Informe Nº: 14/05/2014
May 1st is the perfect opportunity to redeem work and assume, with self-criticism, that beyond declamations, most people of working age are still deprived of the opportunity to access quality employment. This is the result of persevering during decades of labor regulations that discourage job creation. Given the magnitude of the failure, a change of paradigm is needed in the design of labor market institution rather than repeating old recipes.
Labor Day calls for the recognition of those who put their effort and talent to the service of production. The day commemorates the struggle of American workers who managed to impose the 8-hour long workday in the late nineteenth century, conquest that quickly extended to all industrialized countries. Over time, new progresses accumulated regarding workers legal protection. But May 1st is still universally associated with labor rights.
More important and complicated than expressing labor law in regulation, is to make that right to be made effective in practice. Therefore, in addition to recognition and celebration, may 1st should be a day of introspection to analyze critically and reflectively the state of the Argentine labor market, more specifically, to assess the extent to which citizens are able to effectively exercise their right to work under the protection of the labor law.
Based on official data from the household survey INDEC and considering that the urban population of working age is approximately 24 million people, it is estimated that:
· 6.8 million people (29%) are neither working nor looking for work, i.e. not being part of the labor market
· 1.1 million (5%) are looking for a job; this means they are part of the unemployed segment.
· 7.9 million (33%) are working, but not registered as salaried worker or they are self-employed; this means that they have jobs were labor rights are not enforced
These data shows that only a minority of people of working age have access to a job protected by labor laws. Almost a third does not participate in the labor market or are unemployed. Another third works, but under poor conditions such as non registered salaried work or self-employment, that very often is a poor alternative to the lack of opportunities for paid salaried employment. In other words, 2 out of 3 people of working age in Argentina have no access to registered salaried employment.
The contradiction is quite apparent. Labor legislation is composed by a set of complex rules that protect workers. But the short reach in its implementation has diluted its impact considerably. Very few workers have full legal protection, while the most of them, who are mostly in a vulnerable condition, are excluded due to the high incidence of labor inactivity, unemployment and informality.
This is a structural phenomenon that has remained unscathed by the changes of economic and political cycles. The reason behind this is that labor regulation has not experienced significant changes. For example, between 2003 and 2013 an unprecedented cycle that has created over 3 million formal jobs occurred, but still two thirds of the working age population is excluded from such employment opportunities. On the other hand, most of the generation of formal jobs was associated with the slump in the real wage due to the mega-devaluation that occurred in 2002, rather than being explained by modern labor institutions. In other words, it was possible to create legally protected jobs while the cost of labor was cheapened due to the devaluation.
Eduardo Galeano admitted that many of the ideas that he presented in his book "The Open Veins of Latin America" are wrong. The same courage and self-criticism is necessary to admit that the labor laws that only a minority enjoys are hypocritical. Instead of persevering with old recipes, like appealing to devaluations or small reductions in employer contributions, to claim work as a way to realize social justice requires a change of paradigm, and derived from it, a comprehensive plan to modernize labor institutions.