included lockdowns, mobility restrictions, restrictions, mobility included lockdowns, have measures These afloat. economies their keeping while population its among virus the of spread the curtailing at aimed measures have taken governments most 2020, March of As 2020). Dashboard, Emergency Health (WHO and Ecuador Chile Peru, in Brazil, living of them most virus, the with infected have been citizens American Latin 685,000 about Currently, March). (8 and Colombia Peru March), (3 Chile February), (28 Mexico February), (27 in Ecuador reported were cases other afterwards, Soon February. 26 on recorded was virus corona of case first the where in Brazil, continent American Latin the on appeared COVID-19 first The virus Introduction Despite these efforts, governments have governments efforts, these Despite packages. support and economic responses emergency measures, distancing social social and economic justice at the centre of their operations. operations. of their centre the at justice and economic social put to sectors commodity American Latin in the working and investors companies (Dutch) upon calls brief The rights. of labour in terms bottom the to arace risks countries these long-term, the On women. predominantly being latter the economy, informal in the and workers workers outsourced are groups impacted most The and goods. fall for in services demand the from suffer also mining operations around economies Informal of contracts. and suspension renegotiations in layoffs, resulting force, labour of their back the on costs cut to have tried Companies of operations. closure (partial) and the lockdowns national chains, supply interrupted demand, and prices commodity low by affected severely Mining been has mining sectors. large-scale and Peruvian Colombian in the rights and labour employment on pandemic of the effects the into looks brief policy This period. and social political economic, atough already was of what middle in the America Latin COVID-19 struck Value Chain in Latin America COVID-19 Impact on the JULY 2020 right-wing regimes. These governments, governments, These regimes. right-wing and conservative more to governments left-leaning and progressive predominantly from ashift saw 2015from America Latin Politically, 2019). (ECLAC/ILO years few last the over deteriorated of work quality the while and 9%, 8% between balanced rates employment market: labour the in reflected also was stagnation economic 2019a). This (ECLAC, of 0.4% low ahistorical marked 2014-19 period the over rate growth regional average and the instability economic by characterised been has decade past The period. and social political economic, atough already was of what middle the in America Latin pandemic struck The continent. the across crises economic and health severe prevent to able been not

Karolien van Teijlingen & Barbara Hogenboom Policy Brief Clingendael Policy Brief

which openly embraced neoliberal economic This report aims to provide an exploratory policies, responded to economic backlashes analysis of how corona crisis is affecting by introducing austerity measures and Latin America, with a focus on particular taking on more foreign loans. The resulting value chains, employment issues and economic reforms were met by fierce worker’s rights at the start of the chains. protests across the continent during 2019. The sectors that will be looked at are In Chile, Ecuador, Colombia, Costa Rica, the commodity sectors, with a particular Nicaragua, Panama, Honduras and Haiti, emphasis on current challenges in the large numbers of students, workers and Colombian and Peruvian mining sectors. indigenous people took to the streets or These sectors were selected due to their went on strike to protest against budget cuts. importance to Latin American economies. Bolivia and Peru also saw massive protests leading to the resignation of their presidents, In order to reach these objectives, the although this discontent was more related report is structured as follows. First, it will to election and corruption scandals than to provide a general perspective on the impact specific economic measures (Washington of COVID-19 on the economy and on the Post, 2019). commodity sectors in particular. Then it will discuss the effects on labour and livelihoods The economic problems and social unrest in the mining sectors of Colombia and laid bare some of the more structural ills Peru, including sector characteristics that that afflict Latin American economies render specific groups more vulnerable and societies. An important issue here is than others. Last, the report reflects on the the high dependency of Latin American post-COVID recovery of these sectors, the economies on the export of minerals, oil more permanent legacy of the current crisis and agricultural products, and therefore on in the commodity sector, and the role of the fluctuations of international commodity labour unions in defending worker’s rights markets. Particularly for some South during and beyond the crisis. American countries, the export of raw materials represents over 70%, or even 90%, of total exports (World Bank Group, Current impact of COVID-19 2018). Due to the continued decline of commodity prices over the last six years, Although both the pandemic and the socio- many of these countries have seen revenues economic crisis are still unfolding, there are falling from exports of, and taxes on, the some cautious predictions of the implications extractive industries without having other for the economy and the labour market in sectors to compensate for these losses Latin America. ECLAC and the ILO (2020) (ECLAC, 2019a). Another issue is the soaring foresee a contraction of 5.3% of the Latin income inequality that characterises the American economy in 2020, and a prolonged continent. With an average GINI-index of period of negative or low growth rates. 0.48, Latin America continues to be the most unequal region in the world (ECLAC, 2019b). This contraction has much to do with the Lastly, Latin American labour markets continent’s structural dependence on have large informal sectors that account commodity exports. Commodity prices have for approximately 54% of all incomes. generally experienced sharp declines since This percentage is even higher among the outbreak of the pandemic. Crude oil women, young people and rural populations, prices plummeted by 50% in April, while the these also being the groups most likely coal price showed a more modest decline of to be unemployed and living in poverty 17% (UN DESA, 2020; World Bank Group, (ECLAC/ILO, 2020). 2020). Most mineral and metal prices saw a decline, although this varied strongly. Both these structural ills and the economic Platinum saw the strongest decrease (23%), and social difficulties of the last few years followed by copper and zinc (15%). Gold, have defined the way in which Latin America instead, increased 15% as a safe-haven asset is currently being hit by the spread of (World Bank Group, 2020). The FAO Food corona virus and the accompanying crises. Price Index also experienced a downward

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trend, with sugar and vegetable oil prices This sudden fall in commodity prices and showing the strongest declines –14.3% export volumes strongly affects revenues and 5.2% respectively (FAO, 2020; also see from commodity exports in Latin American Figure 1). economies. This increases the pressure on government budgets, which need to remain Figure 1 FAO Food commodity price large enough to deal with the pandemic; indices for selected crops it also affects governments’ abilities to pay Source: FAO, 2020 their debts or secure financing from external sources (UN DESA, 2020). 2002-2004=100 Within the commodity value chains, low iry prices and dropping demand have led to many companies temporarily running down production. These circumstances coincided with initially mandatory shutdowns of mining and oil operations due to national lockdowns r in March. Although pressure by the mining industry led various governments to lift e these restrictions,1 mobility constraints for workers and the disrupted supply chains of equipment, chemicals and explosives erel required for the operations continued to hamper production. Companies furthermore need to design social distancing measures and sanitary protocols, which in some cases eele oil must be approved by governments before they can be implemented. All in all, this has affected mineral production and exports. In Peru, for example, the value of metal exports fell by 17.4% in March (Instituto de Ingenieros Minas del Peru, 2020), and The current contraction is, however, the volume of Colombian coal production caused not only by falling prices but also decreased by 7.2% (Minería en Línea, 2020). by a decline in export volume. The global reduction in total volume of international The agricultural export sector also faces trade in 2020 is estimated to be 13% to 32%, further complications in its operations due which is mainly explained by the slowdown to soaring prices and logistical restrictions, in consumption and economic activity in despite the fact that this sector was China, the United States of America (USA) exempted from lockdown measures from and Europe. The volumes of Latin America the start of the pandemic in almost all Latin commodity exports are most affected by the American countries. Some representatives strong decline in demand from their principle of the sugar cane industry have reported trading partners: China and the USA. This delays in harvests due to a shortage of reduction is caused by reduced travel and workers in Central America (CLAC, 2020), demand for fuel, as well as by the closedown while sugar cane producers from El Salvador of the Chinese manufacturing and technology have claimed that harvest, refining and industries, which use a large percentage of export are proceeding according to plan the metals mined in Latin America (World (El Salvador.com, 2020). The Colombian Bank Group, 2020). The particularly low sugar prices are explained by low oil prices: much of the sugarcane originally destined for 1 The cases of Peru and Colombia are particularly ethanol production is now used to produce illustrative here. See the next section for a more sugar. This sudden dumping of sugar leads to detailed description of the effect of the lockdown an increased volume of sugar on the market, on the mining sectors in these countries, and how hence the falling sugar prices (FAO, 2020). governments have tried to minimise these.

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palm oil sector is operating at 65% of its 30.3% to 34.7% of the population) and normal capacity, as demand by the European extreme poverty (from 11% to 13.5% of the market and the biodiesel market has fallen population) (ECLAC/ILO, 2020). (La República, 2020). To get a more in-depth and qualitative Another impact of the COVID-19 crisis that understanding of what the implications are may affect commodity chains in both the at the start of the commodity value chains short and the long term is the decline in in Latin America, this section reviews the foreign investment, and the fact that many available information on recent changes planned investments by multinationals in employment, worker’s rights and the have been put on hold. Since the start of situation of women and local communities in the pandemic, the global value of cross- the commodity sector. In doing so, it will first border mining deals has gone down by 32% briefly analyse some of the more structural (Mining Technology, citing Global Data, issues that characterise the commodity 2020). In Peru, market analysts expect a sectors, which will help to explain some of 10-30% reduction in mining investment in the sector-specific challenges and impacts 2020. The London-based mining giant Anglo generated by the COVID-19 crisis. Then it will American, for example, says it has delayed a focus on the impacts as they are unfolding US$1.5bn investment in the development of within sectors of particular interest: the the Quellaveco copper mine in the Peruvian Peruvian metal mining sector and the highlands (Mining Technology, citing Global Colombian coal mining sector. Data, 2020). There are also alarming reports about high levels of capital flight across the Structural issues at play in region, although regional numbers on this Latin America’s commodity are not available and national figures are export sectors hard to find. The only figures available are A first issue that structurally affects for Colombia, which reports that foreign worker’s rights at the start of the commodity investors redirected US$115.7m out of the value chains in Latin America is the country – representing about 16% of their fragmented and very complex business total investment portfolio in Colombia and ownership structure of many of (Alerta Económica, 2020). To what extent the enterprises operating in the mining this capital flight takes place within the and agribusiness sectors. By ‘fragmented commodity sectors remains unclear so far. business structure’ we refer to the way in which large transnational mining corporations often make use of joint Effect on livelihoods and ventures and multiple local subsidiaries labour rights to operate their businesses on the ground (Accenture, 2011). These local subsidiaries, in turn, often carry out their work through In overall terms, the contraction of Latin extensive use of subcontracted companies American economies described in the that each specialise in a particular part previous section will undeniably lead of the mining or agricultural process – to severe impacts on the labour market e.g. extraction, processing or refining, and social indicators on the continent. infrastructural maintenance, operation of According to the first projections by ECLAC heavy machinery, environmental monitoring, and the ILO (2020), unemployment rates will transportation or port management. be driven up from the current 8% to 11.5%, These subcontracted companies may also a number that might go up further as the make use of subcontracted companies pandemic and period of social distancing that provide them with particular services last longer. This increased unemployment is such as catering, private security or the accompanied by a general deterioration of transportation of personnel. the quality of work, as informality increases and both working days and salaries This fragmented and complex web of are reduced. This, then, will result in an companies that characterises the production estimated rise in the poverty rate (from of commodities in Latin America has various

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consequences for workers. First, many transnational dialogues within value chains of the workers that are essential to these such as the Better Coal initiative. As we operations are not directly employed by will see in the following sections, avoiding the large multinational mining companies responsibility is also a common practice but by subcontracted companies of their during the COVID-19 crisis. local subsidiaries. These subcontractors are often signed for a limited number of years, A second issue that is important to keep after which contracts may be renewed or in mind when discussing the impacts revoked. This results in very high instability of COVID-19 on workers’ rights in the for subcontracted workers, as well as commodity value chain is the enclave enormous differences between the working nature of both the agribusiness and mining conditions of those directly employed by sectors. Sugar cane or palm oil plantations the transnational, the local subsidiary or the as well as mining operations are often subcontractors. Especially the conditions of located in remote, relatively marginalised the second level of subcontracted workers regions, such as the arid highlands of (who are typically unskilled and from the Andes or the Amazonian rainforests. low- class families), are characterised by Workers often live in camps near the low wages, variable working hours, little plantation or the mine, and work in shifts of social protection and low job security. 15 to 22 consecutive days, after which they There are also notorious differences in are allowed to travel to their families in other the quality of the facilities in the mining parts of the country for eight to 15 days. camps of subsidiaries and subcontractors. Within the camps, workers share dormitories Some subcontracted workers might even and sanitary facilities, and eat collectively at be informally employed as day labourers, the company canteen. with no rights whatsoever. A leader of a Chilean labour union called this group of The enclave nature of these sectors subcontracted workers ‘21st century slaves’ also generates particular community– (IPS News, 2012). Second, this fragmentation company dynamics that are important and differentiation between companies to look at. Far removed from national and workers challenges the formation capitals or economic centres, the areas of strong unified labour unions or other these companies operate in are generally forms of worker representation.2 Workers’ historically underserved, and have poor interests and struggles for better rights and health and education services. The people working conditions are very diverse, which living in these areas are often among the means it is more effective for workers to most marginalised in society, such as organise in small, company-based workers indigenous groups, black communities committees. Third, the obscure ownership or lower-class mestizo peasants. In such structures and outsourcing of labour at contexts, companies often take up the role the start of the global value chain makes of a pseudo-state, providing healthcare, it hard to hold transnational companies education and public transport to accountable for possible violations of labour surrounding communities. Agribusiness rights and international standards (SOMO, and mining companies are furthermore 2014). The outsourcing to other companies the main catalysts of the local economies, allows them to pass on the responsibility for both in terms of direct (or subcontracted) worker’s rights to subcontracted companies. jobs at the plantation or mine and in terms The latter are often much smaller, of indirect jobs related to these operations. place less weight on corporate socially The latter includes jobs at small restaurants, responsible practices, and are not part of hairdressers, shops, laundry shops, taxi companies, bars or brothels – jobs which are mostly informal.

2 In Peru, for example, the last national strike organised by a national union (Federación A last structural issue that should be Nacional de Trabajadores Mineros, Metalúrgico y mentioned here is the gender dimension of Siderúrgicos del Perú) was supported by no more employment in the mining and agribusiness than 5% of mine workers in Peru (Gestión, 2019). sector. The mining industry in particular is

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known for its high level of masculinisation, challenge due to the enclave nature of their as most formal jobs within this industry operations and the mining infrastructure. The are occupied by men. In Colombia, women protocols proposed by companies included in the mining sector represent 15% of the restrictions on the travel of workers to their formal workforce (Asociación Colombiana homes in order to protect their families and de Minería, 2019), while in Peru this is communities. Some companies went even only 6.9% (Ministerio de Energía y Minas, further and forcefully detained workers in the 2019). Women’s participation in the informal camps for up to 60 days, blatantly violating jobs described above is much higher, their work shifts and right to freedom although official numbers are unavailable. (FENTECAMP, 2020). Companies also faced In agribusiness, the participation of women difficulties in ensuring social distancing in in the workforce is less skewed than in the the workplace, both in the (underground) mining sector. The FAO (2017) reports that mines and in the collective dormitories, women make up 20% of the agricultural sanitary facilities and canteens typical of labour force, although they often have the mining camps. Lastly, the remote locations of lower paid (informal) jobs. many mining projects complicated adequate access to testing and health services. In the following sections of the report, it will become clear that these structural Due to these difficulties, companies were characteristics of the commodity sectors rather slow in implementing appropriate draw out the lines along which COVID-19 measures to protect their workers, and some and accompanying crises are affecting even refrained from taking any measures at workers and their rights. all. Although local union leaders spoke out on the lack of protective measures, their The impacts of COVID-19 on labour protests could not prevent the virus from in the Peruvian metal mining sector spreading rapidly among mine workers. The Peru is one of Latin America’s principle first case of COVID-19 was registered on mining nations. The sector accounts for 25 March, and currently there are over 700 about 9% of the country’s GDP and 60% of cases of mine workers with the virus across its total export value (Instituto de Ingenieros the country (see Figure 2). This alarming Minas del Peru, 2020). Despite its economic number of infections among mine workers prominence, the sector was initially included attests to the inadequacy of the measures in the lockdown measures put in place by that were taken and to the risks mining the Peruvian government on 14 March. companies took: only when workers tested In the days that followed, only a few mining positive did they decide to close down. It also companies took restrictive measures and shows the general weight the government sent their workers home. Many mines gave to the economically important mining continued working, albeit at a reduced sector and its reluctance to take preventive capacity due to the reduced demand or lack measures. of some crucial supplies. In response, various local labour unions, mayors and regional Another factor that affected workers in the ombudsmen have denounced mining Peruvian mining sector due to the pandemic companies to the police and the Ministry of and related contraction of commodity Labour (El Gran Angular, 2020a). markets was the diminution of employment in the sector. As mining companies reduced On 17 March, the national government their operations or closed entirely, they issued a statement in which the mining sought ways to cut costs on labour. To do sector was exempted from the lockdown this, Peruvian mining companies basically measures. This was the direct result of followed four different legal and extra-legal a strong lobby by the mining sector. To strategies (based on FENTECAMP, 2020 and continue operating, however, companies other sources): were required to present to the government 1. Companies as well as subcontractors protocols that ensured the health of their sought to negotiate or unilaterally workers and nearby communities. For many announce holidays for their workers companies these protocols formed a major during the time they stayed at home, or a

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Figure 2 Number of mine workers infected with COVID-19 per company and region

Source: El Gran Angular, 2020b.

reduction of their salary. In other cases, working conditions and lack of rights. the company proposed unpaid leave to Companies that were reported using this their workers with the promise they would strategy were Minas de Buenaventura maintain their contract. Companies that SA, Sociedad Minera Cerro Verde, and were reported using this strategy were Shougang Hierro Perú. Sociedad Minera Cerro Verde, Backus, 3. Since 14 April 2020, Peruvian mining Austria-Duvaz, and Raura SA. companies can make use of a legal 2. In order to cut costs, mining companies instrument quite ironically called terminated contracts with their Suspensión Perfecta de Actividades: subcontractors by declaring the work the Perfect Suspension of Labour. The or service for which they were hired Peruvian government brought in this as officially ‘finished’ (in Spanish: measure after lobbying by the corporate terminación de contrato por fin de sector, in an attempt to help companies obra). This legal device enabled mining across sectors to survive the economic companies to unbind the service contract, crisis caused by the pandemic.3 It allows while providing subcontractors with the employer to unilaterally put workers a legal ground to end contracts with their own workers. This directly affected the outsourced labour force, made up largely of unskilled workers who already 3 Emergency Decree number 038, signed suffered disproportionately due to poor 14 April 2020.

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on unpaid leave for up to three months, Finally, impacts of the COVID-19 crisis must a period that was later extended to a unmistakably be felt among the thousands maximum of nine months. As soon as of people who have built their livelihoods circumstances allow, the suspension around the indirect and informal provision will be lifted and workers can return to of services to mining projects. Current their jobs. The Perfect Suspension can lockdown protocols put in place by mining be applied by any company without companies prohibit workers from having any prior authorisation by the Ministry of contact with local communities (CAMIPER, Labour: companies need only declare 2020). Workers’ visits to local restaurants, they are unable to pay salaries. Since its bars, barber shops and brothels are thus introduction, the mechanism has been virtually reduced to zero, leaving these widely used to temporarily suspend informal workers without income. This payments to more than 70,000 employees decline in demand for local informal services across sectors (Ojo Público, 2020). disproportionately affects women, whose Numbers for the mining sector are labour participation in the commodity value unavailable, but a review of newspapers chains is particularly concentrated in jobs and press releases by labour unions in these local informal economies. These indicate that the Perfect Suspension workers are furthermore excluded from affects thousands of workers. Companies official government support (if available), and subcontractors that have been precisely due to the informality of their reported for the use of this mechanism employment. include Semsa, Minera Santa Luisa, San Martín Contratistas Generales, Grupo Despite these presumably devastating Maquinarias Peru, Minera Corona SA, impacts on communities surrounding Austria-Duvaz, Minas de Buenaventura mining projects, there is surprisingly little SA, Argentum SA, Raura SA, and IESA. information available on this issue. When 4. A final, extra-legal strategy that has collecting data for this report, the authors been reported by labour unions is the did not come across any newspaper articles, persuasion of workers to voluntarily reports or communications about this part of resign. Generally, companies offer the mining-related workforce. Labour unions workers money in return for a resignation or worker committees also fail to report letter, although sometimes they are forced on the issue. This lack of attention to the to do so under threat of a court case. hardship experienced by this group, as well as the underrepresentation of their particular As mentioned before, it is very hard to interests and needs, puts them in an even estimate the magnitude of the impact of more vulnerable position within the current each of these strategies on employment in crisis. the Peruvian mining sector. Many of these practices are kept quiet by companies and The impact of COVID-19 on official sector representatives, and the only labour in the Colombian coal information available is scattered across mining sector newspaper articles, union press releases Although Colombia is much less of a mining and Facebook posts. What these strategies country than Peru, coal represents the do show, however, is the existence of easily country’s second most important export, accessible legal mechanisms that allow valued at US$6,562bn a year (World Bank companies to lay off workers or suspend Group, 2018). The coal mines are located in payments. This shows increased worker the north of Colombia, in the departments vulnerability, in particular the already of Magdalena, La Guajira and Cesar on the disadvantaged, the subcontracted and the Caribbean coast. The mines are considered outsourced workers, and a deepening of to be the largest open-pit coal mines in the the inequalities among different groups of world and are operated by local subsidiaries workers in these value chains. Also notorious owned by some of the giants of the is the role of the government in facilitating transnational mining industry such as Anglo this deterioration of workers’ rights. American, BHP, Glencore and Drummond.

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When the Colombian government announced department. Prodeco is a Colombian a nationwide quarantine on 20 March 2020, subsidiary, 100% owned by mining giant the coal mines did not immediately stop Glencore. After Prodeco ended its contract working. Only when the demand for coal with Manpower Group Colombia, the and its prices dropped substantially a few latter laid off about 500 workers. This led days later, did they take their operations to great discontent among unions and the down to a minimum (Seminario Voz, 2020). local population, who called upon Prodeco After restrictions for the mining industry and Glencore to act more responsibly. were lifted in mid-April, the mines slowly However, a Prodeco representative avoided restarted their operations with the use of any involvement by pointing out that Prodeco new protocols. Although labour unions had no direct relationship with the workers from La Guajira also denounced the lack of who had been laid off: ‘We just have to protective measures and social distancing suspend the service contracts when our (Sintracarbón, 2020), the situation did not activities are suspended. The labour relation is get out of hand like it did in Peru. So far, no between the subcontractors and the workers’ cases of COVID-19 have been reported in (El Pilon, 2020). Colombian coal mines. This quote clearly illustrates the way in Due to the reduction of mining activities, the which these multinationals conceive of their Colombian mining sector saw a deterioration responsibility for the conditions of outsourced in employment conditions. With strategies workers. It also underscores the vulnerable similar to those used by Peruvian companies, position of subcontracted and outsourced Colombian coal mines tried to reduce labour, a position further weakened as a result operational costs and the payment of of the COVID-19 impacts on Latin America’s wages. Their main strategy was to terminate mining sector. contracts with subcontractors and services providers. Legally, they base this termination on the claim that the service or job for which Perspectives for post-COVID-19 the subcontractor was hired is ‘finished’ recovery or ‘suspended’. In response, many workers employed by these subcontractors were laid off with reference to a situation of ‘force The previous sections outlined some of the majeure’. According to local labour unions, main impacts on employment and labour these layoffs affected about 1,500 workers, rights at the start of the commodity value although these numbers are hard to verify. chains in Latin America, with an emphasis on Other subcontractors tried to send workers what is currently changing in the Colombian on obligatory holidays and unpaid leaves and Peruvian mining sectors. Although Latin (Seminario Voz, 2020). America is still in the middle of the pandemic and the full impacts of the related crises are The most remarkable case is the layoff unfolding, this section will try to look ahead of subcontracted workers by Manpower and draw out some first perspectives for the Group Colombia.4 The Manpower Group post-COVID-19 recovery. is a transnational employment agency subcontracted by Prodeco, the company Looking at the long-term effects and the that operates the coal mines in the Cesar recovery of a previous, major crisis in Latin America may be helpful in this regard. In 1982, the continent experienced a severe debt crisis after commodity prices plummeted. Years 4 Similar cases were reported for Eproq Mecanica, of negative or zero growth followed in many a subcontracted company of the Cerrejón coal countries, and the region’s average growth mine, which is a joint venture of Glencore, BHP rate amounted to 0.7% in the period 1980-85 and Anglo American, and for Compass Group Services de Colombia SA, subcontractor of (Ocampo, 2020). To service their external Drummond. Compass Group Services PLC itself is a debts, governments were assisted by IMF transnational catering company with headquarters loans, which came with extensive austerity in the UK. and liberalisation measures. Both the crisis

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and the structural adjustments introduced Despite these long-term negative impacts by the IMF have made the 1980s into Latin on mineral prices and exports, national America’s infamous ‘Lost Decade’ in terms of governments will generally be eager to social indicators: poverty rates went up from help the mining sector get back on track. 35% to 41% in only a few years, inequality For most Latin American economies, the soared and many Latin Americans were commodity sector represents an important pushed into the informal sector (Ocampo, economic pillar for the post-COVID 1998). It took the continent eventually more recovery and repayment of the external than two decades to bring these indicators debt contracted during the crisis. National back to pre-crisis levels. governments will therefore probably assist the commodity sector – mining in particular – Analysts warn that Latin America might with deregulation and the speeding up of be heading toward a second ‘Lost Decade’ licensing processes (IHS Markit, 2020). due to the COVID- 19 crisis as well as the The first indication of this was the facilitating poor economic performance of the past five role played by national governments during years. Where the region’s average growth the crisis: they exempted the sector from rate was 0.7% during the worst years of quarantine measures and provided legal the debt crises of the 1980s, the last few instruments to lay off workers or temporarily years have seen a mere 0.4% of average end labour contracts (El Pilon, 2020). growth (Ocampo, 2020; ECLAC 2019b). Peruvian non-governmental organisations, Struggling with alarming debt rates, fiscal however, warn that a more structural deficits and low commodity prices, Latin deregulation of the sector is already taking American economies are thus in a much place. They refer to a recently issued decree weaker position now than they were during by the Peruvian government that aims to the 1982 or 2008 crises (UN DESA, 2020). support key economic sectors to lead the In this context, the current COVID-19 crisis post-COVID recovery. This decree allows will probably cause long-lasting recession companies to conduct citizen participation and a jump in unemployment, poverty rates and consultation processes online and and inequality similar to the Lost Decade. exempts mining companies from certain environmental reports and restrictions. When it comes to the future of the In addition, the comprehensive revision commodity sectors in Latin America, an of the Peruvian Mining Law that had equally dark recovery scenario is to be begun before the pandemic and included expected. According to various outlooks, proposals to higher taxes on the sectors, mineral prices will continue to be historically has been postponed until further notice low throughout the remainder of 2020, (Red Muqui, 2020). except for gold (World Bank Group, 2020). This is explained by contracting economies As a result, the current situation of all around the globe and the subsequent employment loss and deteriorating working continued low demand on international conditions in the Latin American commodity markets. The recovery of China might sectors caused by COVID-19 will see no push up demand for metals and energy quick relief in the near future. On the somewhat, but the growth projected for contrary, the combination of low profit rates this country will be very low compared to due to low commodity prices on the one previous decades (1.2% growth instead of hand and permissive governments on the 6% or 8%). The negative impacts on formal other, may generate a race to the bottom employment in the Peruvian and Colombian in terms of labour rights, environmental mining sector discussed in this report will protection and popular consultation. thus probably endure, also because foreign As a result, some of the structural ills direct investment will be low throughout in the commodity value chains, such as 2020 (Mining.com, 2020a). The ongoing obscure ownership structures, persistent implementation of social distancing subcontracting of labour, informality and protocols within mines will furthermore little participation of women, will probably cripple local, mostly informal and women- persist or further deepen. In the long term, dominated, employment. the current crises will significantly affect

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the realisation of Sustainable Development or policies for the re-opening of mines in Peru Goal 8 on decent work. and Colombia. Their lack of effective leverage contrasts sharply with the way in which the mining sector has been able to push its Role for local unions agenda within national politics. As a result, the government responses discussed in this As the pandemic and related crises have report pass the largest part of the bill of unfolded, labour unions and workers the current crisis on to (subcontracted and committees in the commodity sectors informal) workers. have spoken out against the violations of worker’s right by companies, and against In order to improve their role in setting the the inadequacy of protective measures. agenda for responses to the COVID-19 crisis The struggle for worker’s rights during and the recovery, labour unions must gain the pandemic has been an uphill one. leverage at national level and engage in a Restrictions on mobility have constrained meaningful social dialogue with governments. the work and internal communications of Particularly with regard to the protocols unions and committees, as many union currently being set for the re-opening of leaders working in mines were not allowed mines, unions should become one of the to leave, or they were living in areas with principal negotiation partners. An important no mobile phone coverage. Another issue issue to overcome in order to reach a better that muddled their work was the reduced position is the fragmented nature of worker capacity of government agencies that would representation in the sector. In addition, normally oversee the implementation of unions could improve the way in which they workers’ rights. Finally, the willingness of address the specific issues faced by the most national governments to issue decrees marginalised groups within the value chain: and implement legal mechanisms that subcontracted workers, informal workers facilitated the effective violation of workers’ and women. right has been an important constraining factor. These circumstantial difficulties might have been worsened by the structural Risks and responsibilities for fragmentation of worker representation and the Netherlands the absence of broad sector-wide unions in both Peru and Colombia. In Colombia, violence against union leaders in the coal The Netherlands accounts for about 7% mine regions has created an additional of total exports from the Colombian coal complication (SOMO, 2014). industry (Hellenic Shipping News, 2019), and for relatively small percentages of mineral Probably because of these momentary exports from Peru and commodity exports and more structural constraints, neither from Central America (World Bank Group, in Peru nor in Colombia there has been a 2018). The supply of these commodities to concerted and national-level response to The Netherlands will presumably not be the COVID-19 crisis by labour unions. On a affected in the near future. There is currently local level, unions have been able to mobilise a surplus of most commodities on the global control agencies like the Superintendencia market, and supply will continue to exceed Nacional de Fiscalización Laboral (SUNAFIL) global demand in 2020 (Mining.com, 2020b). or local Ombudsman offices in Peru. Prices will furthermore remain low for most These have carried out inspections at commodities, facilitating access by Dutch mining projects – none of which have been buyers to these markets. Interruptions in the sanctioned so far. Some company- based supply chain will probably be resolved soon, unions have gone on strike, as at the Los as mining companies are working on protocols Quenuales mine operated by a Glencore in order to re-open mines. Dutch investors in subsidiary (IndustriALL, 2020). But beyond commodity markets, in turn, will most certainly this, unions have not been able to influence see their investments affected by the crisis national decision making regarding and the low prices. It is, however, still unclear lockdowns, the protection of workers’ rights what the scope of these impacts will be.

11 Clingendael Policy Brief

Dutch companies and investors operating neta por US$ 115,7 millones en abril’. in the commodity value chains do, however, Last Accessed 20 May 2020. https:// have a considerable role to play in alertaeconomica.com/colombia-registra- upholding the principles of corporate social salida-de-inversion-extranjera-neta-por- responsibility and transparency, despite us-1157-millones-en-abril/ the deteriorating economic conditions. Asociación Colombiana de Minería. 2019. ‘La The COVID-19 crisis will place a considerable mujer en el sector minero’. Last Accessed burden on all players in the commodity value 25 May 2020. https://acmineria.com.co/ chain, yet powerful players such as foreign la-mujer-en-el-sector-minero/ investors and traders have a responsibility Cámara de Minería del Perú (CAMIPER). to avoid passing this burden on to the 2020. ‘Mineras y COVID-19: empresas most vulnerable. Unfortunately, this report activan protocolos de seguridad y has outlined that this is precisely what is prevención’. Last Accessed 26 May 2020. happening within the mining sectors in Peru https://camiper.com/tiempominero/ and Colombia: subcontracted (and often mineras-y-covid-19-empresas-activan- unskilled and low-class) workers, informal protocolos-de-seguridad-y-prevencion/ workers and women are among the most Coordinadora Latinoamericana y del affected by the COVID-19 crisis. Caribe de Pequeños Productores y Trabajadores de Comercio Justo (CLAC). Ensuring that social and economic justice is 2020. ‘Actualización sobre los efectos at the centre of decision making by Dutch del COVID-19 en América Latina y el companies and investors, starts with gaining Caribe’. Last Accessed 24 May 2020. a proper understanding of the structural ills http://clac-comerciojusto.org/2020/04/ of the chains they work in as well as of the actualizacion- sobre-los-efectos-del- groups that are and will be most affected covid-19-en-america-latina-y-el-caribe/ by COVID-19 crisis. This report emphasised Economic Commission for Latin America various gaps in the available information and the Caribbean (ECLAC). 2019a. on the impacts of the pandemic within the Preliminary Overview of the Economies commodity sector. While reporting on the of Latin America and the Caribbean. number of food kits that transnational mining Santiago: ECLAC. companies donated to local communities is Economic Commission for Latin America and abundant, little can be found on the number the Caribbean (ECLAC). 2019b. Promoting of layoffs of (subcontracted) workers, or the Equality and Inclusion: A Latin American particular issues faced by informal workers and Caribbean perspective. Speech to and women. Dutch investors, companies the 57th Session of the Commission for and the government must make efforts to Social Development, United Nations increase their knowledge base on these Headquarters, New York, 13 February issues and their root causes in order to forge 2019. https://www.un.org/esa/socdev/ a socially and economically just recovery csocd/2019/Alicia-Barcena.pdf from this crisis. Economic Commission for Latin America and the Caribbean (ECLAC) and International Labour Organization Bibliography (ILO). 2019. The future of work in Latin America and the Caribbean: old and new Accenture. 2011. ‘Global Operating Models forms of employment and challenges for for Mining Companies: Adding value labour regulation. Series on Employment beyond the individual assets’. Last Situation in Latin America and the Accessed 22 May 2020. https://www. Caribbean, No. 20. Santiago: ECLAC/ILO. accenture.com/t20150527t211403__w__/ Economic Commission for Latin America and jp-ja/_acnmedia/accenture/conversion- the Caribbean (ECLAC) and International assets/dotcom/documents/local/ Labour Organization (ILO). 2020. El ja-jp/pdf_2/accenture-mining-global- trabajo en tiempos de pandemia: desafíos operating-models-pov-final.pdf frente a la enfermedad por coronavirus Alerta Económica. 2020. ‘Colombia (COVID-19), Working paper no. 20. registra salida de inversión extranjera Santiago: ECLAC/ILO.

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El Gran Angular. 2020a. ‘Más de 200 IHS Markit. 2020. ‘Latin America mining trabajadores mineros tienen coronavirus industry is expected to be the most en Perú’. Last Accessed 20 May 2020. heavily impacted industrial sector http://elgranangular.com/blog/reportaje/ due to country risk after COVID-19’. mas-de-200-trabajadores-mineros- Last Accessed 22 May 2020. https:// tienen-coronavirus-en-peru/ ihsmarkit.com/research-analysis/latin- El Gran Angular. 2020b. ‘718 trabajadores america-mining-industry-most-impacted- mineros tienen Covid-19 en Perú’. COVID19.html Last Accessed 22 May 2020. IndustriALL. 2020. ‘Mineros peruanos http://elgranangular.com/blog/ inician huelga en Los Quenuales de reportaje/718-trabajadores-mineros- Glencore’. Last Accessed 26 May 2020. tienen-covid-19-en- peru/ http://www.industriall-union.org/es/ El Pilon. 2020. ‘¿Por qué empresas mineras mineros-peruanos-inician-huelga-en-los- están suspendiendo contratos laborales?’ quenuales-de-glencore Last Accessed 18 May 2020. https:// Instituto de Ingenieros Minas del Peru, 2020. elpilon.com.co/por-que-empresas- ‘Efecto del covid-19: las exportaciones mineras-estan-suspendiendo-contratos- mineras cayeron 17.4% en marzo’. Last laborales/ Accessed 22 May 2020. www.iimp.org. El Salvador.com. 2020. ‘La zafra no se pe/actualidad/institucional/efecto- del- detiene por emergencia del Covid-19’. covid-19:-las-exportaciones-mineras- Last Accessed 23 May 2020. https:// cayeron-17.4-en-marzo www.elsalvador.com/eldiariodehoy/zafra- IPS News. 2012. ‘Outsourced Chilean coronavirus/699149/2020/ Copper Workers “21st Century Slave Federación Nacional De Trabajadores De Las Labour”’. Last Accessed 24 May 2020. Empresas Especializadas Y Contratistas http://www.ipsnews.net/2012/05/ De La Actividad Minera Y Metalurgica outsourced-chilean-copper-workers- Del Perú (FENTECAMP). 2020. 21st-century-slave-labour/ Problemátca actual de las bases apoyadas La República. 2020. ‘Fedepalma pidió al en la FENTECAMP. Internal report by Gobierno “medidas extraordinarias” frente FENTECAMP. al Covid-19’. Last Accessed 22 May 2020. Food and Agriculture Organization (FAO). https://www.larepublica.co/economia/ 2017. ‘Women in Latin America and the fedepalma-pide-al-gobierno-medidas- Caribbean face greater poverty and de-caracter-extraordianario-frente-al- obesity compared to men’. Last Accessed covid-19-2989555 19 May 2020. http://www.fao.org/ Minería en Línea. 2020. ‘Producción de americas/noticias/ver/en/c/473028/ carbón de Colombia cae 7,2% en Food and Agriculture Organization primer trimestre por bajos precios y (FAO). 2020. ‘FAO Food Price Index’. coronavirus’. Last Accessed 24 May 2020. Last Accessed 24 May 2020. https://mineriaenlinea.com/2020/05/ http://www.fao.org/worldfoodsituation/ produccion-de-carbon-de-colombia- foodpricesindex/en/ cae-72-en-primer-trimestre-por-bajos- Gestión. 2019. ‘Huelga minera: Más precios-y-coronavirus/ de 95% de trabajadores asistieron Mining.com. 2020a. ‘CHART: Mining a trabajar con normalidad, afirma exploration spending to drop 29% this SNMPE’. Last Accessed 19 May year’. Last Accessed 22 May 2020. 2020. https://gestion.pe/economia/ https://www.mining.com/chart-mining- huelga-minera-mas- de-95-de- exploration-spending-to-drop-29-this- trabajadores-asistieron-a-trabajar-con- year/ normalidad-afirma-snmpe-noticia/ Mining.com. 2020b. ‘Metals markets to move Hellenic Shipping News. 2019. ‘Colombian into surplus’. Last Accessed 25 May 2018 coal imports via Dutch hubs plunge 2020. https://www.mining.com/metals- 65%’. Last Accessed 24 May 2020. markets-to-move-into-surplus-report/ https://www.hellenicshippingnews.com/ Mining Technology. 2020. ‘Covid-19 colombian-2018-coal-imports-via- dutch- pandemic hits global mining investment’. hubs-plunge-65/ Last Accessed 26 May 2020.

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https://www.mining-technology.com/ Sindicato Nacional de los Trabajadores de features/covid-19-pandemic-hits-global- la Industria del Carbón (Sintracarbón). mining-investment/ 2020. Insuficientes acciones de Cerrejón Ministerio de Energía y Minas. 2019. ‘Más de para prevenir el contagio del coronavirus 14 mil mujeres tienen un empleo directo por parte de los trabajadores que hacen en minería’. Last Accessed 20 May 2020. parte de la contingencia y suspensión https://www.gob.pe/institucion/minem/ de contratos por parte de empresas noticias/70533-mas-de-14-mil-mujeres- contratistas de Cerrejón. Letter to the tienen-un-empleo-directo-en-mineria Cerrejón Coal Mine, retrieved from: Ocampo, José Antonio. 2020. ‘Can Latin https://www.facebook.com/sintracarbon/. America Avoid Another Lost Decade?’ SOMO. 2014. Colombian Coal in Europe. Project Syndicate, 3 January 2020. SOMO Briefing Paper, May 2014. https://www.project-syndicate.org/ Amsterdam: SOMO. somo.nl/wp-content/ commentary/latin-america-lost-decade- uploads/2014/06/Colombian-Coal-in- low-growth-by-jose-antonio-ocampo- Europe-1.pdf 2020-01?barrier=accesspaylog United Nations Department of Economic Ocampo, José Antonio. 1998. Income and Social Affairs (UN DESA). 2020. distribution, poverty and social expenditure Commodity exporters face mounting in Latin America. Paper presented at the economic challenges as pandemic First Conference of the Americas, held spreads. Policy brief No. 60. New by the Organization of American States York: UN DESA. https://www.un.org/ in Washington on 6 March 1998. development/desa/dpad/wp-content/ https://www.un.org/esa/usg_ocampo/ uploads/sites/45/publication/PB_60.pdf articles/pdf/incomedist.htm Washington Post. 2019. ‘Latin America’s Ojo Público. 2020. ‘Companias deciden upheaval should finally shatter suspension perfecta para 70 mil conventional wisdom about the empleados’. Last Accessed 25 May 2020. region’. Last Accessed 23 May 2020. https://ojo-publico.com/1799/companias- https://www.washingtonpost.com/ deciden-suspension-perfecta-para-70- opinions/2019/11/07/latin-americas- mil-empleados upheaval-should-finally-shatter- Red Muqui. 2020. ‘Decreto N°1500 Sobre conventional-wisdom-about-region/ Reactivación Económica Debilita World Bank Group. 2018. ‘World Integrated Institucionalidad Ambiental Y Dificultará Trade Solutions Country Snapshot’. Participación Ciudadana’. Last Accessed Last accessed 27 May 2020. https://wits. 26 May 2020. https://muqui.org/noticias/ worldbank.org/countrysnapshot/en/COL/ decreto-n1500-sobre-reactivacion- textview economica-debilita-institucionalidad- World Bank Group. 2020. Commodity Markets ambiental-y-participacion-ciudadana/ Outlook, April 2020. Washington, DC: Seminario Voz. 2020. ‘Miles de despidos World Bank Group. en el sector minero-energético’. WHO Health Emergency Dashboard. 2020. Last Accessed 20 May 2020. WHO Coronavirus Disease (COVID-19) https://semanariovoz.com/miles- Dashboard. Last accessed 21 May 2020. despidos-sector-minero-energetico/ https://covid19.who.int/.

14 About CEDLA The Centre for Latin American Research and Documentation (CEDLA), hosted by the University of Amsterdam, promotes Latin American Studies in the Netherlands, Europe and beyond. This is done by conducting and stimulating relevant and original research on developments in Latin America and distributing the results of this research via academic publications and education.

About the Clingendael Institute Clingendael – the Netherlands Institute of International Relations – is a leading think tank and academy on international affairs. Through our analyses, training and public debate we aim to inspire and equip governments, businesses, and civil society in order to contribute to a secure, sustainable and just world. www.clingendael.org  @clingendaelorg [email protected]  The Clingendael Institute +31 70 324 53 84  The Clingendael Institute  clingendael_institute  Newsletter

About the authors

Karolien van Teijlingen is fellow at the Centre for Latin American Research and Documentation (CEDLA) and the Amsterdam School for Regional and Transnational and European Studies (ARTES) of the University of Amsterdam. She is also affiliated to the USFQ and UASB universities in Ecuador. She holds a B.A. in Human Geography and Spanish, and completed a Research Masters in International Development Studies at the University of Amsterdam in 2013 (cum laude). In December 2019 she defended her PhD thesis Mining in the Land of Buen Vivir. The Politics of Large-Scale Mining, Development and Territorial Transformation in the Ecuadorian Amazon.

Barbara Hogenboom is Director of the Centre for Latin American Research and Documentation (CEDLA) and Professor of Latin American Studies at the Faculty of Humanities, University of Amsterdam (UvA). Her field of study is the politics and governance of development and environment, viewed from an interdisciplinary perspective. Her research focuses on the clashing values and interests at play in connection with the use of natural resources in Latin America. She is also managing editor of the European Review of Latin American and Caribbean Studies (ERLACS).