Download A FEW THOUGHTS ON ECONOMIC POLICIES AND EMPLOYMENT

A FEW THOUGHTS ON
ECONOMIC POLICIES
AND EMPLOYMENT
RENATO BAUMANN
4 REASONS FOR CONCERN
ABOUT GROWTH AND
EQUITY
1) Reducing inequality is a pre-condition for
achieving sustainable economic growth
(ECLAC)
2) UN Millenium Goal – commitment to
reduce extreme poverty level to half its
share of the total population as observed in
1990
4 REASONS FOR CONCERN
ABOUT GROWTH AND
EQUITY (cont.)
3) Efforts to improve equity should concentrate
on fighting poverty and inequality among
generations (ECLAC)
4) Efforts therefore should concentrate on the 4
main channels for transmitting inequality:
education, employment, wealth distribution
and demographic growth (ECLAC)
CHALLENGES
A) New labor relations in the globalized world
impose new features to employment and wage
policies, demanding higher mobility and
qualification of workers
B) ECLAC estimates that equilibrium in the labor
market requires a sustained annual GDP growth
rate of 4% for the region as a whole. A 6% GDP
growth rate would be required to additionally
close the ´technological gap` in relation to
OECD countries
BUT
ECONOMIC GROWTH IS NOT
SUFFICIENT TO GRANT
EQUALITY: THERE IS A NEED
FOR POLICIES THAT
PROVIDE CONVERGENCE
BETWEEN LABOR SUPPLY
AND DEMAND
TYPES OF LABOR
POLICIES
MINIMUM WAGE
• Minimum wage policies are required to
compensate for the asymmetries in the
negotiating power of the various groups of
workers
• But their (potentially) negative impacts on
the demand for labor and the incentive for
informal jobs must be reduced
POLICIES FOR
UNEMPLOYED WORKERS
• Governments must provide mechanisms to fight
the vulnerability resulting from periods of high
unemployment
• Common measures are unemployment insurance,
emergency programs, special training programs
and basic social protection
AVOID SHORTSIGHTED
APPROACHES
Efforts must be made to help unemployed
people in the long run, via special training
programs or incentives to firms that offer
´on the job training`
FIGHT LABOR MARKET
SEGMENTATION
• There should be free access to the labor market,
ending market segmentation and eliminating
barriers to specific groups
• It is essential to have programs to improve the
qualification and easiness of access by young
workers
• Special programs should be created for groups that
are largely excluded from the market, such as
ethnic minorities
LABOR HIRING
FLEXIBILITY
• It is needed to facilitate adjustments to constantly
changing technologies, as well as to meet the
needs of restructuring productive sectors
• But is not sufficient to reverse the effects of
macroeconomic policies on the labor market, as
they might worsen the quality of jobs
DEVELOPING
PROTECTION SCHEMES
• More flexible hiring systems must be
accompanied by protection schemes
• There is a need of agreement among employers
and workers, so as to provide alternative types of
hiring flexibility and to stimulate the adaptation to
technological changes and to business cycles
MORE IS NEEDED
Output growth and adequate labor policies might not
be sufficient to fight poverty
It is essential to know and to adapt the institutions,
the regulation and the practices in the three basic
markets that affect the poor: a) the labor market,
b) the capital market and c) the market for the
commercialization of their production