that such aid is given based on a comparative table of other countries. If the estimates of comparable countries are done on the basis of an equivalent-concept poverty line, then the position of Guyana would remain invariate and so also its case for receiving aid. As things stand, our new estimates of poverty would raise Guyana somewhat in relation to other countries in the region. This would not be a valid shift in the heirarchy. Poverty estimates are only as good as what is in the poverty line and two estimates of poverty should never be juxtaposed unless they are derived from the same poverty line. In the same way, different estimates of poverty for a single country at any given time should not be juxtaposed to prove one or the other figure wrong. What is permitted is a judgement based on an analysis of what is contained in the poverty line. This is what has been done in Appendix I.

Poverty profile

The hierarchy of poverty by occupation, race and region remains practically the same as in the World Bank's calculations. Table 11 shows the occupational distribution of poverty. "Self-employed in agriculture" -- i.e. smallholders -- are clearly the most poverty-stricken group in Guyana, with nearly one-half of their households in poverty. Since self-employed farmers constitute a sizeable part of the total population (over 10 per cent of all households) they also constitute the largest poverty group: over a fifth of Guyana's poor are self-employed farmers. Going down column 3, the next important poverty group consists of non-agricultural labourers in rural areas (mentioned as "other labour" in the table); around 31 per cent of their numbers are in poverty and they contribute 17 per cent of the poverty in Guyana. Excluding "others", agricultural labourers are the next most important group in poverty, with a 29.7 per cent head count ratio and a contribution of 15 per cent to total poverty. Yet it is worth noting that proportionately only three-fifths of them are in poverty compared to farmers. In the urban areas, casual labourers are clearly the most affected group but since they are a minority part of the total population they do not figure heavily in total poverty. Urban self-employed and salaried groups exhibit the same level of poverty, at 17-18 per cent, the lowest amongst all the groups.

Table 11. Poverty by occupational groups: Poverty incidence

and contribution to total poverty, 1992-93

(total poverty line G$2,983 p.c. p.m.)

The ethnic dimension of poverty in Guyana is captured in table 12. Compared to the estimate of around 27.5 per cent of total households in total poverty, the Afro-Guyanese and the mixed category had about the same incidence of poverty, the Indo-Guyanese considerably lower, at 12 per cent, and the Amerindians the highest at 56 per cent. Taking account of the population representation, the two dominant ethnic groups contributed around 36 per cent of total poverty in Guyana, while the Amerindians with just 10 per cent of the total population weighed in at 22 per cent. The geographical distribution of the two major ethnic groups provides an explanation for their differential rates, with the Afro-Guyanese concentrated in the urban areas and the Indo-Guyanese in the rural areas. As we noticed in table 11, the self-employed and the salaried workers figure quite prominently in urban poverty, explaining the overall poverty of the Afro-Guyanese, while correspondingly in the rural areas the predominance of the Indo-Guyanese amongst farmers and agricultural labourers explains the poverty of that group. The very high rate of poverty amongst the Amerindian group underlines the imperative for their inclusion in any viable national strategy of poverty eradication.

Table 12. Poverty by ethnic groups: Poverty incidence

and contribution to total poverty, 1992-93

		% in poverty		% of total population		% of total poverty
Indo-Guyanese		22		45.9		36
Afro-Guyanese		28		36.7		37
Amerindian		56		10.3		22
Mixed		29		6.2		6
Total		27.5		100.0		100.0
Sources: HIES, approximated based on World Bank 1994, appendix table 5.

Table 13 shows some geographical, demographic and employment characteristics of the poor compared to the population at large. For the former, data relating to the first (poorest) quintile are used. Georgetown with around one-quarter of the total population had only 11.6 per cent of its population in the poorest quintile, confirming the relatively well-off status of the capital city. Urban areas in general are not amongst the poverty groups. Rural areas certainly are, particularly the interior. Poorer households tend to be larger (average size 5.6 compared to an average of 4.4), have more children (2.6 versus 1.8), but also more income earners (1.9/1.5). The bottom part of the table confirms the underprivileged place of self-employed farmers.

Table 13. Characteristics of poorest quintile households

compared to the average, 1992-93

		Poorest quintile		Average
Area Urban   Georgetown   Other Rural   Coastal   Interior		11.6 4.3 52.4 31.8		25.1 11.8 54.4 8.8
Sex of head of household   Male   Female		69.9 28.2		71.8 28.2
Age of head		45.7		44.2
Household size		5.6		4.4
Number of children (<17)		2.6		1.8
Number of earners		1.9		1.5
Employment status   Working   Seeking employment   Inactive		71.7 3.2 25.1		75.9 3.7 20.4
Employment type   Self-employed non-agriculture   Self-employed agriculture   Salaried/wage labour   Casual labour   Others		15.3 33.4 20.0 13.8 17.4		23.0 14.2 28.9 15.1 18.8
Source: World Bank, 1994, table 1.2.

Changes in employment and incomes

Employment

Major changes happened in the employment profile during the years of the crisis, and the employment profile that emerged has continued into the present times. Table 14 attests to this.

Table 14. Changes in employment, 1980 and 1992 (also 1996)

		1980			1992			1996
		Total	%		Total	%
Self-employed		34 156	17.9		97 085	39.5
Regularly salaried Public   Central Government Private		152 380 105 380 42 000 46 751	79.8 55.2 24.5		128 722 63 689 17 000 65 033	52.4 25.9 26.5		42 122 12 400	(14.5%)
Others		4 313	2.3		19 685	8.0
Total		190 600	100.0		245 492	100.0
Memo items Unemployed Total labour force					32 586 278 087			2 912 000	(100%)
Sources: 1980 from Population Census Report; 1992 from HIES, 1992-93. Figures for central Government from table 15. Total labour force in 1996 extrapolated from 1992 at 1.16 per cent p.a.

In 1980 almost four-fifths of the labour force were employed as wage earners, a majority in the public sector. The self-employed constituted only 18 per cent of the labour force and most of these were on the farms and as professionals and businessmen in the towns; the informal sector practically did not exist. By 1992 wage employment had fallen to around one-half of the labour force. All the decline came in the public sector, where the numbers fell by 40 per cent. The greatest contribution to this was the decrease in central government employment where the numbers fell by 60 per cent. The private wage sector picked up some of the slack, but most of those terminated from the public sector ended up as self-employed, which in practical terms meant absorption in the informal sector. Even agriculture employment increased from 48,603 (25.2 per cent of the total) to 74,038 (30.2 per cent). Table 15 shows a time series of employment in the public sector from 1980 to 1996. The decline in central government employment continued after 1992, joined by the state enterprise sector where employment had stabilized between 1984 and 1992, after the first initial decline between 1980 and 1984. Given that the Afro-Guyanese are most dependent on wage labour, particularly public sector employment, they were the most affected by the contraction of the government sector.

Table 15. Employment in the public sector, 1980-92 and 1996

Year		Central Government		State enterprises		Total
1980		42 000		56 848		98 848
1981		29 981		56 245		86 226
1982		27 502		56 252		83 754
1983		28 096		53 130		81 226
1984		28 686		49 420		78 106
1985		28 686		47 261		75 947
1986		28 650		45 398		74 048
1987		27 411		47 167		74 578
1988		24 493		45 901		70 394
1989		22 034		44 894		66 928
1990		19 280		45 887		65 167
1991		18 123		46 967		65 090
1992		17 062		46 627		63 689
1996		12 393		29 729		42 122
Source: State Planning Secretariat quoted in IDB, 1994.

Incomes

The impact of the huge decline in public sector employment was compounded by a decline of similar proportions in public sector wages. The critical period is 1980-90, when all the sectors of the economy were contracting: agriculture at 4.2 per cent per annum (for a total decline of 35 per cent); manufacturing at 7.4 per cent (54 per cent total decline); construction at 1.5 per cent (14 per cent); and services at 0.5 per cent (5 per cent). Table 16 shows what happened to the value of the national minimum wage. The series goes back beyond 1990. At the same time, a series for real wages of central government employees between 1986 and 1996 is also included for comparison.

Table 16. Nominal and real minimum wage, 1980-97 (end of year)

	Nominal		Real			Real central government wage
	(G$ per day)		(G$ 1980)	Index
1980	11.55		11.55	161
1981	12.36		9.96	139
1982	12.36		9.73	136
1983	12.36		7.62	106
1984	15.10		7.86	109
1985	16.00		7.37	103
1986	16.80		7.18	100		100
1987	23.75		7.89	110		113
1988	24.94		5.94	83		102
1989	35.92		5.29	74		75
1990	43.04		3.80	53		84
1991	106.74		4.65	65		82
1992	165.68	a	5.73	80		107
1993	173.86	a	6.47	90		113
1994	230.00		7.50	104		131
1995	368.00		8.25	115		141
1996	423.20		8.96	125		151
1997			11.29
Note: a Food poverty line per capita for 1992-93 estimated at G$66.30. Source: Statistics Bureau for nominal wages (col. 1) and government real wage (col. 4); real minimum wage (col. 3) by deflation. Also available in UNDP, 1996, p. 69.

Between 1980 and 1998 the minimum wage declined by two-thirds, the decline between 1986 and 1990 being reflected in the decline in the central government wage. Both the series then show a sizeable increase. Clearly the average standard of living deteriorated sharply in the 1980s and then improved equally in the next decade. To give some perspective to the figures, the minimum wage at the two periods is compared to a minimum food poverty line derived in Appendix I (G$ per day):

In 1992-93 a person on the minimum wage supporting 3.5 family members would not be able to purchase even the minimum food basket; in 1996 he would just about be able to do so but not much would be left over for non-food items. Although the minimum wage may be earned by no more than one-quarter of the labour force, it may still be not too much below the average wage. Even if we assume that the average wage is 1.5 times the minimum, basic food would still take up over three-fifths of such an average wage. Thus, despite the recent turnaround in wages, life is still precarious for the average worker.

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