Undersecretaryof Labour Studies Ministy of Labour, Employment and Social Security - Argentina The need for policy consistency Policies articulation ERF UNICEF WORKSHOP Social and EconomicPoliciesforChild Rightswithequity Marta Novick July 2013
PresentationIndex • The need to speak about economic social models ( Argentine example to see the linking within different dimensions in different moments) • The system based in only one dimension vs articulated/ consistence in different policies and institutions • What have we done? • The global crisis and its impacts : labor and social protection policies. Its main outcomes • Argentina-Brazil comparisons • Some reflexions and questions
THE 90’s MODEL Labor Institutions Income Policies Macro Policies Active/ Passive Labor Market Policies EMPLOYMENT AS A COST In context of crisis, orthodox policies were applied
“Decent Work” as mainsocial inclusion policy (coordination) Growth and Social Inclusion 2003-2008 • Macroeconomic: • Stable and competitive real exchange rate • External and fiscal surpluses • Encourage domestic demand and investment • Employment and labor • Labor institution recovery • Labor policies • Active employment policies • Income policies • Social Policy: • Cash Transfers to vulnerable families • Food Program • Free access to generic medicines
Labor policies Reform of labor regulation • Law N°25.877 provided a set of tools to: • Promote decent jobs. • Stimulate collective bargaining. • Give pre-eminence to the norm most favorable towards the employee, in case of conflict between the regulations of the employee’s activity and those of the company. • Reverse the previous trend towards flexibility of employment conditions. • Facilitate creation of SMEs, so that they might create more registered jobs. • Confer authority to the Ministry of Labor so it can act as an additional organ of inspection and oversight, together with other jurisdictions. Re-establishment of inspection at work sites Fighting against employment informality Encouragement of collective bargaining and social dialogue
Labor policies Reform of labor regulation Re-establishment of inspection at work sites • National Program for Employment Regularization (ProgramaNacional de Regularización del Trabajo –PNRT-): • Coordination of inspections by the Ministry of Labor together with AFIP, ANSES, Superintendencia de Riesgos del Trabajo, Consejo Federal del Trabajo and many provincial governments. • 890,000 enterprises and 2.6 million workers inspected. • The standing of 36% of the workers found to be unregistered was immediately corrected, and for all remaining cases the legal procedures and fines against the enterprises were accordingly initiated. Fighting against employment informality Encouragement of collective bargaining and social dialogue
Labor policies Recovering and strengthening labor institutions Reform of labor regulation Re-establishment of inspection at work sites Fighting against employment informality • Inserting the issue in the public agenda. • Explicit position of the government against illegal hiring of workers. • Systematic communication and awareness campaign: mass media, schools, unions, chambers and consulting and debate forums. • Simplification of administrative procedures for registration. • Reduction of hiring costs for new employees in SMEs. • Implementation of a set of measures focused on the regularization of the employment situation of domestic employees. Law 26.844, regulating employment relationships for domestic employees (2013). • Law N° 26.727: New Statute for Rural Laborers, implemented via Decree 301/2013. Encouragement of collective bargaining and social dialogue
Labor policies Recovering and strengthening labor institutions Reform of labor regulation Re-establishment of inspection at work sites Fighting against employment informality Encouragement of collective bargaining and social dialogue • Collective bargaining becomes systematic and permanent. • Political decision to make non-taxable sums in the salary taxable, so as to encourage the parties to negotiate. • Reopening of bargaining units in each level of activity, most of which had been closed during the ’90s. • Compatibility with enterprise internal negotiations. • Recovery of the central role of unions and employers in the network of work relationships. • Encouragement of diversity of spaces for social dialogue about equal treatment and opportunities, eradication of child labor, enterprise social responsibility, etc.
Moving from social policies to active employment policies Integral Employment Promotion Plan • The Plan sets in motion throughout the country a set of tools that promote integration into the labor market with quality jobs; the approach includes: (1) job training, (2) assistance in processes of salaried or independent employment insertion and (3) preservation of employment. • More and Better Work for Young People Program (2008-on-going): the program seeks to generate opportunities for social inclusion and employment for young people through integrated activities (e.g. finish compulsory education, obtain training and practical experience in work environments), preparing them to obtain work or start their own business. • Between 2008 and March 2013, almost 600,000 young people enrolled in the program • Training and Employment Insurance Program: The SCyE provides a monthly allowance for up to two years that counts towards social security benefits. It also provides support to complete primary and secondary schooling, job orientation and support for job search, referral to social services, education, job training and support for individual and joint business ventures. • By March 2013, 107,571 people are covered by the Training and Employment Insurance, reaching a total of 449, 059 since the beginning of its execution in 2006 Active employment policies Public Employment Services Network Continuing Formation System
Moving from social policies to active employment policies Integral Employment Promotion Plan Public Employment Services Network Active employment policies • 341 Municipal Employment Offices were created and strengthened throughout the country. • These are technical organisms that mediate between the supply and the demand for jobs at a local level. • They offer free information, orientation and forwarding towards services of training and employment. • Between 2006 and 2010 almost 875 thousand men and women were attended to and received orientation. Continuing Formation System
Moving from social policies to active employment policies Integral Employment Promotion Plan, “More & Better Employment” Public Employment Services Network Active employment policies Continuous Training System • The Network of Continuous Training Establishments is created: 310 establishments throughout the country were strengthened. • The threefold Sector Councils of Training and Certification are put into action in 41 sectors of productive activity. • Over 60 thousand people were certified for employment. • Between 2003 and 2010, 1 and a half million workers were given proper training.
Income policies Wage and income policiesBroadening coverage (quantity, quality and amount received) Sustained increase of the minimum wage • The National Council for Employment, Productivity and Minimum Wage. • This threefold organism began functioning regularly after 11 years of inactivity. • Between the ninenties and 2011 the minimum salary had increased to 109% in real terms. Encouragement of collective bargaining and social dialogue Increase of income transfer to families
Income policies Wage and income policiesBroadening coverage (quantity, quality and amount received) Sustained increase of the minimum wage Encouragement of collective bargaining and social dialogue • Collective bargaining becomes systematic and permanent. • Political decision of making non-taxable sums in the salary taxable, so as to encourage the parts to negotiate. • Reopening of bargaining units in each level of activity, most of which had been closed during the ’90s. • Compatibility with enterprise internal negotiations. • Recovery of the central role of unions and employers in the network of work relationships. • Encouragement of diversity of spaces for social dialogue about equal treatment and opportunities, eradication of child labor, enterprise social responsibility, etc. Increase of income transfer to families
Income policies Wage and income policiesBroadening coverage (quantity, quality and amount received) Sustained increase of the minimum wage Encouragement of collective bargaining and social dialogue Increase of income transfer to families • The principle initiatives that explain this substantial increase were: • Universal Child Allowance • Anticipated Provisional Inclusion Program • Contributive Family Benefit for increase of registered employment • Non-contributive and special pensions • National Employment and Training programs
Social protection Wage and income policiesBroadening coverage (quantity, quality and amount received) Cash Transfers • Previsional Inclusion (Moratorium) Program • Increase of minimum pension and Mobility Law (Oct.08) which establishes two annual pension benefits’ increase • Expanding child coverage: • Trough growth of formal employment – contributory • Universal Child Allowance (AUH) – non contributory • Increase access to non-contributive pensions (families with more than 7 children, and/or persons with disabilities) • Social Policy: Argentina Works, Cooperatives, “They Make Program” (for women). • Food Program Education Health
Social protection Wage and income policiesBroadening coverage (quantity, quality and amount received) Cash Transfers Education • Plan to Complete Primary and Secondary Studies (Plan de Finalización de EstudiosPrimarios y Secundarios -FINES-) • Connect Equality Program (ProgramaConectarIgualdad) • Scholarships • AUH Conditionalities Health
Social protection Wage and income policiesBroadening coverage (quantity, quality and amount received) Cash Transfers Education Health • Free access to generic medicines • Birth Plan (Plan Nacer) • Sumar Plan (Plan Sumar) – since 2012 • AUH Conditionalities
From Social Policies to Labor Policies • “Training and Employment Insurance Scheme” – Workfare • Temporary – Cash Transference • Training • Formal education attainment • “PJJHD”Social Plan - Welfare • Conditional cash transfers to heads of household. • 2.2 million beneficiaries (2003) • Return to formal work • “Family Plan” – Welfare • Aimed to Vulnerable groups • Cash transfers according to number of children in family • Educational and Wealth Conditionality Universalization of Rights Subsecretaria de Programación Técnica y Estudios Laborales, Dirección General de Estudios y Formulación de Políticas de Empleo.
Factors associated to the Crisis • Model of Globalization behinf the financial crisis • A model for accumulation based on outsized growth in the financial sector and deregulation of all markets. • Absence of social dimension: dissociation between commercial, economic and financial policy , and labor and social policy. • The unofficial history of globalization (Chang) • Weakening of Labor Institutions (minimum wage, collective bargaining, and the individualization of labor relations) • Consequences for global employment, income and wage inequality • Significant stagnation in real wages • Sustained increase in inequality • Outsized credit expansion (bubble), facilitating absorption of the supply of goods • The crisis • Financial detonation (extension of credit beyond the capacity of creditors to repay) • But it is an economic crisis (productive, distributive, of international commerce and regulation), comparable only to the world crisis of 1929
Whathavewelearned? • At the onset of the world financial crisis, there was some emphasis on supporting employment and securing income in the international response (G20, ILO/OMC ,etc.) • The diagnoses placed the roots of the crisis in worsening economic inequality – declining shares of income from salary and the preponderance of the financial sector (United Nations 2009; Fitoussi and Stiglitz, 2009; ILO 2009; OCDE, 2011) • Lately, we have observed a return to neoclassical policies, which primarily seek financial stability or fiscal consolidation, neglecting labor and social dimension and economic growth (at least in the short term)
Anti-crisis policies (in defence of employment and social welfare) Argentinian labor policies face up to the global crisis • Industrial Policies • Credit conditioned to employment maintenance • SME’s Support • Tax reduced for new registered workers • Macroeconomic Policies • Program of PublicInfrastructure Investment • Pension System Nationalization • Change of Bank Central goals • Tax waiver in case of formalizing employment • Labour Policies: • Use of institutions: • Crisis Agreement Procedures. Wage Subsidies to firms affected by the crisis (REPRO=141.615). Extension of the Training Program. Incentives to register workersand training • Keepemployments and incomes: • Collectivebargaining. Increase of MinimumWage, increase of otherincomes, pensions, programs and childwage. Pensionmobility. • Social Policies • Transferences toPensions and Social Programs Increase • Food Program budget Increase
Thenumbers of the anti-cyclicpolicies (estimated)
Central Bank and Development : we changed the “Organic Constitution” which states an explicit engagement with the evolution of the real Economy… • To sustain growth and broadening the productive capacity and the growth of employment… • Change The Central Bank goals ….… • To reestablish a mandate which considers the level of economic activity , employment, financial stability at the same level of inflation targeting…. • To recover essential mandate of a monetary authority and use virtuously the tools that all the Central Banks in the world utilized to help the development processes before “independency” stage • BCRA´s Legal Mandate: It is replace the idea of single mandate of monetary and financial stability for multiple, ones that includes employment and social equity • Loans: The Central Bank is authorized to regulate and alllocate credit
Outcomes I: Increase of formal employment and firms
Outcomes II: InformalityTrends Informality by occupational category Heterogeneity within the informal sector
Outcomes III: Wages and Bargaining
Outcomes IV: Social ProtectionCoverage Coverage of under-18 population (2011) Coverage of theelders
Improvement of personal income distribution • The Gini index showed a systematic worsening of 18.5% between 1994 and 2002, reaching levels of inequality never before registered in the country. • This trend began to reverse in 2003, and a continuous improvement is observed since then. • Between 2002 and 2012 the distribution of personal income improved, reaching the most equitable distribution of at least the past 18 years. Source: MTEySS, based on EPH (INDEC)
No “one fit for all”: a comparison Argentina-Brazil • Significant differences in terms of macroeconomic policies (Brazil, orthodox monetary policy and Argentina more heterodox) • Both obtained very good outcomes in terms of employment, registered employment, wages, inequality reduction and social inclusion • Brazil has an wide institutional network , credit to stimulate accessibility to the own household, a Bank of Development, etc • Argentina (as I try to demonstrate) generated a coherence policy package to stimulate internal demand, a type of monetary exchange to increase exports, taxes on agricultural exports
What it means? The role of the State and the political goal • Both had the same political goal: increase of internal demand and social inclusion • Argentina, Brazil and Uruguay have advanced to this goal (mainly) trought employment, collective agreements, minimum wageand active labour policies. • But other Southamerican countries have improve in social situation through other ways: social protection program and universalisation of some social rights (pension)
Final reflections • I’ve tried to show the differences between a model driven by a single institution ( the market, and confidence in its self-regulation) and another model, with greater state participation (or other models), in which a single goal or set of goals underlies the articulation of policy (In our case: economic growth with social inclusion). • International comparisons make it clear that the world is too complex for “one size fits all” solutions. Rather, countries should set their own goals in accordance with their existing institutional framework based on their history, social actors, productive structure and the main problems to solve. • We can suppose that the change in the models implemented in South America in the last decade is the result of two things: • Popular rejection of the “small state” model, driven by the marke with its negative consequences for unemployment, informality and precariousness; and • The emergence of political leadership able to hear the social demands • Finally, for the model to function, we’ve discussed how it is important to have clear economic and social goals and that it be built on a conceptual framework that allows for consistency across policy dimensions and institutions. In support of achieving these goals, the model must be subject to constant evaluations, and those implementing policy must have the flexibility to adapt when the environment changes.