Labor reform in three steps

The creation of formal employment as a way out of the crisis was the diagonal that crossed the panels that were held during the first day of the 57th IDEA Colloquium. The starting point was the presentation of a plan with three concrete proposals that incorporate new elements to known recipes: the creation of an emergency labor regime with temporary reduction of employer charges, reduction of the cost of compensation for SMEs and training to adapt to the new demands of the labor market.

Santiago Bulat, IDEA’s chief economist, was in charge of presenting the proposals before the eyes of the executives, some of whom were part of the team of twelve entrepreneurs that he coordinated for about a year to finish shaping the plan. Before the public presentation, they presented the proposal to the Minister of Economy Martín Guzmán, with whom they shared the idea that in order to generate employment, the macroeconomy must be ordered and growth generated. This Friday, the event will be closed by President Alberto Fernández, who confirmed his presence this afternoon.

Guzmán was very clear in this regard: “Our policy in the way of ordering labor market issues is not based on weakening or removing rights at all” and added that “the data show us that, with the same legislation labor, Argentina has had periods where employment was created and where there was growth in the number of companies. What happened in those periods? That the economy worked better, the macroeconomy was better, the economy growing. The situation of a well-functioning macroeconomy for us it is the fundamental factor for job creation “.

From IDEA they are clear that they are not generators of public policies, but they proposed this solution to Guzmán to accompany the path to achieve the ordering of the economy. “It does not touch a single right of workers who have a job,” Bulat said, adding: “Alvarez Agis said it very well: we are very concerned about protecting the rights of 28 percent of registered workers, but what about the Remaining 72 percent? “, Recovering a phrase that the former Vice Minister of Economy contributed to the discussion in another panel during the day.

The Minister of Economy was also consulted about another issue that worries businessmen attending the event, the ban on layoffs. Guzmán associated it with a conjunctural situation to avoid the massive destruction of employment and insisted: “The central thing is the macroeconomic situation, stabilize the economy, reassure it. Having a productive model in the center, a model that adds value to the economy and of course to adapt the organization of the labor market to the circumstances that are occurring “.

The executives assured that they do not have a “legislative tactic” to carry out these measures, which presented the diagnosis to the ruling party and the opposition. The next step will be to do it before the Minister of Labor, Claudio Moroni, who is not participating in the Colloquium: “There is nothing closed, the idea now is to sit down and debate,” said Executive Director Daniel González.

The proposal

The plan proposed by the Argentine business community consists of three legs. First, creating a emergency labor regime that “rapidly promote the creation of new jobs and encourage formalization.” This new labor regime proposes a scheme of reduction of employer charges for three years in the creation of new jobs especially for specific populations, such as young people. It exempts 75 percent of the load in the first year, 50 percent in the second and 25 percent in the third to resume the general scheme from that moment.

It also proposes a new temporary scheme for disconnections that preserves the indemnities and “discourage the industry from labor lawsuits.” Here, the cost of compensation will depend on the size of the company.

Second, it proposes moving towards the federalization of the Compulsory Labor Conciliation Service, the reform of the labor fines regime that discourages the trial industry, and the modernization of collective bargaining agreements to promote productivity improvements. It points to the prohibition of initiating legal claims after compensation has been agreed and settled.

Finally, the third proposal focuses on a training program to adapt to the demands of the world of work. “If there is no training, nothing can work from what we do from now on. Above all, with almost half of high school students who do not finish their studies. In this case, there would be an incentive remuneration to train in companies and those who are not incorporated can obtain a certificate to apply to other jobs, “said Bulat.

Another axis points to self-employment, with the reformulation of the monotax to discourage under-invoicing and the creation of a new labor figure for workers who are linked to the new market demands such as application workers.

As a novelty it proposes formalize workers in the popular economy through the unification of the social monotax, the recognition of low-scale activities and the positive certification of good labor practices to close the gender gap and the presentation of substantive gender equality reports with tax benefits.

In numbers

The diagnosis from which the business community starts to make this proposal is summarized in the following figures:

  • The Argentine economy has not generated formal private employment for more than a decade. From 2008 to the present, the share of formal private employment within the working-age population contracted 4 percentage points
  • In the private sector there is little formal employment: only 2 out of every 10 Argentines of working age.
  • 24 percent of registered workers correspond to public employment.
  • There are 1.8 million unemployed
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