March 25, 1999

Peru's disillusioned professionals a snag for Fujimori election

                  LIMA, Peru (AP) -- Former bank manager Alejandro Champin keeps a
                  copy of "Don Quixote" in the glove compartment of his battered Toyota to
                  read during breaks in his 12-hour shifts as a cabdriver.

                  Lawyer Julio Rodriguez regales his passengers with tales of past legal battles
                  as he weaves among potholes on Lima's clogged, cutthroat streets.

                  The educated cabdriver has become a popular Lima icon of the 1990s --
                  and a symbol of growing disillusionment over Peru's economic problems that
                  could derail a re-election bid by President Alberto Fujimori.

                  Many professionals lost jobs after Fujimori instituted economic reforms that
                  forced previously protected businesses to retrench and that slashed the
                  public payroll.

                  One in three drivers at some taxi agencies are college-educated former
                  professionals, drivers say. Many others took their severance pay and bought
                  a cab or slapped a taxi sign on their car and went freelance.

                  These cultured cabbies, their dreams of returning to their former careers
                  dying, have become a potent touchstone for Peruvians' anxieties over the
                  lack of jobs. The mood could spell bad news for Fujimori if, as expected, he
                  runs for a third term next year.

                  "Peruvians for years put up with hardship because they believed in Fujimori's
                  tough leadership. But now many people -- like those cab drivers -- have lost
                  their faith as their economic expectations have not been met," said Giovana
                  Penaflor, director of the polling company Imasen.

                  The iron-fisted Fujimori was elected in 1990 and re-elected in a landslide in
                  1995 by Peruvians grateful to him for ending the economic chaos and
                  hyperinflation he inherited and capturing leftist rebel leaders.

                  The economy boomed after he imposed market reforms in the early 1990s,
                  privatizing 174 state companies, opening protected industries to competition
                  and laying off tens of thousands of state workers. Growth topped 13 percent
                  in 1994.

                  Expectations soared and Fujimori promised to make Peru a "Latin American
                  economic tiger."

                  But the high growth did not create jobs. And, battered by the global financial
                  crisis and El Nino-related floods, growth braked to a mere 0.7 percent last

                  Vacancy signs dot offices in Lima's business districts. One in two Peruvians
                  lives in poverty. A new wave of economic refugees from the impoverished
                  countryside has swelled the capital's shantytowns.

                  "There is a feeling in Peru that Fujimori has done a number of things well, but
                  the most important thing he promised -- rising living standards -- has not
                  occurred," former Finance Minister Javier Silva Ruete said.

                  Fujimori's approval rating, which for years hovered near 70 percent, has
                  collapsed to half that, and polls say the lack of jobs and low wages are the
                  main reasons, Penaflor said.

                  Some 8 percent of Peru's work force is unemployed, and 59 percent of
                  those who do have jobs do not earn enough to meet basic needs, according
                  to a 1998 World Labor Organization study.

                  Peru's minimum wage is 350 soles (dlrs 100) a month, and a police officer
                  earns 850 soles (dlrs 250) a month. But a family of five needs 1,360 soles
                  (dlrs 400) a month for food, housing and clothes, Penaflor said.

                  Silva Ruete estimated that with a mass of young people entering the work
                  force, Peru's economy would have to average around 7 percent annual
                  growth over the next decade to significantly raise living standards.

                  Taxi driver Champin, who now wears a ragged sweater instead of a suit, lost
                  his job as a manager with Banco Popular, one of Peru's largest banks, when
                  it closed in 1992 amid the economic shakeup.

                  The sharp drop in his living standard and status was a depressing blow, he
                  said. His two children had to leave private school, and the family was short
                  of food.

                  The only job he could find was driving a cab and he discovered that more
                  than 30 of the 100 drivers at the Alo Taxi company were college-educated
                  professionals with stories like his.

                  Economic studies say that privatizations between 1990 and 1997 resulted in
                  78,000 layoffs and tens of thousands more lost jobs when once-protected
                  private companies were exposed to foreign competition.

                  A subculture of doctors, lawyers, engineers and accountants who now drive
                  cabs or sell sandwiches in the streets has emerged in Lima, Peruvian
                  sociologist Mirko Lauer said.

                  Other professionals earn so little in their careers that they moonlight as cab
                  drivers to make ends meet, he said.

                  "I've become a pessimist," said Daniel Gamarra, an unemployed architect
                  who drives a Volkswagen Beetle as a taxi. "The years come and go,
                  governments come and go, and the situation does not improve. I see no
                  solution on the horizon."