More Jobs, Better Jobs

(Op-ed of ECLAC Executive Secretary, José Antonio Ocampo, published in ECLAC Notes No. 18, September 2001.)

The decline experienced by labour markets in 2001, as a result of sloweconomic growth, is part of a worrying long-term context. In Latin America during the1990s demand for labour rose 2.2% annually, less than supply, which grew at 2.6%. Becauseof this, unemployment rose from less than 6% to almost 9%. Finally, the quality of jobsdeclined: throughout the past decade, seven of every ten new jobs in cities was generatedin the informal sector.

These trends indicate that the employment problems facing the region aredue in part to the slow pace of economic growth (3.2% annually for the past decade versus5.5% from 1945 to 1980), but also to structural factors associated with the incorporationof new technologies and the strong preference for skilled labour that these generate. Theimpact of unemployment on welfare has increased, moreover, to the degree that it hasspread into middle income sectors, making periods of unemployment longer and reducing theearnings of workers who eventually manage to rejoin the workforce.

What can the countries of the region do to resolve this situation? Littlewill be achieved, in terms of work, without more economic growth and aggressive policiesin education and job training. Some specific programs could also help: support for micro-and small firms, where most of the region's employment is generated, a policydirected at improving information on job opportunities, and the design of permanentschemes that make it possible to implement emergency employment programs opportunely whena crisis strikes.

'The quality of employment has declined: seven of every ten new jobs in cities are generated in the informal sector.' Minimum wage policies must offset asymmetries in wage negotiations,especially among less organized groups, but they must also reduce their potential negativeeffects on demand for labour or their tendency to encourage informal employment. The roomfor a minimum wage policy depends on progress in controlling inflation, the real level ofthe minimum wage compared to the productivity of small companies, and the increase inlabour productivity.

Workers too, must adapt to technological change and the economic cycle.Flexible hiring and firing is not the only instrument for achieving this objective andcould adversely affect labour productivity, if workers lose their sense of belonging tocompanies. Agreements, therefore, between business and workers must be encouraged tocreate alternative forms of adapting, based on social dialogue at the country, regional,sector or company level, and in general must encourage a labour-relations climate thatbuilds on the potential common interests shared by both parties.

Finally, any job-improvement policy must aspire to develop social securityframeworks, which are universally applied, encourage solidarity and are integral in theirapproach. In an era of increasingly unstable job markets, this means gradually creatingunemployment insurance, according to each country's level of development. Finally, itis necessary to establish adequate social security system mechanisms for workers frommicro and small companies, to provide them with the health care and pensions that theylack today.