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Argentina 2003 – 2009. Labor Policies in Times of Crisis. July 2010. Marta Novick Under Secretariat for Technical Programming and Labor Studies. 1. Presentation Topics. Context to the Argentine crisis (2001–2002) Policies for addressing the domestic crisis (2003 – 2008) - PowerPoint PPT Presentation
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Argentina 2003–2009
Labor Policies in Times of Crisis
Marta Novick
Under Secretariat for Technical Programming
and Labor Studies
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Presentation Topics
Context to the Argentine crisis (2001–2002)
Policies for addressing the domestic crisis
(2003–2008)
International crisis (2008–2009)Labor policies in Argentina
Final thoughts
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Households Poverty Total urban centres 1993-2003
14%12%
16%
20% 19%18%
19%21%
26%
41%43%
3% 3%4%
5%4% 4%
5% 5%
8%
18%16%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
PovertyExtreme Poverty
Increase 213% 29p.p.
Minimum Wage in ninenties
150
160
170
180
190
200
210
220
230
240
250
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Unemployment Rate 1988-2002
19.717.4
15.1
14.3
12.914.9
17.217.5
11.5
9.67.0
6.5
7.5
0.0
5.0
10.0
15.0
20.0
25.0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Increase 164% - 12.2 p.p.
The 1990s The 1990s & the 2001-02 Crisis
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Post-Convertibility 2003-2008
Industrial policy• Withholdings • Promotion regimes (software, automobiles,
electrodomestics)• Promotion of non-traditional exports• Non-automatic imports
Macro policy• Competitive and stable exchange
rate • Budgetary and external surpluses• Encouragement of domestic demand
and investment
Labor policies• Labor institutions • Employment policies• Income policies • Social Security
Social policies• More universal criteria • Direct transfers for vulnerable families• National Food Program • Remediar: free access to generic
medicines
Decent work as a policy objective
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Labor policies
Labor institutions• New legal framework (employment reordering law)• Promotion of collective bargaining• Recovery of labor inspection – PNRT• Mediation of labor conflicts
Income policies • Wage increases: fixed amounts, minimum wage, and promotion of collective
bargaining• Increases in retirements and pensions (mobility) and in family allowances • Increases in socio-labor plans (families, etc.)• Increase in social security coverage (Welfare Inclusion Program)
Employment policies• PJJHD Training Program (SCE)• Employment programs for vulnerable groups (youth, etc.)
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Between 2003 and 2008, employment reported record levels of improvement
20%
22%
24%
26%
28%
30%
32%
34%
36%
38%
40%
42%
44%
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Industria, Comercio y Servicios. En miles
2,500
3,000
3,500
4,000
4,500
5,000
5,500
Em
ple
o -
en
mil
es
300
320
340
360
380
400
420
440
460
480
500
Em
pre
sa
s - e
n m
iles
Empleo 2,89 3,10 3,39 3,42 3,39 3,42 3,10 3,09 3,41 3,82 4,19 4,53 4,58 4,67 4,83 4,90 4,94 4,97 4,99 4,94
Empresas 372 381 386 381 377 369 352 349 371 411 436 458 461 466 469 471 472 475 475 473
1° trim. 1996
1° trim. 1997
1° trim. 1998
1° trim. 1999
1° trim. 2000
1° trim. 2001
1° trim. 2002
1° trim. 2003
1° trim. 2004
1° trim. 2005
1° trim. 2006
1° trim. 2007
2° trim. 2007
3° trim. 2007
4° trim. 2007
1° trim. 2008
2° trim. 2008
3° trim. 2008
4° trim. 2008
1° trim. 2009
Formal waged employment Fall in registered employment
Registered employment and number of companies
7,5
7,9
8,8
3
5
7
9
11
13
15
17
19
21
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: MTEySS, based on EPH (INDEC)
Unemployment rate
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Wages and collective bargaining
5.848.254
3.479.691
3.000.000
3.500.000
4.000.000
4.500.000
5.000.000
5.500.000
6.000.000
2002 2003 2004 2005 2006 2007 2008
229
100
90
110
130
150
170
190
210
230
250
2002 2003 2004 2005 2006 2007 2008
Var. 2002 / 2008: + 129%
Coverage of collective bargainingAverage wage level
1.331
1.231
406
150
0
200
400
600
800
1000
1200
1400
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Number of agreements
Minimum Wage 2003-2009
0
200
400
600
800
1000
1200
1400
Ene-0
3
Mar
-03
May
-03
Jul-0
3
Sep-0
3
Nov-0
3
Ene-0
4
Mar
-04
May
-04
Jul-0
4
Sep-0
4
Nov-0
4
Ene-0
5
Mar
-05
May
-05
Jul-0
5
Sep-0
5
Nov-0
5
Ene-0
6
Mar
-06
May
-06
Jul-0
6
Sep-0
6
Nov-0
6
Ene-0
7
Mar
-07
May
-07
Jul-0
7
Sep-0
7
Nov-0
7
Ene-0
8
Mar
-08
May
-08
Jul-0
8
Sep-0
8
Nov-0
8
Ene-0
9
Growth 520%
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Evolution of professional training (PT) numbers (provincial, municipal, and sectoral)
Source: DNOyFP, SE, meta 2009.
134,931
110,058
13,550
$150,000,000
Active training policies
11,539
30,000
28,420
31,211
23,609
12,35410,258
580
10,000
5,5276,357
20
27,949
110
40,000
32,879
29,323
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2003 2004 2005 2006 2007 2008 Proy 2009
PT prov PT munic PT sector
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The international crisis
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Magnitude of the crisis
• Worst crisis since 1930.
• World unemployment rose by 11 million last year, and around 40 million more jobs could be lost by the end of 2009.
• In the USA, 650,000 jobs were lost during January 2009 alone, raising its unemployment rate from 7.6% to 8.1%.
• The IMF recently estimated (July 2010) that global output fell by
0.6% in 2009 (–3.2% in the developed nations and +2.5% in developing countries). Estimates forecast global growth of 4.6% in 2010.
• Global trade also reported a significant fall (–11.3%). The IMF predicts an increase of 9% this year.
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First thoughts on the crisis
• Traditional indexes, such as GDP or other indicators of well-being, are not enough and cannot prevent catastrophes or disasters of this kind. • The recent work by Stiglitz, Sen, and Fitoussi states that
these traditional indicators do not highlight what is most important to us: the well-being of the citizenry, their quality of life, their dignity, and, ultimately, their happiness, which do not necessarily correlate with GDP growth.
• This underscores two essential issues: • Intervention in public policy matters
• The role of income distribution
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Argentina: Policies during the international crisis
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Industrial policy• Production credits conditional on
maintaining employment• Support for SMEs• Credits for consumption and
commerce• Non-automatic imports
Macro policy• Public infrastructure investment
program • Tax incentives for formalizing
workers • Nationalization of the retirement
system
Social policies• 1st phase: Increases in social
program transfer amounts and in the budget of the National Food Program
• 2nd phase: Universal per-child allowance
ANTI-CRISIS Policy Permanent labor market
observatory
Labor policies• Use of existing institutions • Policies to protect jobs • Income policies
International Crisis 2008–09
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Protecting jobs and incomes Using existing institutions
• Clear strategy to maintain labor relations • Crisis Prevention Procedure • Wage subsidies for companies affected by the crisis (REPRO)• Various strategies to extend SCE coverage• Greater effort (and incentives) for training policies • Income policies:
• Continuance of collective bargaining • Increased minimum wage• Once-off fixed amount increase in income (for retirees and
minimum-wage earners) • Increased family allowances • Retirement mobility
Labor policies for tackling the crisis
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Maintaining employment: Major expansion in coverage after the crisis
6.973 6.768 7.95012.853
16.910
129.411
120.751
182.495
-
20.000
40.000
60.000
80.000
100.000
120.000
140.000
160.000
180.000
200.000
2004 2005 2006 2007 2008 2009 2010 TOTAL2003-2010
Other job maintenance programs
Interzafra and other seasonal programs
Productive recovery
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Expanded coverage of social protection: Elderly and youth
86%
37%
69%
84%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Percentage of beneficiary children and adolescents in the under-18 population
Percentage of retirement and pension beneficiaries in the senior population
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Countercyclical policy in figures
C ifras de la polític a anti-c íc lic aEn m illo n e s d e Pe so s y % P IB
2008 2009 2010 A c u m .I. Medidas dis c rec ionalesPo líti c a d e in g re so s (t ran sf e re n c ias e x t rao rd in ar ias a h o g are s) 1 1.200 2.670 3.870A sig n ac io n e s Fam iliare s 2 346 3.392 9.631 13.369Dif e r im ie n t o d e im p u e st o s 3 1.500 1.500Dism in u c ió n d e Im p u e st o s 4 350 3.500 3.850Dism in u c ió n d e De re c h o s d e Ex p o rt ac ió n 5 730 730Co m p e n sac io n e s A g ro 6 250 250Su b sid io a p ro d u c t o re s t am b e ro s 7 968 968Su b sid io a p ro d u c t o re s g an ad e ro s 8 500 500Co m p e n sac io n e s salar iale s (REPRO) y Pc ia. De B s. A s. 9 45 610 457 1.112Plan d e e m p le o e n c o o p e rati v as (h ip ó t e sis d e m áx im a) 10 150 1.800II. P lanes de financ iamiento (es pec ialmente c on fondos de S IP A 11)Lín e as d e c r é d it o al c o m e r c io , al c o n su m o y a la p r o d u c c ió n 15.600 15.600Lín e as d e c ré d it o s h ip o t e c ar io s 13 1.140 1.140III. G as tos de C apitalPlan d e o b r as p ar a t o d o s lo s ar g e n ti n o s 14 24.000 24.000Fo n d o Fe d e ral So lid ar io 15 2.941 2.941IV. Medidas es truc turales que c ontribuyen al P lan Antic ris isA ju st e p o r m o v ilid ad ju b ilat o r ia 16 7.750 6.900 14.650In c r e m e n t o s salar iale s 17 1.636 2.006 3.641In c r e m e n t o d e salar io s e n u n iv e r sid ad e s y d e b e c as 17 734 899 1.633I + II + II (exc . P lan de obras y c réditos a c ons umo y produc c ión) 1.941 18.351 11.888 32.180S ubtotal I % P IB 0,19% 1,76% 1,14% 3,08%P olític a de ing res os (P lanes , AAF F y R E P R O) 1.591 6.822 11.888 20.301S ubtotal % P IB 0,15% 0,65% 1,14% 1,95%
P IB 1.043.632
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Impact of external crises on employment in Argentina
8,0
12,413,2
12,2
8,8
13,814,5
16,6
6
8
10
12
14
16
18
20
22
Mexican Crisis Russian Crisis Brazilian Crisis Global Crisis
Pre-crisis rate Rate during crisis
+4,4
+1,3
+1,4
+0,8
Convertibility regime Productive model2003 - 2009
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Final thoughts (i)
• Change in how responses to the international crisis are oriented (first stage)
• The role of public policies / state
• Greater emphasis on employment (maintenance,
improved coverage, unemployment, and training)
and expanded social protection
• New role of “non-traditional” institutions
(Labor Ministries / ILO)
• Heightened role of developing countries (G20)
and a broader outlook on the economic crisis
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Final thoughts (ii)
• Second stage (European crisis)
• Some return to adjustment policies (Greece, Spain)
• Adjustments in labor affairs and reduced spending
• Potential impact on demand and activity levels
• Fiscal and monetary policies as sole macroeconomic
strategies
• G20 Toronto, “transition”
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Final thoughts (iii)
• Need to coordinate public policies
• Ffrench-Davis states that the type of macro-level focus
adopted has a decisive impact on the degree of stability,
and on how that affects the path of growth and influences
the level of equality or inequality found in domestic
markets.
• Recovery from a crisis is impossible if social and labor
objectives are not placed at the center of economic policy.
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