Labour Institutions and Labour Market Performance in Argentina · Labour institutions pursue distributive and allocative goals. In terms of the latter, free market balance is not

Labour Institutions and Labour Market Performance in Argentina

Authors:Fabio BertranouLuis Casanova


Fabio BertranouLuis Casanova

Copyright © International Labour Organization 2016First published 2016

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Translator: Jane BrodieDesign: www.thisistender.ccom

Printed in Argentina

Bertranou, Fabio; Casanova, Luis

Labour institutions and labour market performance in Argentina / Fabio Bertranou, Luis Casanova; International Labour Organization; ILO Country Office for Argentina. - Geneva: ILO, 2016

ISBN: 9789221306351; 9789221306368 (web pdf)

International Labour Organization; ILO Country Office for Argentina

labour market policy / employment creation / social protection / Argentina

13.01.2 ILO Cataloguing in Publication Data


Fabio BertranouLuis Casanova

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Table of Contents

Foreword 7

1. Introduction 9

2. Policies to Create Quality Employment: Why are Labour 12 Institutions Relevant?

3. The Macroeconomic Context, Transformations in the 17 Production Structure, and Labour Market Performance

— Macroeconomic scheme and economic growth 20

— Transformations in the production structure in the last quarter 29 of the 20th century and the early 2000s

— The evolution and structure of employment 22

4. LabourInstitutionReformsandtheirEffectsonthe 27 Labour Market

— Employment protection legislation and labour legislation 27

— Policies to stimulate labour demand by reducing employer 31 contributions to social security

— Workplace Inspection 34

— Labour Market Policies 39

— Minimum wage and collective bargaining 45

5. Social Protection of Workers in the Informal Economy 50

— Measures to extend social protection to workers in the 50 informal economy

6. SummaryandClosingReflections 54

References 57

Appendix 63

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LABOUR INSTITUTIONS AND LABOUR MARKET PERFORMANCE IN ARGENTINA

Index of ChartsChart 1 Economic context and development of employment policy: two contrasting periods before 18 and after the 2001 crisis

Chart 2 Change in labour regulations, 1991-2014 30

Chart 3 General Characteristics of Labour Market Policies 43

Chart A1. Distribution of employment by work category (employed population ages 18 to 65), 1992-2014 64

Chart A.2. Coverage of training and employment insurance and benefits delivered, 2006-2013 68

Chart A.3. Coverage of the Program for More and Better Youth Employment (PJMyMT) and benefits 69 delivered, 2008-2013

Index of GraphsGraph 1. Gross Domestic Product Growth Rate, 1991-2013 19

Graph 2. Evolution of productive linkages in Argentina by area of activity 21

Graph 3. Evolution of the Employment and Unemployment Rate, 1985-2013 23

Graph 4. Evolution of the Distribution of Employment by Type of Insertion.Argentina, 1992-2014 26

Graph 5. Agreed average rate of occupational risk insurance by number of permanent employees (May 2014) 33

Graph 6. Rate of non-registered employment (NRE), employment regularization rate, and rate 36 of non-registered salaried employment, 2005-2013

Graph 7. Evolution of the number of beneficiaries of labour market policies, average annual benefits, 1993-2013 40

Graph 8. Evolution of minimum wage in constant currency and relative to the average income of the employed 46 population, 1990-2013

Graph 9. Evolution of minimum wage, of wages in collective bargaining agreements, and of labour incomes 49 of registered and non-registered salaried employees, 2003-2013

Graph 10. Dynamic of employment and social protection programs, 2002-2014 52

Graph A.1. Evolution of (financial) surplus and current account, 2004-2013 63

Graph A.2. Evolution of amount of serious penalties as percentage of minimum monthly wage, 2000-2014 65

Graph A.3. Evolution of amount of very serious penalties as percentage of minimum monthly wage, 2000-2014 65

Graph A.4. Evolution of the number of collective bargaining agreements authorized by the Ministry of Labour, 66 Employment and Social Security, 1991-2013

Graph A.5. Ratio of minimum wage for domestic work and overall minimum wage, 1991-2013 66

Graph A.6. Non-compliance with the specific legislation on the minimum wage of domestic work, 1992-2014 67

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Foreword

In 2008, the International Labour Organization (ILO) unanimously adopted the ILO Declaration on Social Justice for a Fair Globalization, which is considered the third far-reaching declaration of principles and policies adopted by the International Labour Conference since the founding of the ILO in 1919. It is the heir to the Declaration of Philadelphia (1944) and to the ILO declaration on fundamental principles and rights at work and its follow-up (1998). The Declaration on Social Justice expresses the contemporary vision of the ILO’s mandate in the age of globalization. It institutionalizes the concept of decent work that the ILO had been developing since 1999, placing it at the center of ILO policies to reach the organization’s founding goals. That declaration reaffirms the role of employment in social development and, on that basis, asserts the need to place full and productive employment and decent work for all at the core of economic, labour, and social policy.

In Argentina, the constituents of the ILO—that is, the State, and employers and workers’ organizations—have committed to tackling the chief socio-occupational challenges facing the country by signing three decent work programs that encompass the 2004-2015 period.

In that framework, the aim of this document is twofold. First, to document the advances made in Argentina in relation to strengthening labour institutions and the impact of those institutions on labour market performance in terms of employment and the quality of jobs. To that end, we will examine the results of a series of measures undertaken by the ILO country office for Argentina during the period covered by the three decent work programs. It is our hope that this assessment will contribute to the debate on the advances that have been made towards full and productive employment and decent work for all in Argentina, as well as the challenges that remain. Second, since the role labour institutions play in labour market performance is a topic of international debate and recommendations vary from case to case, this report will attempt to provide diagnoses and empirical evidence, and to discuss lessons learned, on the impact of labour institutions and policies in the Argentine case. It is our hope to make a contribution to future international debates as part of the global agenda of the ILO Research Department.

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This report was written by Fabio Bertranou, Director of the Decent Work Technical Support Team and of the Country Office for the South Cone of Latin America, and Luis Casanova, Technical Support Officer to the Decent Work Program of the ILO country office for Argentina. Andrés Marinakis, Johanna Silvander, Kristen Sobeck, Marta Novick, Luis Beccaria, Oscar Cetrángolo, and Alejandra Beccaria made contributions and suggestions that proved valuable to this paper.

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1 Introduction

The labour market is regulated by a set of practical and political regulations that have an impact on its functioning and on every aspect of persons as workers, both within the work environment and beyond, over the course of their lifetime. Those regulations form the basis of labour institutions, both those strictly related to the labour market—such as employment protection legislation and collective bargaining—and institutions like trade unions and employer organizations. In a broader sense, they encompass as well social security and income guarantee mechanisms (Rodgers, 1994; Berg and Kucera, 2008, among others). That last point is particularly important in an economy that continues to be riddled with high rates of informal employment, where social protection plays an eminent role in bolstering welfare since access to most economic and social rights is not ensured by a combination of social security and labour laws (Bertranou et al., 2015; Beccaria and Maurizio, 2010).

Labour institutions pursue distributive and allocative goals. In terms of the latter, free market balance is not attainable due to what are called “market failures.” In terms of the former, labour institutions are an efficient mechanism for the redistribution of production between workers and employers. If labour market institutions are understood in a broader sense to include social security, they also form part of the effort to prevent unemployed workers and those who have left the labour market from facing poverty. Lastly, these institutions help to protect minority groups from possible abuses which take a toll on society as a whole (“political failures”) (Boeri and Van Ours, 2008).

Labour institutions, then, play a fundamental role in the level of employment and in its dynamics, as well as in levels of productivity, determining salaries and wages, and wage structure. Similarly, labour market dynamics affect the performance of labour market institutions, particularly in terms of compliance with labour laws and social security regulations.

Over the course of the last twenty-five years, major changes in the characteristics of the labour market and in labour and social security law have taken place in Argentina. Despite the process of formalization of employment that took place in the 2000s, employment informality has become a substantial and distinctive feature of the labour market in Argentina. The period from 1991 to 2013 witnessed four major changes in labour law: the National Employment Law and three reforms to the Labour Code. Numerous other modifications in regulations were implemented and new regimes put in place for specific segments of the labour market, such as rural workers, pursuant to a reform enacted in

INTRODUCTION


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2011, and domestic workers, pursuant to a reform enacted in 2013. Similarly, changes in social protection policy were implemented in relation to social security and to non-contributory programs.

In addition to these many reforms in labour market institutions, changes have ensued in various areas of the political economy, specifically in the design and management of a number of macroeconomic policy instruments. Underlying these reforms are different visions of the functioning of the economy in general and of the labour market in particular. The reforms to labour institutions in the nineties occurred in conjunction with reforms to other areas of the economy. They were based on the notion that a flexible labour market was necessary in order to improve competitiveness and to generate employment (Marshall, 2004). This conception was eschewed in the 2000s. The change in the orientation of some labour policies was regional in scope; intergovernmental organizations that had advocated the reforms enacted in the nineties exerted less pressure due to their results in terms of the creation of employment and its quality. It was in that framework that the creation of quality employment was restored as a priority on the public policy agenda in Argentina (Ministry of Labour, Employment and Social Security, 2010).

In the overall context described here, the aim of this country study for Argentina is to analyze the interaction between the performance of labour institutions and labour market dynamics, specifically in terms of the level and nature of employment and of salaries in the last twenty-five years. The intention is to provide a baseline from which to contribute to the debate on new and longstanding challenges faced by labour institutions in the search for full and productive employment and decent work for all.

As part of a series of studies on the global agenda of the ILO Research Department, this document also hopes to contribute to the international debate on the impact of labour institutions on labour market performance. It intends to do so by presenting diagnoses and empirical evidence and by discussing lessons learned for the Argentine case. Given the relatively low incidence of atypical forms of employment within the formal labour market, this study considers informal employment the main indicator of quality employment (Bertranou et al., 2013).

After this introduction, this document is organized as follows. The second section provides a conceptual framework for understanding the importance of labour institutions to the creation of quality employment. The third section presents a brief overview of the macroeconomic context, the main transformations in the production structure, and the evolution of some labour market indicators that show the level and quality of employment. The fourth section—which encompasses the bulk of this report—addresses the main

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changes in a wide range of labour institutions. On the basis of a review of the literature and of studies carried out by the ILO country office for Argentina, it presents empirical evidence on the role that those institutions play in labor market performance. Finally, the fifth section presents closing reflections.

INTRODUCTION

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2 Policies to Create Quality Employment: Why are Labour Institutions Relevant?

The performance of macroeconomic variables plays a key role in the evolution of employment. A fundamental aim of macroeconomic policy, in conjunction with other measures, must be producing economic growth that generates quality employment. If that is not the case, growth proves unsustainable.

Hence, the macroeconomic environment and growth strategies are basic to creating quality work insofar as “macroeconomic environment” is understood to mean the result of the effects of and the interrelationships between fiscal, monetary, and exchange policy, the domestic capital market, and the foreign capital account. All of these factors affect the speed of growth and the distribution of its fruits through their impact on the labour market and the vigor of social policies (Ffrench Davis, 2011).

The history of Latin America as a whole, and of Argentina in particular, has been characterized by macroeconomic instability and its negative effects, whether static or dynamic, on the labour market in terms of, for instance, employment level, real salaries, informal labour, and others.

The instability of the macroeconomic environment is one of the main issues to address, since it discourages the formation of capital, employment, and overall economic productivity. Unstable aggregate demand is associated with lower investment, a use of productive factors that does not meet productive capacity, and lower effective productivity. This, in turn, leads to deterioration of the labour market and more informal employment. A vicious cycle can set in insofar as aggregate demand has effects on potential output (depressed demand decreases investment incentive which, in turn, diminishes productive capacity) (Ffrench Davis, 2011; World Bank, 2013).

Another macroeconomic variable whose performance has been markedly unstable on the regional level is the real exchange rate. This variable is considered key to the evolution and diversification of exports, to the integration of national economies, and to economic growth and generating employment (Ffrench Davis, 2011; Frenkel, 2005). Through its impact on trade balance and aggregate savings, a competitive and stable real exchange rate can bolster economic growth as well as create jobs.

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According to Frenkel (2005), the transmission channels for job creation are three. First, the macroeconomic channel through which the real exchange rate increases the competitiveness. Second, the development channel, through which a high real exchange rate stimulates industrialization by promoting exports, encouraging firms to invest, and expanding production and employment. The expansion of the tradable sector generates externalities that favor the modernization and growth of other sectors of the economy. Third, the labour intensity channel, which encourages the intensive use of labour in production processes as a result of the change in relative prices; in some countries, however, the degree of substitution between productive factors may be low.

Similarly, to ensure sustainable growth with the creation of quality work in emerging economies, the production structure must be diversified. Emphasis should be placed on industrial or service sectors with added value. They can engineer technological change to increase productivity and to generate both forward and backward production linkages. In addition to a macroeconomic environment that favors sustained growth—minimal real volatility, sustainable external and fiscal accounts, and price stability, among others—to meet this goal requires sector-specific policies and institutions that support industrial and technological development, as well as public-private alliances (Salazar-Xirinachs et al., 2015; Coatz et al., 2015; Ocampo, 2014; Ffrench Davis, 2011).

Nonetheless, since economic growth does not always lead to the creation of quality employment, other policy instruments must be deployed. Due to certain characteristics of labour markets, their free functioning—that is, functioning without interference—does not yield optimal social results. Hence, labour policies and labour market policies are instruments that can be used by the State to correct market failures and to improve the welfare of workers (ILO, 2014a; Cazes and Verick, 2013; Cahuc and Zylberberg, 2004; Boeri and Van Ours, 2008; World Bank, 2013). All countries make use of such policies and institutions, though their design, enforcement, and scope vary from country to country according to level of development, labour market structure, and legal, political, and cultural factors (Cazes and Verick, 2013; World Bank, 2013).

Labour institutions are responsible for a wide range of interventions in, among other areas, labour legislation and labour market policies. Labour legislation is associated with regulations of the relationships between employers and workers pertinent to working conditions. Specifically, these policies address questions tied to rights such as employment protection, minimum wage, collective bargaining, social security, child labour laws, and other workers’ rights related to quality employment.

POLICIES TO CREATE QUALITY EMPLOYMENT: WHY ARE LABOUR INSTITUTIONS RELEVANT?


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In terms of labour market policies and their goals, two large categories can be drawn: i) passive policies that aim to relieve the risk of poverty associated with the drop in income associated with the loss of work, and ii) active policies that aim to reduce unemployment and to provide those individuals working at jobs with low levels of productivity access to more productive occupations. Such policies include employment subsidies (direct subsidies or subsidies implemented through reductions in taxes or contributions to social security), training, bolstering entrepreneurship, aid in the search for employment, and public employment programs (Samaniego, 2002; Bertranou and Paz, 2007).

Below we will briefly introduce the labour institutions discussed in this report and how they contribute to improving the quality of employment.

R Employment protection legislation Employment protection legislation refers to the regulatory framework pertinent to hires and dismissals—especially unjustified dismissals and mass layoffs—severance pay, and labour contract law. The main justification for employment protection legislation is the need to guarantee the jobs and income security of workers. Legislation of this sort, however, has additional effects, some positive and others negative, even for those whom it was designed to protect. First, stricter laws improve the outlook for stable employment by encouraging investment in human capital and, therefore, in productivity. It also helps workers adapt to technological changes and to internal mobility. Second, on the macroeconomic level, employment protection law acts to stabilize employment during economic shocks. The main argument against employment protection law is that it limits firms’ ability to act by raising labour costs and, thus, leads to lower levels of employment (Cazes and Verick, 2013; Cazes and Nesporova, 2003).

An array of studies demonstrates that the effects of employment protection law on employment can be positive or negative, albeit moderately. The nature of those impacts depends on the specific context. Studies indicate as well that the extremes of excessive legislation and of lack of legislation should be avoided (ILO, 2014b; World Bank, 2013). Evidence shows that it is possible to design legislation to protect workers that does not have an adverse effect on job creation (ILO, 2014b).

R Minimum wage and collective bargaining These two labour institutions are important to setting salaries. The minimum wage establishes a salary floor for workers with employee status that guarantees a degree of income security while also furthering two aims of labour market institutions: i) increase efficiency by remedying market failures like those resulting from monopsony and informational asymmetries that lead to adverse selection and moral hazard; and ii) reduce salary inequality mainly by increasing the incomes of less skilled workers. To

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achieve these goals, extreme caution must be taken in setting the minimum wage. Both the income required for a decent life and the question of an effective compensation structure must be taken into account. If the minimum wage is too low it is not effective, and if it is too high it can have perverse effects on the labour market such as making it more difficult for less skilled workers to find jobs in the formal economy (Boeri and Van Ours, 2008; Eyraud and Saget, 2006; Marinakis, 2006).

Collective bargaining is not only an instrument to determine compensation, but also a means to establish working conditions and to enable employers and workers to define jointly the norms that will govern their relationship. In addition to salary, the topics negotiated include working hours; overtime pay; safety, hygiene, and environmental conditions; training; and gender issues. Collective bargaining is also a means to institutionalize labour relations and to solve workplace conflicts through dialogue. In an appropriate regulatory and institutional environment, collective bargaining can have positive social and economic effects. In terms of the former, dialogue between parties is an essential part of labour agreements; it contributes to democracy, social stability, and equal treatment. In terms of the latter, on an aggregate level collective bargaining helps facilitate and balance adjustments resulting from economic reforms, changes in employment, and inflation. On a macroeconomic level, collective bargaining contributes to resolving labour conflicts and to increasing productivity. It favors investment in the development of human resources and helps a company to adapt to a more competitive environment. Furthermore, collective bargaining is a mechanism to achieve the equitable income distribution necessary to ensuring social stability (Hayter, 2011; ILO, 2009a).

RLabour market policies This set of institutions plays an important role in reducing the risk of unemployment, whether by helping unemployed workers find jobs or protecting jobs that are in jeopardy; in increasing the ability to generate income and the employability of both unemployed and employed workers; and in providing an income guarantee. By reducing costs and improving the link between supply and demand, public employment services provide assistance in the search for employment. This has important consequences for both efficiency and fairness (Cazes and Verick, 2013).

Investment in skill development makes sense for both firms and workers because it facilitates adoption of new technologies, increases levels of productivity and competitiveness, and improves the employability of workers. Notwithstanding, investment in training can, for a variety of reasons, be insufficient, which makes public intervention necessary. Difficulties establishing property rights over human capital, the mobility of workers, and financial restrictions due to which low-income workers are not

POLICIES TO CREATE QUALITY EMPLOYMENT: WHY ARE LABOUR INSTITUTIONS RELEVANT?


16

able to finance their training are among the obstacles that arise. A number of measures can be implemented to overcome these problems: scholarships to pay for workers’ training, tax credits for private companies, the creation of specific funds for vocational training, and training agreements between workers and employers (Nübler, 2008).

The justification for direct employment programs is often more linked to questions of equity and fairness than to questions of efficiency. Direct employment measures are usually undertaken in contexts where the demand for labour is shrinking and protections against unemployment and other social risks are not far-reaching. The temporary jobs offered by these programs are usually aimed at individuals with little labour market experience, at groups with labour market insertion problems, and at those who have been unemployed for a long time. These job programs attempt to provide individuals with the minimum skills needed to occupy certain jobs. According to the World Bank (2013), evidence shows that measures of this sort tend to have low impact on labour insertion once the programs have come to an end. Nonetheless, as stated above, these measures are justified, to a large degree, by concern with equity.

An alternative to public job creation programs is the indirect creation of employment by means of economic stimulus to private companies for hiring labour and for retaining workers who, were it not for the stimulus, would have been fired. Instruments of this type are often used during recessive economic cycles. They include the reduction of labour costs by means of subsidies for wages or the reduction of other, non-wage, costs. One of the main criticisms of measures like these relates to the question of efficiency. A “dead weight” could be generated by subsidizing the hiring (or retaining) of persons that would have been hired, or would not have been fired, anyway, that is, regardless of the subsidy.

In the context of the renewed debate on labour and labour market policies, a number of international studies have shown that labour institutions are important to the creation of quality work (ILO, 2014a; Cazes and Verick, 2013; World Bank, 2013; Berg and Kucera, 2008, and others). These studies warn, however, that the impact that these institutions can have on the labour market depends on their design and implementation, on how they interact with other policies, and on other variables. Their effects on the labour market, then, are largely country specific; while some lessons can be learned from international experiences, they are no substitute for debate on the country level on how to design and implement such measures in order to create decent work.

RWorkplace inspection In addition to the adequate design of labour institutions, workplace inspection is essential if they are to have the desired impact. Without it, it is impossible to ensure application of and compliance with labour laws. The purpose of workplace inspection

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is twofold. First, to ensure compliance with labour regulations and laws, mostly those related to workers’ rights. Second, to provide information, counsel, and training linked to those laws and regulations (ILO, 2011)

3 The Macroeconomic Context, Transformations in the Production Structure, and Labour Market Performance

Economic growth and changes in the production structure are two critical factors to understanding transformations in the level and composition of employment. In this section, then, we will make some general remarks on macroeconomics, transformations in the production structure, and the evolution of some labour market indicators pertinent to the level and quality of employment.

Macroeconomic scheme and economic growth After episodes of hyperinflation in 1989 and 1990, a currency exchange scheme known as “convertibility” was implemented in the early nineties as an anti-inflationary policy. That scheme pegged the Argentine peso to the US dollar at a rate of 1:1. In macroeconomic terms, that period was characterized by an appreciated real exchange rate due, partly, to inertial inflation during the first year the scheme was in effect, and by a policy of trade and financial openness. The period also witnessed other pro-market reforms in different sectors of the economy (ILO, 2009b). This model was very successful in terms of controlling inflation, which was quickly reduced to international levels. The improvement in productive performance during the first years the new model was in place did not continue, however, over the course of the decade. On the contrary, the level of activity proved highly volatile due, in part, to the inability of the exchange rate-monetary scheme to offset external shocks (Damill et al., 2011).

Between 1998 and 2000, the economy experienced a series of negative shocks due to international crises (in Russia, Brazil, and Turkey). This, along with a run on local currency that began in early 2000, led to a major economic, financial, currency, and social crisis. As a result, from 1999, when the recession began, to 2002, the GDP shrank

THE MACROECONOMIC CONTEXT, TRANSFORMATIONS IN THE PRODUCTION STRUCTURE, AND LABOUR MARKET PERFORMANCE

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by 18.4% (Graph 1). All socio-economic indicators showed a marked deterioration. Two particularly telling indicators are unemployment, which reached almost 20% of the EAP, and poverty, which reached 55%.

After the 2001 crisis, a different macroeconomic regime was adopted. This new regime entailed a managed floating exchange-monetary scheme, which registered the highest real exchange rate from 2003 to 2007 (Porta, 2015; Damill et al., 2011). Chart 1 presents the main difference between the nineties and the 2000s in terms of both economic context and economic policy.

Behind the reversal of the shrinking of the economy and its subsequent growth starting in mid-2002 lie domestic factors, like the change in relative prices due to the devaluation, the achievement of macroeconomic balance, the reduction of debt, and the implementation of high-coverage employment and social protection policies. At the same time, international conditions were very favorables during this period (increases in the prices of exports and low international interest rates), which contributed as well to the expansion of the economy (ILO, 2009b; Ministry of Labour, Employment and Social Security and ILO, 2012).

Chart 1Economic context and development of employment policy: two contrasting periods beforeand after the 2001 crisis

Source: Bertranou, Casanova, Jiménez and Jiménez (2013).

• Predominance of the Washington Consensus in the

development of public policy

• Structural adjustment

• Fixed exchange rate – convertibility with the peso pegged

to the dollar, growing debt

• Privatizations

• Deregulation

• Growth with low levels of job creation

• Flexibilization of the labour market

• Compensatory labour market policies

• Increase in informal employment and inequality

• High real exchange rate

• Increased competitiveness

• Growth with high level of job creation

• Reversal of privatizations and of deregulation

• Increase in formal employment

• Central role of labour institutions: collective bargaining,

minimum wage, workplace inspection

• Development of a network of public employment services

• Drop in inequality

• Substantial increase in tax to GDP ratio

THE 2000STHE 1990s

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Nonetheless, after the major international crisis of 2008-2009, the pillars of the new macroeconomic scheme, such as a fiscal surplus and a surplus in current accounts, were weakened. The financial results of the national public sector went from surpluses of over 1% of the GDP from 2004 to 2008 to deficits of almost 2% of the GDP in 2012 and 2013. Similarly, the current account also began to show deficits starting in 2010. Once again, both domestic and international factors are responsible for these basic macroeconomic changes whose effects have included an economic slowdown, especially since 2012. The domestic factors are, among others, a foreign exchange shortage and the effect on the real economy of some measures, such as restrictions on imports, geared to maintaining the current account surplus in the balance of payments. International factors include lower growth rates in developed countries due to the outbreak of the Eurozone crisis in 2012 and slower growth in China and in Brazil, which is one of Argentina’s most important trade partners. The combination of these factors has produced uncertainty about the future evolution of the economy, which means that investment decisions have been put off.


Graph 1Gross Domestic Product Growth Rate, 1991-2013

Source: Ministry of Economy and Public Finance; Permanent Household Survey-National Institute of Statistics and Census (EPH-INDEC, for the acronym in Spanish).

1991

1992

1993

1994

1996

1997

1998

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

9.0%

6.0%

3.0%

0.0%

-3.0%

-6.0%

-9.0%

-12.0%

GDP

GROW

TH

1999

2000

1995

2001

2002

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Transformations in the production structure in the last quarter of the 20th century and the early 2000sIn terms of the production structure, the period between the mid-seventies and the early 2000s witnessed growing fragmentation of the industrial structure, the disintegration, at the local level, of many areas of economic activity, and the destruction of institutions’ ability to act due to deregulation and the sudden imposition of free trade as well as the absence of significant industrial, scientific, and technological policies (De Miguel and Woyecheszen, 2015; Coatz and Sarabia, 2015). The production structure that emerged pursuant to this process included consolidated sectors whose survival was less dependent on the macroeconomic environment. Other sectors that faired well were those with static competitive advantages, that is, capital intensive sectors and sectors linked to natural resources (De Miguel and Woyecheszen, 2015). These structural transformations tended to increase external productivity gaps in relation to advanced countries as well as internal gaps, thus accentuating the preexisting structural heterogeneity instead of furthering the “catch up” process (Coatz and Sarabia, 2015).

In the fifties, sixties, and seventies, the growth of the Argentine economy revolved around a dynamic manufacturing industry, which led to the development of certain technological capacities and of learning processes in some areas of the economy and in some companies. This despite the fact that the local production structure was by no means adequately complex or integrated; there was still a lack of integration and linkages—both forward and backward—between productive sectors (See the “empty quadrant” in Chart 2). The change in the macroeconomic scheme and the weakening of industrial policies and institutions from the mid-seventies to the end of the nineties led to a process of deindustrialization and productive disintegration where integrated and essentially purchasing sectors lost weight, that is, they lost the ability to drag or to propel the rest of the production structure in the face of changes in demand (Graph 2). This process meant that the weight of the service sector increased in terms of the generation of added value, whereas the weight of the industrial and primary sector decreased (Coatz et al., 2015).

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While the destruction of productive and technological capability, as well as the fragmentation of different chains, encompassed all areas of the economy, it was particularly intense in important strategic segments where the need for design, engineering, and other skilled labour is great. The strategic branches of the economy most harmed were the ones that required intermediate inputs—a sector responsible for an essential part of the economy’s added value—and the machinery and equipment sectors—where manufacturing technologies are generated and determined (Coatz et al., 2015). Furthermore, this process weakened small and medium-sized enterprises (SMEs) significantly (Porta, 2015).

As we will analyze in greater depth below, the disintegration of the production structure that Argentina experienced in the last quarter of the 20th century meant structural restrictions in relation to the generation of quality employment. The destruction of links critical to the creation of quality jobs favored the “informalization” of the economy: The non-registered employment rate in the industrial sector in Argentina climbed from 17.1% in 1974 to 44.6% in 2003 (Coatz et al., 2015).

Graph 2Evolution of productive linkages in Argentina by area of activity

BASICALLY SUPPLYING SECTORS INTEGRATED SECTORS

INDEPENDENT SECTORS ESSENTIALLY PURCHASING SECTORS0.4

0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3

0.7

0.6

0.5

1.9

1.8

1.7

1.6

1.5

1.4

2.0

BACKWARD LINKAGES

FORW

ARD

LIN

KAG

ES

Note: The size of the bubble reflects the participation of the sector in the added value of the economy as a whole Source: Coatz et al. (2015).

1.31.2

1.1

MEDIAN 1973

MEDIAN 1997

MINING

SERVICE SECTOR

SERVICE SECTOR

PRIMARY SECTOR

COMMERCE

MINERY

INDUSTRY

CONSTRUCTIONCOMMERCE

PRIMARY SECTOR

GAS. ELECTRICITY AND WATER

GAS. ELECTRICITYAND WATER

INDUSTRY

CONSTRUCTION

1.0

0.9

0.8

19971973


22


After the 2001-2002 crisis, a reversal in the dynamic of the production structure set in. There was growth in different branches of the manufacturing sector, especially those that had been hit the hardest by the earlier recession, and in small and medium-sized enterprises (Porta, 2015). While its relative weight did not grow, industry, during the post-crisis period, regained some of its ability to influence the economy’s behavior and employment growth as labour intensive sectors and sectors geared to the domestic market were revitalized (Roitter et al., 2013).

Notwithstanding, the contribution of the most dynamic areas to growth has been marginal because their participation in the GDP is small, modifying, if only modestly, the structure of manufacturing industry. These changes have not yet been able to alter substantially the comparative advantage of certain sectors, foreign and domestic productivity gaps, and the degree of integration between large and small enterprises (local value chains) (Roitter et al., 2013; Abeles et al., 2013; Porta, 2015; Coatz et al., 2015; De Miguel and Woyecheszen, 2015; Coatz and Sarabia, 2015).

Despite significant recent gains, the production structure continues to show signs of fragmented industrialization due to decades of productive fragmentation and disintegration. This is why the obstacles and difficulties that have characterized the economy for decades have yet to be overcome. In other words, there are still major inter- and intra-sectoral productivity gaps and a persistent foreign currency shortage due to dependence on imports for economic growth (Coatz et al., 2015; De Miguel and Woyecheszen, 2015; Coatz and Sarabia, 2015).

The evolution and structure of employment There are some contrasts in labour market performance between the end of the 20th century and the 2000s in relation to both the level and quality of employment. These changes largely reflect variations in economic activity and in the production structure described above.

From 1985 to the early 2000s, the behavior of the employment rate was volatile, reflecting economic cycles. At the same time, the unemployment rate grew steadily throughout the period, except for in 1991 and 1997. After the currency convertibility crisis, labour market indicators began to improve after having fallen, in some cases (like unemployment and precarious employment), to the worst levels since records have been kept. The employment rate grew steadily from 2003 to 2007 and unemployment diminished. After 2009, the year when the impact of the international financial crisis was most keenly felt in the local economy, and despite the resulting slowdown in growth among some of Argentina’s most important trade partners, employment kept growing, albeit at a slower rate.

23

Graph 3Evolution of the Employment and Unemployment Rate, 1985-2013

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%80%

75%

70%

65%

60%

55%1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

UN

EMPL

OYM

ENT

RAT

E

EMPL

OYM

ENT

RAT

E

POPULATION AGES 18 TO 65. GREATER BUENOS AIRES1

Note: (1) Information is presented for Greater Buenos Aires because that is the urban area for which it is possible to construct a historical series like the one shown in the graph. Source: Own elaboration on the basis of the Permanent Household Survey (EPH, for the acronym in Spanish).

EMPLOYMENT UNEMPLOYMENT

The Argentine labour market witnessed growth in informal salaried employment during the last quarter of the 20th century, a tendency that began to turn around in the early 2000s, though the current level is still above the level at the beginning of the nineties (Bertranou and Casanova, 2013; Schleser, 2007). The formal/informal salaried employment dichotomy alone does not encompass all the aspects relevant to quality work between 1990 to the 2000s (Bertranou et al., 2014). The methodology proposed in Bertranou et al. (2014) will be used to provide a more detailed description of the employment dynamic. That methodology classifies labour insertions according to some attributes that determine quality (see Box 1).


24


Box 1Labour Insertions: Typology Used

Labour insertions can be grouped according to a series of attributes that determine the quality of the job, mainly: social security coverage, contract modality, number of hours worked (involuntary underemployment), and skill level (which is related to the degree of productivity of the task performed) in the case of informal salaried workers and independent contractors.

1. Salaried workers can be divided into: 1.1. Formal salaried workers (AF, for the acronym in Spanish): salaried workers registered in the social security system. 1.1.1. Formal salaried workers with typical contracts (AFMCT, for the acronym in Spanish): formal salaried workers whose contracts go on indefinitely. This includes voluntary part-time workers. 1.1.2. Formal salaried workers with atypical contracts (AFMCA, for the acronym in Spanish): formal salaried workers whose contracts cover a fixed period and involuntary part-time workers. For some exercises, AFs were classified by the sector or type of institution where they are employed, that is, public or private sector.

1.2. Informal salaried workers (AI, for the acronym in Spanish): salaried workers not registered in the social security system. 1.2.1. Skilled informal salaried workers (AIC, for the acronym in Spanish): informal salaried workers that perform skilled tasks. 1.2.2. Unskilled informal salaried workers (AINC, for the acronym in Spanish): informal salaried workers that perform unskilled tasks. 1.3. Domestic work (TD, for the acronym in Spanish): salaried workers that work in private homes, whether or not they are registered in the social security system..

2. Independent contractors can be distinguished between:: 2.1. Employers. 2.2. The professional self-employed: self-employed workers who perform highly skilled tasks. For this analysis, they are grouped with employers in the “self-employed professionals and employer category” (CPPyP, for the acronym in Spanish). 2.3. Non-professional self-employed workers (CPNP, for the acronym in Spanish): all other self- employed workers.

Source: Bertranou et al. (2014).

In relation to formal and informal employment, formal salaried work, not including domestic work, went from representing nearly 48% of all employment in the mid-nineties to representing 40% in 2003, due to the deterioration of the labour market from 1999 to 2002. After dropping to that minimum, the level of formal salaried employment began to grow steadily until reaching the pre-convertibility crisis levels.

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Participation of registered employment in the public sector (AFPub) grew during the convertibility crisis, mainly due to the destruction of jobs in the private sector. In 2003, the percentage of registered salaried workers in the private sector (AFPriv) represented 26% of all employed persons, a drop of six percentage points since 1998. The weight of the AFPriv increased by ten percentage points from 2003 to 2011, when it leveled off at 35% of all employed persons.

Pursuant to economic recovery and growth in private sector employment, the weight of the AFPub dropped from 2003 to 2005, when it began to grow again, increasing by nearly three percentage points to reach 16% of all employed persons in 2011.

Reforms enacted from 1995 to 1998 permitted more flexible contacts in terms of period covered (those contract modalities were ultimately eliminated). During that period, the weight of formal salaried workers with atypical contracts (AFMCA) grew. The increase in involuntary part-time employment accounts for most of the weight of atypical contracts in the period that goes from 1998 to the early 2000s. From 2002 to 2014, the participation of AFMCAs in the AFSPriv dropped from 14% to 7% (Chart A.1).

The weight of self-employed professionals and employers (CPPyP), workers largely characterized by high rates of registration in the social security system and by medium to high incomes, was relatively stable at 6-7% of all employed persons.

The weight of salaried workers not registered in the social security system, regardless of whether skilled (AIC) or unskilled (AINC), grew steadily from the mid-nineties until 2003. The participation of those workers, not including domestic workers, in the entire workforce grew from 17% to 30%. Their relative participation in employment then dropped, falling to as low as 20% in 2009 and remaining near that level in subsequent years.

Finally, the weight of non-professional self-employed workers (CPNPs) has tended to decline slightly since the 2000s, dropping from 18-19% to 16-17%. This group of workers is heterogeneous; many are not registered in the social security or tax systems (Contartese et al., 2015).

The participation of domestic workers was similarly stable (7-8% of all workers). The level of domestic workers not registered in the social security system fell, however. (This information is not presented in Graph 4; for further information, see Bertranou and Casanova, 2013).

26


Furthermore, over the course of the period, the percentage of salaried workers employed at small establishments decreased whereas the percentage working at large establishments increased. The average length of employment relationships increased, and the weight of formal salaried workers with less than one year seniority decreased (see Chart A.1 for more details).

Graph 4Evolution of the Distribution of Employment by Type of Insertion.1 Argentina, 1992-2014

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

DIST

RIBU

TION

OF

ALL

EMPL

OYM

ENT

NON-PROFESSIONAL SELF-EMPLOYED WORKERS (CPNP)

SKILLED INFORMAL SALARIED WORKERS (AIC)

REGISTERED SALARIED WORKERS IN THE PUBLIC SECTOR (AFPub) AUX 1

UNSKILLED INFORMAL SALARIED WORKERS (AINC)

SELF-EMPLOYED PROFESSIONALS AND EMPLOYERS (CPPyP)

REGISTERED SALARIED WORKERS IN THE PRIVATE SECTOR (AFPriv)

FORMAL SALARIED (AF)

Note: (1) It is not possible to break salaried employment down into the public and private sector during the 1992-1994 sub-period for the seventeen urban areas considered.Source: Own elaboration on the basis of Permanent Household Survey (EPH)-National Institute of Statistics and Census (INDEC), May 1995-2003 (EPH Puntual) and second quarter of 2004-2014 (EPH Continua).

In sum, the period after the currency convertibility crisis witnessed an increase in the level of employment and a drop in informal employment: growth in employment meant an increase in the weight of salaried employment, particularly formal salaried employed, which went from representing 40% to representing 51% of the entire workforce. Informal salaried employment dropped from 49% in 2003 to 33% in 2014. The bulk of that decrease occurred between 2003 and 2008. Without taking into account domestic work, non-registered salaried employment dropped from 41% to 28% during that period.

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4 Labour Institution Reforms and their Effects on the Labour Market

As stated in section two, labour institutions have a major impact on labour market performance. In this section, we will describe reforms to labour institutions and their functioning, as well as their impact on labour market performance, in the period that goes from the early nineties to the present.

The specific institutions analyzed in this section are: employment protection legislation; policies to stimulate demand for labour by reducing employer contributions to social security (known as “social security funding”); workplace inspection; active labour market policies; minimum wage; and collective bargaining. We will discuss as well measures that have been enacted in conjunction with labour market policies in order to extend social protection to workers in the informal economy and to their families.

Employment protection legislation and labour legislation In the nineties, in the context of a stagnant labour market, labour law reforms were implemented on the basis of the notion that greater flexibility would make the labour market more dynamic. Such reforms were geared to heightening the impact of other pro-market reforms enacted at the beginning of this period by increasing competitiveness (Heckman and Pagés, 2005).

In terms of employment protection law, these reforms were tied to factors like severance pay, trial periods, the use of temporary contracts, and the role of labour unions in companies’ decisions on the use of the workforce.

Until 1998, reforms attempted to make the labour market more flexible by sanctioning the use of new and atypical contract modalities characterized by covering fixed periods of time (as opposed to indefinite contracts). Reforms also reduced the costs associated with terminating a labour relationship and, in some cases, diminished employer contributions to social security. Implemented in 1991, the early fixed-term contract modalities were not used widely; the reforms sanctioning such contracts contained clauses limiting companies’ ability to use them (limitations related to agreements with trade unions, increases in volume of employment, requirements about mass layoffs in previous years, limits on staff ) (Salvia et al, 2000; Marshall, 2004; Hopenhayn, 2005).

28


For that reason, in 1995 new laws were passed to extend the use of temporary contracts. Specifically, small and medium-sized enterprises (SMEs) were exempt from end-of-contract payment requirements, recognition of these contract modalities in collective bargaining agreements, and the requirement that such contracts be registered with a public employment agency.

This reform brought with it more extended use of fixed-term contract modalities. During their “honeymoon period”—the second period of economic expansion under convertibility (1996 to the third quarter of 1998)—these contracts represented almost 40% of new net registered salaried employment. Fixed-term contracts came to represent as much as 8% of all registered salaried employment. During the recession and the convertibility crisis, however, employment under such modalities dropped dramatically (Bertranou et al., 2013). Empirical studies on the impact of atypical forms of employment show that they were not entirely beneficial to creating employment though they may have increased employment turnover.1

In 1998, the labour flexibilization strategy was modified. The fixed-term contract modalities created in 1991 and 1995 were eliminated and the aim of greater flexibility was pursued through changes in severance pay regulations. The amount of severance pay was reduced for workers with less than three months seniority. A stricter relationship was established between period of service and amount of severance pay in order to reduce the cost of dismissing workers with less seniority.2

Studies suggest that none of the labour flexibilization strategies adopted, not even measures that reduced employer contributions to social security, proved favorable to job creation (Cruces et al., 2010; Mondino and Montoya, 2005). In a context of high unemployment and growing informal work, production units modified their strategies for managing the volume of employment by means of the “de facto flexibilization” that informal employment implies (Bertranou et al., 2014). The aforementioned reforms may have contributed to generating a climate in which forms of precarious employment were socially acceptable if deemed necessary to getting a job.3

1. No convincing evidence was found on the relationship between flexibilization and mobility. Hopenhayn (2005) found evidence for an increase in the risk of employment termination during the first months of an employment relationship. Beccaria and Maurizio (2005), on the other hand, posit that the increases in turnover was not associated with greater flexibility, but rather with an increase in informal employment. 2. The cost of dismissals without cause dropped by approximately 50%, while the costs of layoffs due to economic reasons increased by 33% (Marshall, 2004; Beccaria and Galin, 2002).3. As Carlos Tomada, Minister of Labor, Employment, and Social Security from 2003 to 2015, has stated, in some periods of Argentine history informal employment was not seen as a problem, but rather as a solution to employment problems (Bertranou and Casanova, 2015).

29

LABOUR INSTITUTION REFORMS AND THEIR EFFECTS ON THE LABOUR MARKET

The situation changed after the economic crisis in 2002. First, dismissals without justified cause were suspended and severance pay doubled if that suspension was violated. The regulation against dismissals was extended through October 2007, though there were changes in how it was implemented. In 2004, the administration that took office in 2003 changed the Labour Code, reversing modifications related to the method for calculating severance pay and to trial periods that had been introduced in 1998 and 2000.

Furthermore, in the framework of the 2002 crisis, the Program for Productive Recovery (REPRO, for the acronym in Spanish) was created to further the Crisis Prevention Procedures put in place as a means to handle potential mass layoffs. A tool of the Ministry of Labour, REPRO offered payroll subsidies to counter an employment crisis. This program was applied with particular intensity during the international crisis of 2008-2009. It allowed firms, especially those with low job mobility, to keep workers (Castillo et al., 2012a).

30


Chart 2Change in labour regulations, 1991-2014

Source: Bertranou, Casanova, Jiménez and Jiménez (2013).

Trial period

Severance pay

Employer contributions

Short-term contracts

Other arrangements promoted

1991. New arrangements

created. Fixed-term

contracts; no employer

contributions; no severance

pay at the end of the

contract period.

1995. The arrangements

promoted are modified to

allow for greater use.

1998. The arrangements

promoted from 1991 to

1995 are no longer

permitted.

Short-term contracts:up to 5 years; with

severance pay at the

end of the contract

period (50% of the

amount for standard

contracts). Other

contract modalities:

occasional and

seasonal.

1991. Fixed-term contracts.Term: 6 to a 24 months;

severance pay at the end

of the contract period (half

a salary); employer

contributions reduced

by 50%.

1995. Flexibilization of

contracts for indeterminate

periods for small and

medium-sized companies

(SMEs).

1998. Fixed-term contracts

are no longer permitted.

33% Overall contribution were reduced over the course of

the 1990s. The average legal rate dropped almost 15

percentage points in the 1990s.

2002. Partial

recovery of employer

contributions.

23%

(approximately).

Temporary

reductions for

new hires.

One month for each

year of service or fraction

of a year greater than

3 months with no upper

limit for calculation.

Amount of severance

pay cannot be less than

2 monthly salaries.

1991. An upper limit for

calculation is established

(3 agreed on salaries with

no seniority).

1998. Severance pay for

workers with less seniority

is reduced. Notice is reduced

for worker with less than

3 months seniority.

2002. Suspension of

unjustified dismissals.

Double severance

pay (until 2007).

2004. One month

for each year of

service or fraction

of a year greater

than 3 months.

Though not explicit,

severance pay was

paid after 3 months

of employment.

1995. The figure of trial

period (3 to a 6 months)

is introduced.

2000. Extended to 12

months for small and

medium-sized enterprises

(SMEs).

Set at 3 months.

CRISIS NEW REGIME LABORREGULATION

BASELINE(1990)

INTENSE FLEXIBILIZATION MODERATE FLEXIBILIZATION

1991 AND 1995 1998 AND 2000 2002 2004

A) Linked to contracts for indefinite periods

B) Linked to contracts for fixed periods

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Finally, in terms of labour laws for specific sectors of the labour market, the regimes in place for rural and domestic workers have been changed in recent years. In terms of the former, in late 2011, a new regime called the Agricultural Work Regime was created to establish a series of rights and guarantees for rural workers that had not been in place previously. The components of the new regime include regulation of the new collective bargaining agreements; the establishment of contract modalities whereby employment contracts are permanent and continuous except when expressly stated otherwise and of the figure of a temporary contract; and improvements in relation to compensation and length of workday. In 2013, the Special Employment Contract Regime for Domestic Employees was enacted. This law defends the rights of domestic workers, affording them protections similar to those established in the General Regime (Labour Contract Law). According to this new regime, employers of domestic workers assume all the labour and social security obligations of other employers.

Policies to stimulate labour demand by reducing employer contributions to social security In both the nineties and the 2000s, modifications to employer contributions to social security were enacted, albeit by means of different modalities.

One of the measures implemented in the nineties to increase demand for labour was a general reduction in the rate of employer contributions to social security. In 1993, employer contributions were reduced by 30% to 80%, depending on the location of the production unit. Later, between 1993 and 2000, the breadth and progressivity of those reductions were modified on a number of occasions. For much of the nineties, then, the unified rate of employer contributions to social security was well under 33%, its level in 1991. The lowest average rate was reached in the year 2000, when it fell to 17.7% (Bertranou et al., 2014). This measure had no impact on the generation of registered work (Cruces et al., 2010). In fact, during that period the level of non-registered work grew steadily.

This policy was changed in 2001. On the one hand, the average rate of employer contributions to social security was raised slightly and, on the other, a reduction in contributions for employers who expanded their payroll of workers hired for an indefinite period was put into effect. These measures were implemented in a context of recession during which labour market trends were not positive.

Starting in 2002, the rates of employer contributions to benefits other than health insurance were 21% for the service sector and 17% for other employers. An additional 6% is paid to fund the health insurance of workers and their dependents. Overall rates of employer contributions are still nowhere near the rates in 1991 (33%).


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Starting in 2004, in a different macroeconomic context, a series of measures were implemented in attempts to generate formal employment by means of temporary reductions in employer contributions for new hires.

When formal employment was showing signs of significant reactivation, Law 25,877 was passed. That legislation enacted a temporary reduction in employer contributions for new hires as a means to encourage employment. The measure was focused on small and medium-sized companies, and the rate of the reduction was 33% for one year.4

In 2008, in a context where the effects of the major international crisis were beginning to make themselves felt domestically, Law N° 26,476 was passed. It further reduced contributions both in size and in duration in order to encourage registered employment. No restriction was placed on the size of companies that could benefit from the reduction (where size was measured either in terms of number of permanent employees or amount of invoicing); the reduction was set at 50% for the first year and 25% for the second. Another set of measures to protect registered employment, among them the REPRO program, was put into effect.

The temporary reduction in employer contributions established in 2008 had a major impact on the employment dynamic in 2009, when the international financial crisis hit the local economy the hardest. It is estimated that the loss of formal employment would have been twice as high if that program had not been implemented (100,000 jobs were lost whereas estimates suggest that 200,000 would have been lost). The turnover rate increased at beneficiary companies because the rate of new hires was much higher than the rate of terminations due to the positive effect of the measure. The companies that most benefited from this policy were those with high rates of labour mobility, that is, those where employment is less stable (Castillo et al., 2012b).

Finally, pursuant to assessments of the policy described above and in the context of a relatively stagnant labour market after the worsening of the international crisis and a less dynamic local economy in general starting in 2012, the policy of reduced employer contributions to social security was modified. In 2014, in the framework of the Law for the Promotion of Registered Work and the Prevention of Labour Fraud, the Permanent Regime of Social Security Contributions for Micro-Employers was created. It established a permanent reduction of 50% in employer contributions to social security for micro-employers. Similarly, a limit was placed on how much occupational risk insurers (ARTs,

4. A study carried out for Santa Fe province shows that this policy had greater impact on micro-companies (those with one to five workers) and small companies (those with six to twenty-five workers) than on larger companies. This was particularly true in the industrial manufacturing, construction, and commerce sectors.

33


for the acronym in Spanish) can charge employers. The average ART payment grows exponentially the fewer employers a company has (firms with five employees or less pay 70% to 80% more per employee than those with 50 to 100 employees, see Graph 5). The aforementioned law would benefit almost 75% of micro-employers in the commerce sector and 85% of micro-employers in the industrial manufacturing sector (Casanova et al., 2015).

5. For companies with fifteen workers or less, the reduction is 100% for the first year after the hire of each worker with an indefinite contract and 75% for the second year. Companies with sixteen to eighty workers receive a 50% reduction during the first two years after hire for each new employee with an indefinite contract. None of these reductions apply to employer contributions to health insurance.

Graph 5Agreed average rate of occupational risk insurance by number of permanent employees (May 2014)

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 100

FIRM SIZE

AGRE

ED R

ATE

Source: Casanova et al. (2015).

At the same time, the regimes of temporary reductions to social security were changed to focus on small and medium-sized companies; the reduction was progressive according to firm size5 (Casanova et al., 2015). The regime for the promotion of new hires is compatible with the Permanent Regime of Social Security Contributions for Micro-Employers. These modifications attempted to reinforce previous measures’ ability

34


to generate employment and to minimize possible substitution effects and excessive fiscal costs. In relation to Law 26,476 for the Promotion of Registered Employment, it has been observed that, although in 2009 the greatest percentage of workers hired according to that modality were employed by large companies, it has had the greatest impact on smaller firms since they tend to have higher rates of labour mobility (Castillo et al., 2012a; Castillo et al., 2012b). The aforementioned measures attempted to correct those imbalances.

The impact of these two new regimes will depend on a series of factors exogenous to the norm that regulates them: in macroeconomic terms, the level of economic activity and, in microeconomic terms, the development of the production structure and of productivity. Endogenous factors are at work as well, specifically those associated with the ability to minimize the unwanted effects of these actions such as the substitution effect mentioned above and a certain “fiscal dwarfism” in the form of tax avoidance and evasion (Casanova et al., 2015).

Workplace Inspection In Argentina, workplace inspection falls under the domain of provincial governments. Notwithstanding, provincial governments cannot monitor compliance with social security contributions or with worker registration in the social security system. When problems of this sort are detected, they can notify the national government.6

During the nineties, indicators of detection of noncompliance with labour laws grew while the resources allocated to inspection tended to decline (Ronconi, 2010). This, along with the high levels of informal employment registered in the early 2000s in the wake of the convertibility crisis, led the national government to design and implement new measures to strengthen workplace inspection and, hence, to detect, and ultimately formalize, non-registered employment. In this framework, the National Job Regularization Program (PNRT, for the acronym in Spanish) was implemented in 2003.

In 2004, with the passing of Law 25,877 to reorganize the labour code, the System for Workplace Inspection and Social Security was created. The Ministry of Labour, Employment and Social Security (MTEySS) was designated responsible for enforcing

6. For a more detailed historical account of modifications in the domains for workplace inspection, see the Ministry of Labor, Employment and Social Security (2013).

35


this law in the style of the central authority described in ILO Convention No. 81.7 The aims of the regulation included remedying the difficulties resulting from a federal workplace inspection system and coordinating the efforts of other nationwide authorities operative in the area of workplace inspection such as the Federal Tax Administration (AFIP, for the acronym in Spanish), the Superintendence on Occupational Risk (SRT, for the acronym in Spanish), the Statistics and Registration Institute of the Construction Industry (IERIC, for the acronym in Spanish), and the Registry of Agricultural Workers and Employers (RENATEA, for the acronym in Spanish). As part of this institutional strengthening, the Under-Secretariat of Labour Relations and of Social Security and the National Inspection Bureau were created. These agencies work in conjunction with the National Federal Relations Office, which is in charge of coordinating the inspection actions carried out by Ministry of Labour, Employment and Social Security offices throughout the country (Tomada, 2007).8

In addition to these institutional reforms, processes were modified and resources allocated to inspection bolstered. Coordination efforts were intensified through the formulation of recommendations and through improvement plans as well as complementary inspection measures when deemed necessary due to high rates of noncompliance. All of this was carried out with the necessary involvement of the Federal Labour Council. Furthermore, the number of Ministry of Labour, Employment and Social Security inspectors went from forty to 450. Inspectors are now better qualified as well; they have been trained, for instance, to inform employers of the new benefits and penalties established in Law 26.940 (Tomada, 2007; Ministry of Labour, Employment and Social Security, 2013). New technologies have been incorporated, from new management applications to the creation of the Digital Labour Register, which makes it possible to find out the registration status of workers at the time of inspection by means of an online connection to social security databanks.

With the launching of the PNRT, not only did the number of inspections increase, but some management indicators improved as well. There was a steady increase in the rate of detection of non-registered employment, reaching the level of the non-registered employment rate

7. This law defines an authority shared by the provinces and the national government. It holds that when any of the local inspection agencies that forms part of the system fails to comply with the terms of ILO Conventions 81 and 129, the Ministry of Labor, Employment and Social Security will authorize the Federal Labor Council to intervene to perform, along with the Ministry itself and the provincial jurisdictions, those actions that the provincial agencies failed to perform or performed inadequately (Ministry of Labor, Employment and Social Security, 2013).8. By way of an example, in the province of Santa Fe, the process of strengthening inspection included: i) the creation of the Provincial Office of Workplace Inspection; ii) the release of a new Procedure Manual; iii) the writing of an Ethics Code; iv) the strengthening of human resources with efforts to professionalize and to expand staff, among other things; v) improved physical resources (for instance, premises) and technology (Muruaga et al., 2015).

36


starting in 2011. This increase can be explained by more targeted inspections since the early years of the PNRT provided experience for future planning (Ministry of Labour, Employment and Social Security, 2013). The employment regularization rate increased by almost fifteen percentage points from 2005 to 2013 (Graph 6).

Graph 6Rate of non-registered employment (NRE),1 employment regularization rate,2 and rate of non-registered salaried employment,3 2005-2013

0%

10%

5%

15%

20%

25%

30%

35%

40%

45%

50%

2005

2006

2007

2008

2009

2010

2011

2012

2013

Notes: (1) This refers to the ratio of workers who, at the time of inspection, did not have an active social security code as compared to the total number of workers covered by the inspection. (2) This refers to the percentage of workers who, at the time of inspection, did not have an active social security code but who, pursuant to the inspection and before a hearing, were enrolled in the system. (3) The rate of non-registered salaried employment reflects an average of the quarterly rates.Source: Own elaboration on the basis of Ministry of Labour, Employment and Social Security and Permanent Household Survey data.

RATE OF REGULARIZATIONOF NRE

RATE OF DETECTIONOF NRE

RATE OF NON-REGISTERED SALARIEDEMPLOYMENT

Both detection and regularization rates vary between sectors. The former is considerably higher than the average rate (which stands at 32%) in the agricultural, livestock, silviculture, and fishing sectors (51%) and substantially lower than the average in the financial intermediary, corporate services, and communications sectors (21%). The detection rate is closer to the average in the other areas of economic activity. It is below average in the manufacturing industry and commerce sectors and above average in the construction and transportation sectors. The highest rate of regularization in 2013 occurred in the hotel and restaurant branches (55%), while the lowest rate was in the mining and quarry branches (16%).

37


In November 2014, the Regime for the Sanction of Labour Infractions, including the Federal Labour Agreement, was adjusted. The amount of penalties was increased to strengthen the dissuasive component of inspection (that is, to induce compliance) and to further penalize violators. While the nominal values of penalties had remained unchanged since 2000, their relative value had dropped, that is, their value in relation to, for instance, minimum wage. (See Graphs A.2 and A.3) The reform pegged penalties to minimum wage, which meant an automatic adjustment whenever that variable changed. Thus, penalties for serious and very serious infractions, categories that include the failure to register workers in the social security system, rose. Penalties for “serious infractions” went from somewhere between 8 and 30% to somewhere between 30% to 152% of the minimum monthly salary and for “very serious infractions” from somewhere between 30 and 200% to somewhere between 50 to 2000% (Graphs A.2 and A.3).

In conjunction with the PNRT, a number of measures geared to facilitating the work of inspectors and to simplifying the paperwork to enroll workers in the social security system have been put into effect. Outstanding among these measures is the Program for the Simplification of Employment Registration, which establishes a new scheme for registration that entails a single procedure, thus making it easier to enroll workers, to identify employers, and to audit compliance with the regulations in place. Similarly, progress has been made towards the simplification of processes for employee registration and for compliance with tax obligations by means of online platforms.

In addition, awareness campaigns in the mass media provide information about the benefits of complying with labour, tax, and social security laws. Instruments have also been developed that allow workers to monitor their social security contributions and wage levels.

Another outstanding measure was the creation of the Registry of Agricultural Workers and Employers under the auspices of the Ministry of Labour. This instrument is geared to inspecting working conditions in rural settings. Other social actors also became involved in collaborating with the detection of non-registered work. The Statistics and Registration Institute of the Construction Industry began participating in inspection operatives in the construction sector.

In 2014, the Law for the Promotion of Registered Employment and Labour Fraud Prevention was enacted. This law included some specific measures geared to strengthening inspection, whether in relation to detection and regularization or to dissuasion. Through the Ministry of Labour, Employment and Social Security, that law bolsters the role the national government plays in workplace inspection. Under the

38


auspices of the Ministry of Labour, Employment and Social Security, the law created the Special Inspection Unit to detect non-registered labour (UEFTI, for the acronym in Spanish) in order to improve the results of workplace inspection in those sectors of the economy that are particularly difficult to reach. In terms of dissuasion, the law created as well the Public Register of Employers with Labour Sanctions (REPSAL, for the acronym in Spanish), whose aim is to expose employers that do not comply with labour laws and regulations. The REPSAL publishes the sanctions enacted for failure to enroll as an employer and to register workers in social security and for obstruction of workplace inspection; sentences delivered at hearings for employer failure to recognize an employment relationship; sanctions for violation of child and adolescent labour laws; and sentences delivered for violation of the Law for the Prevention and Punishment of Human Trafficking and Assistance to Victims. Employers who appear in the REPSAL are not only exposed before the public, but also subject to a series of penalties that affect their commercial operations. They do not have access to lines of credit from public banks, for instance, or to benefit programs implemented or funded by the national government (Casanova et al., 2015).

The 2000s also witnessed changes to tax administration and policy in order to encourage the formalization of employment. The social security regime for domestic workers was modified in order to bring in more workers.9 Until 2013, the Special Social Security Regime for Domestic Employees encompassed only those workers that worked six or more hours per week. In late 2005, employers of domestic workers were given the opportunity to deduct what they had paid as employers’ contribution to the Special Social Security Regime for Domestic Employees from their income tax base. A measure was also taken whereby the total amount paid to domestic employees for services rendered could be deducted from gross taxable income for the fiscal year (an amount determined by the Federal Tax Administration). As a result of these measures, the number of workers registered in social security according to the terms established by the special regime for domestic workers rose from 58,000 in 2004 to 427,000 in 2013, while the rate of non-registered salaried employment in that sector dropped from 95% to 77%.

In order to increase the impact of inspection in terms of monitoring and dissuasion, the Federal Tax Administration began to implement the Minimum Number of Workers Indicator (IMT, for the acronym in Spanish). This is a parameter to determine the number of workers solicited in a certain period to perform a certain activity. The IMT is applied to a range of activities, such as construction, some branches of industry (textile, for

9. This is included in the new Special Employment Contract Regime for Domestic Employees established in 2013 by Law 26,844.

39


instance), commerce (supermarkets with a surface area of up to 200 m2), services (tourism, call centers, and others), some primary activities, and domestic work.

Furthermore, starting in April 2013 as an extension of the “presumption of employment relationship” mechanism that the IMT established, the Federal Tax Administration dictated a norm whereby, barring proof to the contrary, all persons with high incomes or wealth are assumed to have a domestic employee.

In addition, starting in 2008 the Joint Trade Union-Employer Agreements (CCG, for the acronym in Spanish) were implemented to encourage formalization of work in the rural sector. These agreements, which are signed by workers’ associations (trade unions) and rural producers, allow the employer to replace monthly social security contributions with deferred payments, known as a “substitute tax,” to be paid at the most favorable moment in the production process. In addition to the organizations of workers and employees mentioned above, the Ministry of Labour and the Federal Tax Administration are also involved in the implementation of this mechanism. The Law for the Promotion of Registered Employment and Labour Fraud Prevention passed in 2014 foresees extending the CCGs to other branches of the economy with similar characteristics pursuant to prior authorization from the Social Security Bureau, the Secretary of Economic Policy and Planning for Development, and the Federal Tax Administration (Bertranou et al., 2014).

Labour Market Policies10

The nineties witnessed a major advance in relation to labour market policies which were institutionalized in the National Employment Act (LNE, for the acronym in Spanish) of 1991.11 Nonetheless, during that period, labour market policies largely revolved around low-coverage temporary employment programs that aimed to address unemployment envisioned as a passing phenomenon resulting from structural reforms. Workers covered by those programs, it was believed, would find a place in the labour market pursuant to economic growth.

The National Employment Act created unemployment insurance for registered salaried workers with employee status in the private sector. From the onset, that scheme was characterized by low coverage, mainly due to the fact that only a small percentage of unemployed persons had previously held registered salaried jobs and, furthermore,

10. This section is based on Bertranou et al. (2014) and Bertranou (2013).11. Before that act, there are few precedents for labor market policies in the country. One is the unemployment insurance for construction workers enacted in 1967 by Law 17,258, and other temporary regulations and measures enacted in the eighties (Law 22,752/1983, Decree 3,984/1984, Decree 2,485/1986, Decree 2,533/1986, Decree 2,228/1987, and Decree 209/1989) that were designed to provide temporary unemployment subsidies (Chebez and Salvia, 2001).

40


many of those that had did not have much seniority at the time of termination (Bertranou and Paz, 2007).

While the coverage of these labour market policies was low at the beginning of the nineties, it expanded in the second half of that decade with the implementation of Plan Trabajar [a job creation plan] and with the allocation of funds so that provincial governments could design their own employment programs. These allocations were necessary due to the low coverage of national policies (Vezza, 2014).

Graph 7Evolution of the number of beneficiaries of labour market policies, average annual benefits, 1993-2013

2,500,000

2,000,000

1,500,000

1,000,000

500,000

0

PJyJHD

SCyE PIST JMyMT

OTHER NATIONAL EMPLOYMENT PROGRAMS (2)

UNEMPLOYMENT INSURANCE

TRAINING AND SECONDCHANCE EDUCATION PROGRAMS

TOTAL EMPLOYMENT PROGRAMS (1)

Note: (1) This does not include other measures like vocational orientation services and temporary reductions to employer contributions to social security. Source: Bertranou et al. (2014).

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

During the 2000s, the change in focus in labour policies ensued alongside a change in approach to employment policies. The implementation in 2002 of the Unemployed Heads of Household Plan (PJyJHD, for the acronym in Spanish) was a turning point in this process. The plan was designed to alleviate the effects of the convertibility crisis. By 2003, this program covered almost two million individuals (Graph 7). In this context, the Ministry of Labour, Employment and Social Security once again became a major player in the design and implementation of employment policy.

41


The PJyJHD was designed to confront a profound social and economic crisis; most of the beneficiaries were single mothers with very low educational levels. A high percentage of the beneficiaries were able to perform the activities stipulated in exchange for the benefit, mostly community service. As the economy recovered, many of the program’s beneficiaries, especially men and those with previous formal employment experience, were able to transition into formal employment (Ministry of Labour, Employment and Social Security, 2004). From 2003 to 2009, almost 670,000 of some two million beneficiaries were able to find a formal job. This dynamic was driven as well by significant economic growth from 2003 to 2008 (Graph 1).

In late 2003, as the economy began to recover, the Ministry of Labour, Employment and Social Security modified the strategy underlying employment policies. The focus was now on improving the employability of unemployed workers and of workers in the informal economy. The comprehensive “More and Better” work program was put into effect in conjunction with two complementary initiatives: the Network of Employment Services and the Continuous Training Network. Starting in 2005, in a context of high job creation, the PJyJHD was reformulated. Those beneficiaries who had not found a formal job were incorporated into the Plan Familias [Families Plan], a social promotion program, or the Training and Employment Insurance program (SCyE, for the acronym in Spanish), an active labour market policy.

Through the Municipal Employment Offices (OMEs, for the acronym in Spanish), the Network of Employment Services provides beneficiaries of employment programs with assistance in the areas of training and vocational orientation. It provides services in the realms of vocational orientation, job hunting, labour mediation, and basic and vocational training to the general population as well. There are approximately five hundred OMEs around the country. From 2006 to 2011, the number of individuals who received services at those offices grew steadily, climbing from around 38,000 to 620,000. In 2012, that figure diminished slightly to 550,000 (Secretariat of Employment information). The Continuous Training Network develops programs and actions geared to finishing school, vocational training, and certification of work skills. Many of these programs are associated or coordinated with other active employment policies. The number of individuals participating in measures geared to finishing school and vocational training has increased steadily, climbing from 50,000 in 2004 to 300,000 in 2010 and then to nearly 400,000 by 2013.12

12. See Bertranou (2013) for further information on these two pillars of active labor market policies.

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Created in 2008, the Training and Employment Insurance (SCyE) program provides beneficiaries with an income guarantee and the opportunity to participate in a series of actions to improve employability (Chart 3). From the time of its creation until mid-2014, almost 510,000 individuals participated in the SCyE. Of that number, almost 70,000 went on to find a formal job. In the early years of the program, the areas of finishing school and vocational training encompassed the bulk of services provided. In more recent years, though, the importance of training for work in social organizations has grown (Chart A.2).

Starting in 2009, specific programs aimed at highly vulnerable groups became more important: the Program for More and Better Youth Employment (PJMyMT, for the acronym in Spanish) is geared to youth, and the Social Income with Work Program - Argentina Works (PIST, for the acronym in Spanish) program, which is run by the Ministry of Social Development, is geared to workers in the social economy. Both programs provide a battery of services to improve employability while also containing a cash-transfer component (Chart 3).

In 2014, to bolster measures targeted to youth, the Program to Support Students of Argentina (PROGRESAR, for the acronym in Spanish) was created. Almost 500,000 individuals have participated in that program, which provides a cash-transfer and a series of benefits to improve employability, such as finishing school and vocational training. Further measures include employment opportunities like internships and payroll subsidies to employers that hire youths participating in the program. The services geared to workers in the social economy provide beneficiaries with economic assistance, social security coverage (through what is called the “monotributo social”13), and the opportunity to participate in training programs (Chart 3).

As mentioned before, the coverage of measures geared to maintaining private-sector employment expanded in the wake of the international financial crisis of 2009. Specifically, the Program for Productive Recovery (REPRO, for the acronym in Spanish) provides a payroll subsidy to companies in crisis. In 2009, REPRO covered as many as 140,000 workers at 2,700 firms. This program was closely linked to the Crisis Prevention Procedure (PPC, for the acronym in Spanish), an instrument that mandates negotiation and agreements between parties, with the mediation of the State, should companies decide to reduce personnel.

13. Those enrolled in this category receive a partial subsidy for health insurance (50% of the amount for the standard—that is, non-social—“monotributo” category) and a total subsidy for pensions contributions.

43


Chart 3General Characteristics of Labour Market Policies MONTHLY BENEFITS AS OF DECEMBER 2014

Source: Own elaboration.

TARGET POPULATION

BASICBENEFIT

MON

ETAR

Y SU

PPOR

TBE

NEF

ITS

OTH

ER S

OCIA

L PR

OTEC

TION

SYS

TEM

BEN

EFIT

S

COMPLEMEN-TARY COMPONENTS (EG: INCENTIVES)

Nature of vulnerability: labor market and income.Age: 18 to 24.

$600 for actions geared to education and finishing school.$2000 for job training actions $2500-1500 (according to the size of the company) PIL -PIL, Program to support formal labour insertions.

Nature of vulnerability: unemployed young people that have not finished grade school or high school.Age: 18 to 24.

$450 (vocational training, finishing school, others), 2 to 4 months.$225 support for job searchup to 6 months.$2000 job training actions.$2500-1500 (according to the size of the company) PIL Program.

Completion of formal studies: $2000.Vocational training courses: up to $900.

Supplement of $225 for participation in training actions and actions for finishing school, and other incentive allocations.

$300 for productivity.$250 for daily attendance of program activities.

EMPLOYMENT Aid for labor insertion through, for instance, payroll subsidies.

Aid for labor insertion through, for instance, payroll subsidies.

Aid for labor insertion through, for instance, payroll subsidies.

Direct employment.

SCHOOL COMPLETION

VOCATIONAL TRAINING

Yes.Yes. Yes. Yes.

Yes.Yes. Yes. Yes.

FAMILYALLOWANCE

HEATH INSURANCE

AUH (since March 2014).AUH. AUH (since March 2014). AUH.

No, except for beneficiaries of: job training: Yes (12.6% of all benefits rendered in 2013)PIL Program: Yes (0.6% of allbenefits rendered in 2013).

No, except for beneficiaries of job training or PIL Program.

No, except for beneficiaries of: job training: Yes (60.4% of all benefits rendered in 2013)PIL Program: Yes (3.6% of allbenefits rendered in 2013).

Yes (Monotributo social).

$225 for the first 18 months and $200 for the last 6 months.$2000 job training actions.$2500-1500 (according to the size of the company) PIL Program.

$1200.

Nature of vulnerability: labor market.Age: 18 or over (those between 18 and 25 must have completed high school).

Nature of vulnerability: income.Age: 18 or over.

CHARACTERISTICS

PROGRAM

SPECIFICALLY FOR YOUNG PEOPLE

PROGRESAR JMyMT SCyE PIST - ARGENTINA TRABAJA

BROADER TARGET POPULATION

SOCIALSECURITY

No, except for beneficiaries of PIL or job training actions.

No, except for beneficiaries of PIL Program or job trainingactions.

Period of participation considered for the calculation of contributing years. (PIL Program or job training contribution on the basis of salary).

Yes (Monotributo social).

OCCUPATIONALRISK INSURANCE (ART) (FOR THE EMPLOYED)

Job training: Yes (12.6% of all benefits rendered in 2013).PIL Program: Yes (0.6% of all benefits rendered in 2013).

Job training: Yes.PIL Program: Yes.

Job training: Yes (60.4% ofall benefits rendered in 2013).PIL Program: Yes (3.6% of all benefits rendered in 2013).

LRT full-time workers with employee status. Resolution 4664/13 of the INAES (insurance is the responsibility of the cooperative).

CHILDCARE Child Development Centers.

44


The empirical evidence available on the impact of these active labour market policies shows that they improve the likelihood of finding a formal job. Castillo et al. (2014) find that sector-specific training courses increase likelihood of finding a formal salaried job by an average of three percentage points. They also increase the average length of employment relationships. Impact assessments show that courses given in the metallurgic and metal mechanical, software, construction, and auto mechanic sectors increased the likelihood of finding a formal job. The largest impact (+ 7 percentage points) was found in the first of those sectors.

Castillo and Ohaco (2015) found that the Labour Insertion Program (PIL, for the acronym in Spanish) has had a positive impact. That program provides production units with economic incentives for new hires. The impact of the Work Training Actions, a program that provides an economic incentive to firms for undertaking job training and mentoring programs, was also found to be positive. The PIL increased the likelihood of finding a formal job by forty-five percentage points, and the Work Training Actions by thirteen. Both of those programs, however, are small scale.

The PJMyMT gives many young people who dropped out of school a chance to finish their formal education thanks to a cash-transfer component that allows them to concentrate on their studies and, hence, diminish their likelihood of working at an informal job (Mazorra et al., 2014). Due to the considerable educational deficits of the overwhelming majority of the young people who participate in employment programs, the focus of such programs is finishing school (Chart A.3). As Bertranou and Casanova (2015) point out, the challenge faced by youth-oriented employment policies is to expand the coverage of internships and assisted job placement in order to strengthen the tie between young people and formal employment. Actual work experiences of that sort have significant positive impact on future employment trajectories.

The impact of some subnational employment programs also appears to be positive. The First Step Program in the province of Córdoba offers young people with no significant work experience the opportunity to participate in on-the-job training and provides employers with a payroll subsidy. The program significantly increases the likelihood that participants find a formal job (Berniell, 2015). Another program that has yielded favorable results is the Envión Program in the province of Buenos Aires. By means of a combination of cash transfers and incentives to return to school, the school attendance rate of young people who had dropped out has improved (Díaz Langou et al., 2014).

45


Minimum wage and collective bargainingThe national minimum wage in Argentina is set by the tripartite Board of Employment, Productivity and Minimum, Vital and Mobile Salary. This minimum wage does not apply to rural or domestic workers for whom there is another set of regulations, although the new Regime for Agricultural Work establishes that minimum remuneration for agricultural workers cannot be less than the minimum, vital and mobile salary. In terms of public sector workers, the minimum wage applies only to workers employed by the National Public Administration and by other agencies in which the national government is the employer. In other words, it does not apply to workers employed by provincial and municipal governments and their agencies.

During the second half of the seventies and much of the eighties, minimum wages were not established pursuant to a tripartite process. In 1988, the Board of the Minimum, Vital and Mobile Salary was revitalized and, in 1991, it underwent some modifications (Marshall and Perelman, 2004).

The contrasting evolution of the minimum wage in the last two decades can be summed up as follows: in the nineties, the minimum wage was relatively low and, in the 2000s, relatively high (Graph 8). After an increase of the minimum wage in September 1990 pursuant to significant deterioration in its level as a result of episodes of hyperinflation in 1989 and the early nineties, its nominal level remained unchanged until 1993, even though the inflation at the end of 1990 and in 1991 (an inertial inflation after the enactment of the Convertibility Law) had meant a 46% drop in minimum wage between 1990 and 1992 (Graph 8).

From 1993 to December 2003, the minimum wage remained stable in nominal terms and, until 2001, relatively stable in real terms as well. With the devaluation of the peso and the rise in prices, the minimum wage deteriorated in 2002. Starting in December 2003, however, it began to grow in real terms. Indeed, by 2006 its real value had reached twice the level it had maintained for much of the nineties. Since then, the level of minimum wage has been relatively stable, increasingly slightly until 2011 and declining slightly in 2012 and 2013 (Graph 8).

The increase of the minimum wage in the 2000s was due to the revitalization of the Board of the Minimum, Vital, and Mobile Salary in 2004, as well as other measures undertaken by the national government, such as lump sum increases and modifications to the labour code that encouraged periodic and tripartite debate on minimum wage in Argentina.

46


From 1953, when the first law on collective bargaining was passed, until 1988, bargaining between workers and employers was only possible during relatively short periods (1953-1955; 1960-1966; and in 1975), that is, a total of only eleven years in the period. This period was characterized by public administration or control of wages; there were few cases of company-level negotiation. Since 1988, however, collective bargaining has taken place without interruption, though its main characteristics were different in the nineties and in the 2000s (Marshall, 2013).

After a long period of stagnation, collective bargaining, like the minimum wage, was revitalized in the 2000s. Whereas during the nineties the number of collective bargaining agreements reached annually at the company or sector level was around two hundred, after 2004 that figure began to grow exponentially, reaching over two thousand in 2010

Graph 8Evolution of minimum wage in constant currency and relative to the average income of the employed population,1 1990-2013 2

120

110

100

90

80

70

60

50

40

30

20

80%

70%

60%

50%

40%

30%

20%

10%

0%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Notes: (1) Two indicators were used to measure minimum wage relative to labour incomes: a) in relation to the average wage of formal salaried workers, and b) in relation to the average labour income of the entire employed population (formal and informal salaried workers and the self-employed). Greater Buenos Aires was the area considered. (2) December of each year. To deflate nominal values, information from the National Institute of Statistics and Census (INDEC), the Center for the Study of Argentinean Development (CENDA, for the acronym in Spanish), and provincial statistical agencies was used.Source: Casanova et al. (2015) on the basis of data from the Permanent Household Survey.

INDE

X 20

13=

100

% SALARY / %

LABOR INCOM

E

INDEX 2013=100

% LABOR INCOME - ALL EMPLOYED

% SALARY - FORMAL SALARIED WORKERS

% SALARY - SALARIED WORKERS NOT INCLUDING DOMESTIC WORKERS

47


(a level that has remained unchanged in subsequent years) (Graph A.2). Similarly, from 2004 to 2013 the personnel encompassed by agreements authorized by the Ministry of Labour, Employment and Social Security grew by 250%.

One of the factors that favored collective bargaining in the 2000s was the enactment, in 2004, of the Law of Labour Regulation (Law 25,877). That law granted upper level negotiation precedence over lower level negotiation. Another factor was the policy to raise the minimum wage periodically. Changes in the macroeconomic and institutional context were similarly crucial. In the nineties, labour unions were reluctant to engage in negotiations due to an unfavorable economic and institutional climate; it was preferred to preserve the terms of agreements reached in other periods which, pursuant to ultra-activity,14 remained in effect (Palomino and Trajtemberg, 2006).15 Furthermore, after a long period of nominal stability under convertibility (except for an episode of inflation in 2002), inflation was once again a factor, particularly after 2007. This meant that the main point of reference for trade unions engaged in negotiations was variation in price level, a factor that rendered salary negotiation more frequent (yearly) (Marshall, 2013).

Over 90% of workers covered by collective bargaining agreements are covered by agreements negotiated at the level of sector or economic activity, that is, agreements that encompass many firms. Agreements of this sort tend to reduce salary dispersion (Etchemendy, 2011). It is estimated that some 83% of all workers with employee status in the private sector are covered by collective bargaining agreements. The wages of agricultural workers, teachers and professors at private schools, and domestic workers (who represent almost 9% of all salaried workers in the private sector) are determined by other mechanisms. A portion of registered salaried private-sector workers are not covered by agreements. These workers negotiate their compensation on an individual basis. The bulk of them hold professional or management positions at large companies (such workers represent almost 7% of all registered private-sector workers) (Palomino and Trajtenberg, 2012; Ministry of Labour, Employment and Social Security, 2006).

14. This is the principle by which the terms of collective bargaining agreements remain in effect even after the period covered by the agreement has come to an end. It was abolished by the 2000 labor reform but then reinstated by a law enacted in 2004.15. In the early nineties, labor policies that tended to support the negotiation of salary increases were based solely on increases in productivity. The decentralization of collective bargaining on wages was encouraged. For a more extensive historical perspective of collective bargaining and of modifications in the laws governing it, see Beccaria and Galin (2002), and Marshall and Perelman (2004).

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In the 2000s, and through 2012 if not longer, the legal statutory minimum wage, minimum wages determined by collective bargaining agreements, and the average conformed wage16 pursuant to collective bargaining grew at a rate greater than inflation as measured by different baskets. Similarly, due to the increase in the coverage of collective bargaining and the reversal of the tendency to establish the terms of labour relations on an individual basis, the gap between wages set in agreements and wages actually paid has diminished, illustrating that collective bargain has in fact become a key component to determining wages (Ministry of Labour, Employment and Social Security, 2010; Etchemendy, 2011).

The State, through social dialogue, came to play a central role in the coordination of collective bargaining, orchestrating the demands of different negotiating parties by means of a pattern-bargaining approach to wage increases (Trajtemberg et al., 2009). The impact of that reference pattern increased from 2006 to 2008, when the truckers’ union was able to negotiate a pattern that was then followed by a number of other trade unions (Etchemendy, 2011; Palomino and Trajtemberg, 2006). As Marshall has observed (2013), this period witnessed a resurgence of imitative practices that were altered as new union leaders emerged.

In the post-2000 period, there have been two distinct phases in the evolution of the minimum wage and of wages pursuant to collective bargaining agreements. From 2004 to 2007, minimum wage grew at a higher rate than wages in collective bargaining agreements, whereas from 2007 onwards the growth of the latter outpaced the growth of the former. In the first period, the average real wages of registered and non-registered salaried workers grew at a slower pace than the minimum wage and wages determined by collective bargaining. Later, the rate of the increase in all these wages was similar (Graph 9).

In terms of wages set in the most important sectoral agreements from 2002 to 2006, the wages of workers in the lowest categories grew at a greater rate than the average conformed wage pursuant to collective bargaining due largely to decrees establishing wage hikes issued in 2002 and 2003. Starting in 2006, the difference in variations between the minimum wage established in collective bargaining agreements and the average wages established in those agreements shrank as did salary dispersion between sectors (Casanova and Alejo, 2015).

16. This consists of basic wages, stipulated bonuses, and increases pursuant to decrees issued by the executive branch when they were not calculated as part of the wages set in collective bargaining agreements or covered by other wage hikes.

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The dynamics of annual wage negotiations indicate a relationship between increases in minimum wage and wages hikes established pursuant to collective bargaining. Specifically, the adjustment to minimum wage takes places after most of the major collective bargaining agreements have been reached; its level is below the wages of the lowest category in most of the major agreements, that is, the agreements that cover the largest number of workers (Casanova and Alejo, 2015).

In terms of salary dispersion, a number of studies indicate that the minimum wage and collective bargaining have contributed to diminishing inequality in labour income through, on the one hand, increases in minimum salaries in collective bargaining agreements and, on the other, changes in pay scale, which modify the compensation received by skilled and unskilled workers. Similarly, policies to formalize employment have allowed labour institutions like collective bargaining and minimum wage to reach more workers (Maurizio, 2013; Maurizio and Vázquez, 2013; Ronconi, 2013; Marshall, 2013; Groisman, 2012; Trajtemberg, 2011; Casanova and Alejo, 2015; Casanova et al., 2015).

Graph 9Evolution of minimum wage, of wages in collective bargaining agreements, and of labour incomes of registered and non-registered salaried workers,1 2003-20132

(REAL VARIATION. PRIVATE SECTOR NOT INCLUDING DOMESTIC WORKERS OR THE AGRICULTURAL, LIVESTOCK AND FISHING SECTORS)

50%

40%

30%

20%

10%

0%

-10%

Notes: An interval that ranges from the 25th to the 75th percentile is presented along with the median accumulated increase in the average conformed wage in collective bargaining agreements. (1) The evolution of the wages of registered and of non-registered salaried workers is provided by the Permanent Household Survey (EPH). (2) Data is for December of each year, except for the labour incomes of registered and of non-registered salaried workers, which are from the fourth quarter.Source: Own elaboration on the basis of Bertranou and Casanova (2013).

2004-2003 2005-2004

MINIMUM WAGE

REGISTERED SALARIED WORKERS

AVERAGE CONFORMED WAGE PURSUANT TO COLLECTIVE BARGAINING (MEDIAN)

2006-2005 2007-2006 2008-2007 2009-2008 2010-2009 2011-2010 2012-2011 2013-2012

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5 Social Protection of Workers in the Informal EconomyInformal employment, unremunerated work performed in family settings and, in some cases, self-employment diminish the scope of a number of the labour institutions discussed above. Their impact on these segments of the labour market is more limited, which makes it difficult to improve the working conditions of these workers. For that reason, it is essential that labour institutions and policies exist alongside social protection policies that increase the welfare of the population in transition to formal employment. Thus, an overview of the major changes that have taken place in social protection, both in social security and in non-contributory programs, is presented in order to complement the above analysis of labour institutions. We will also discuss how social protection interacts with some of the institutions and policies discussed above.

Measures to extend social protection to workers in the informal economy Since the vision of how to provide social protection to unemployed workers and to workers in the informal economy has varied in tandem with the two notions of how the labour market functions that predominated in each of the sub-periods in the last twenty-five years, and due to the overlap between social protection policy, on the one hand, and labour and labour market policy, on the other (Bertranou and Paz, 2007; Bertranou et al., 2014; Bertranou et al., 2015), it is impossible to describe social protection policies geared to unemployed workers and workers in the informal economy without considering as well labour market policies.

During the nineties and early 2000s, the primary instruments to provide social protection to unemployed workers and to workers in the informal economy were labour market policies. This was because there were almost no non-contributory programs and the coverage of those few that did exist (for instance, non-contributory disability pensions) was low. In the 2000s, the approach to employment policies changed for two reasons: first, new visions on an international level that upheld the importance of providing a degree of economic security to the unemployed; second, the focus on the creation of quality employment on the local economic policy agenda (Bertranou et al., 2014; Ministry of Labour, Employment and Social Security, 2010).

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As mentioned in the previous section, with the onset of the convertibility crisis in the early 2000s, the coverage of emergency programs grew; most of those programs were geared to poverty relief (of all such programs, the Unemployed Heads of Household Program (PJyJHD) was the one with greatest coverage). “Passive” labour market policies were restructured to augment the employability of unemployed workers and workers in the informal economy and to attend to the needs of the most vulnerable populations. The Plan Familias (PF, for the acronym in Spanish) was created for the working-age sector of the population that, for a variety of reasons, was not able to participate in the labour market and that lived in households where no member held a formal job. This program provided an income guarantee to households with children and adolescents where the family income was less than the monthly minimum salary and who were not beneficiaries of another social program. In 2009, the Universal Child Allowance (AUH, for the acronym in Spanish) was created. This program extended the family allowance for child under the age of eighteen and for child with a disability to workers outside the formal economy and to formal domestic workers and to those enrolled in the “Monotributo social” program. It also stipulated a pregnancy allowance. The overlap between some of the programs already in place, such as the aforementioned PF and PJyJHD, and the AUH was inevitable due to the eligibility requirements of the AUH. Some of those older programs (like the PJyJHD) were eliminated, others (like the PF) were reformulated, and the beneficiaries of still others17 were transferred to the new program. This meant that a large number of programs and measures aimed at providing benefits to households with children under the age of eighteen, with disabled children, and with a pregnant mother were brought together in a single program (Bertranou, 2010). Graph 10 sums up the transformations in social protection programs.

SOCIAL PROTECTION OF WORKERS IN THE INFORMAL ECONOMY

17. This was the case for, for instance, the Community Employment Program, the Youth with More and Better Work Program (JMyMT, for the acronym in Spanish), and the Training and Employment Insurance (SCyE, for the acronym in Spanish).

52


Graph 10 Dynamic of employment and social protection programs, 2002-2014

Source: Bertranou et al. (2015).

COMMUNITY EMPLOYMENT PROGRAM (PEC)250,000BENEFICIARIES

FAMILIES FOR SOCIALINCLUSION (PFIS)

PROEMPLEAR

UNIVERSAL CHILDALLOWANCE

ARGENTINA WORKS

250FAMILIES

UNEMPLOYED HEADS OF HOUSEHOLD PROGRAM (PJyJHD)

TRAINING AND EMPLOYMENT INSURANCE (SCyE)

PRODUCTION RECOVERY PROGRAM (REPRO)

2 MILLONBENEFICIARIES

640,000 BENEFICIARIES

LABOUR MARKET



2 MILLION FAMILIES(3,5 MILLION

CHILDREN AGES 0 - 8)

2002CRISIS

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

PROGRAMS CREATED DURING THE 2002 CRISIS

PROGRAMS CREATED TO CONSOLIDATE SOCIAL PROTECTION EXTENSION

PROGRAMS CREATED IMMEDIATELY AFTER THE 2002 CRISIS

150,000BENEFICIARIES

700,000 FAMILIES(2 MILLION CHILDREN

- AGES 0 - 19)

YOUTH WITH MORE AND BETTER WORK (PJMyMT)

PROGRESAR

AVG - IDH

6,5 MILLION FORMALSALARIED EMPLYMENT

- PRIVATE SECTOR -

3,5 MILLION FORMALSALARIED EMPLYMENT

- PRIVATE SECTOR -

With the implementation of the Families Plan, first, and the AUH, later, the coverage of cash-transfer programs to households with children and adolescents increased from around 40% in the late nineties to around 68% in 2008. It climbed further in 2009, reaching 80% (Ministry of Labour, Employment and Social Security, 2010; Bertranou and Casanova, 2012). The AUH meant not only an expansion in horizontal coverage but in vertical coverage, that is, benefit amount, as well (Bertranou et al., 2014; Bertranou et al., 2015). In 2011,18 coverage was around 75%; the reason coverage is not universal is that there are children and adolescents whose parents are excluded from the norm (13%) or who are not covered by it (12%) (Ministry of Labour, Employment and Social Security, 2014).

18. The most recent data available on the coverage of all income-guarantee programs for children and adolescents.

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The AUH has had considerable impact on poverty and even greater impact on indigence (Bertranou, 2010). Almost 75% of the minors covered by the AUH are in the first and second income quintile; the benefit represents 12% of total family income for those in the first quintile (Ministry of Labour, Employment and Social Security, 2014). Thus, since the aim of the program was to provide income insurance, it can be considered a success; it has had a major impact.

The policy has had second-order impacts as well related to its cash-transfer component and to the requirements for receiving the benefit. Children and adolescent AUH beneficiaries are required to attend school and to receive certain health care monitoring. In terms of the health care, after the implementation of the AUH the number of children enrolled in the SUMAR Program22 grew by 50% and the number of pregnant women by 14% (Bertranou et al., 2015). In terms of schooling, Jiménez and Jiménez (2015) found evidence that the AUH has reduced the school drop out rate among young people ages sixteen and seventeen, that is, the group with the highest drop out rate. Hence, the AUH appears to have a positive impact on factors related to preventing the transmission of poverty from one generation to the next. Regarding the potential impact of the AUH on the labour market, studies by Maurizio and Vázquez (2014) and by Bustos and Villafañe (2011) show that the program did not produce adverse incentive effects on workforce participation. Garganta and Gasparini (2012), though, indicate that the AUH might have a negative effect on the transition from informal and self-employment to formal registered employment. While the AUH is by no means the main obstacle to formalization, in certain segments, like temporary agricultural work and domestic work, a not insignificant percentage of workers fears that they will lose the benefit should they formalize their labour relationship; this fear is based on lack of knowledge of the details of participation requirements. It is likely, however, that that misinformation will be corrected—and its results disappear—thanks to the extension of the program (Bertranou et al., 2014).

The recent extension of social protection has included other benefits as well. In terms of health care, the Argentine system is based on a public system to which all inhabitants of the country, regardless of whether they have social security health coverage through their jobs or contract a private carrier, have a right. Notwithstanding, the coverage of the public system was expanded through the Sumar Program (formerly Nacer Plan).

Similarly, non-contributory pensions (NCPs) for disability and for mothers with seven or more children were expanded. The coverage of the pension system was also expanded by means of moratoriums. The number of beneficiaries of NCPs grew from almost 350,000 to 1.4 million from 2000 to 2013, and pension coverage climbed from 70% to 91% during the same period (Bertranou et al., 2014; Bertranou et al., 2015).


54


6 Summary and Closing ReflectionsThe behavior of the labour market varied greatly from the nineties to the 2000s. In the second half of the nineties in particular, unemployment grew and the quality of employment deteriorated due to an increase in both informal employment and precarious employment in the formal sector. In the wake of the socio-economic crisis at the beginning of the century, labour market indicators improved: the unemployment rate dropped and formal salaried employment expanded. Since 2009, though, a number of labour indicators have leveled off. They did not, however, deteriorate as they had in other similarly volatile economic contexts.

Labour market performance has been tied to macroeconomic performance, to changes in the production structure, and to labour institutions and their functioning. Those institutions have, in turn, demonstrated a degree of endogeneity in relation to changes in macroeconomic models and economic circumstances.

As stated above, both economic growth and transformation in the production structure are fundamental to fomenting quality employment. Macroeconomic as well as sectoral policies, then, have played an important role as pillars of the process of employment formalization that took place in Argentina pursuant to the convertibility crisis.

Notwithstanding, labour market institutions and policies have also played an important role in labour market performance. While labour institutions were not excluded from discussions on policies to promote employment in the 1990s and 2000s, for much of the last quarter of the 20th century they were considered part of the problem, rather than part of the solution, to employment issues. Although some progress was made in the nineties, it was quickly offset by the visions prevalent at the time on how some labour institutions should be designed and adapted to an environment now characterized by globalization and, in the second half of the decade, by a series of contagion effects of international crises. In the 2000s, institutions involved in setting wages and the administration of labour were revitalized; other institutions, like active labour market policies, were strengthened (the design, funding, implementation, and coverage of such policies varied substantially in the brief period that spans from their creation to the early 2000s); other institutions were redesigned, as were the contents of some labour laws and policies, to promote formal employment. These measures contributed to improving the quality of employment.

55

After a process of steady growth in formal employment from 2003 and 2008 which, as indicated above, coincided with a period of economic growth, with the transformation of some links in the production structure, with the reversal of some tendencies towards the broadening of structural heterogeneity, and with the revitalization of labour institutions, some labour market indicators have ceased to show the improvements observed year after year during that earlier period. This coincides with a period during which, due to factors both external and internal to the economy, economic activity growth rates have dropped and become more volatile and divergent between sectors. Despite some changes in the production structure, the knock-on effect of the sectors capable of generating quality jobs is limited. Similarly, a shortage of foreign currency, which is nothing new in Argentine history, has stifled growth in some emerging sectors (Coatz et al., 2015; De Miguel and Woyecheszen, 2015).

To achieve further advances in the formalization of the economy and the struggle against informal employment and other impediments to quality employment, it is essential to resume steady economic growth, to stimulate activities capable of generating a transformation in the production and occupational structure in the medium term (such as strengthening production linkages, learning processes, and technological innovation), and to reexamine labour institutions to strengthen their functioning and to increase their impact on the labour market.

There are challenges to making further progress on the basis of existing achievements in the strengthening of labour institutions and in improvement in the quality of work in terms of formalization.19 While workplace inspection has contributed significantly to formalization, it is important to enhance the detection of non-enrollment of workers in the social security system. It is equally important, however, to detect other infractions of labour laws connected to, among other things, length of workday, overtime pay, and non-compliance with terms of collective bargaining agreements in relation to wages and working conditions. It is also important to encourage greater and more systematic use of the State’s various sources of information in order to support inspection and to assess the impact of labour market policies. This will improve inspection planning, especially in relation to labour fraud (in the case, for instance, of full-time workers who are declared as part-time, non-compliance with minimum wage requirements, and the fraudulent use of independent contractors). It will also increase the scope and further the impact of labour institutions and policies in specific segments of the labour market where some current measures have come against obstacles.


19. These last paragraphs present a summary of the debate that took place at the tripartite roundtable “Achievements and Challenges for Labor Formalization: A Future Vision.”

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In terms of labour and employment policies, it is important to follow up, monitor, and assess the battery of measures implemented in 2014 pursuant to the Law for the Promotion of Registered Employment and Labour Fraud Prevention, which was geared to reducing informal employment—an issue that, despite considerable progress, continues to affect a large percentage of the employed population. It is similarly vital to address the heterogeneity of the production structure in terms of sector, territory, and value chains, in order to generate conditions that favor productive development, decent work, and fairness.

Lastly, it is essential to continue to strengthen cooperation and coordination between the various institutions of the central government, and also different levels of government (and between the different institutions operating in the three levels of government). This will facilitate the communication of measures taken, streamlining procedures conducive to the formalization of the economy, and the creation of a true culture of work. The impact of efforts along these lines will be particularly great in segments of the labour market where measures undertaken by the three levels of government are crucial (segments like domestic work performed in private homes, construction, commerce, and rural labour).

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Appendix

Graph A.1Evolution of (financial) surplus and current account, 2004-2013

IN PERCENTAGE OF GDP (BASELINE YEAR 2004)

Source: Own elaboration on the basis of the National Institute of Statistics and Census (INDEC).

4%

3%

2%

1%

0%

-1%

-2%

-3%2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

CURRENT ACCOUNT (BP) CAPITAL AND FINANCIAL ACCOUNT (BP) FISCAL RESULT

63

64

Chart A.1Distribution of employment by work category (employed population ages 18 to 65), 1992-2014

Note: (1) The series is presented from 2003 onwards because, pursuant to methodological changes in the EPH Continua, or ongoing household survey, domestic labour came to be considered employment with employee status. Previously, some domestic employment was classified as self-employed and some as salaried employment.Source: Own elaboration on the basis of Permanent Household Survey data.

FORMAL SALARIED

WORKER

(NOT INCLUDING

DOMESTIC

WORKERS)

YEARSCATEGORY SUB-CATEGORY

1992 1993 1995 1998 2002 2003 2008 2014

URBAN AREAS

Type of firm

Private

Public

Contract modality

Typical (formal salaried workers with typical contracts (AFMCT)

Atypical (formal salaried workers

with atypical contacts (AFMCA)

Seniority

Less than 1 year

1 to 5 years

Over 5 years

Firm size

Small

Medium

Large

All (% of employed)

-

-

-

-

17%

30%

53%

16%

52%

33%

49%

INFORMAL

SALARIED WORKERS

(NOT INCLUDING

DOMESTIC

WORKERS)

DOMESTIC

WORKERS

Non-reg. salaried employment1

All (% of employed) 8%

INDEPENDENT

CONTRACTORS

ALL EMPLOYED

Skill level

Self-employed professionals and employers (CPPyP)

Non-professional self-employedworkers (CPNP)

All (% of employed)

26%

26%

74%

26%

100%

27%

27%

73%

28%

100%

29%

29%

71%

25%

100%

27%

27%

73%

25%

100%

22%

22%

78%

26%

100%

27%

23%

77%

25%

100%

28%

28%

72%

23%

100%

23%

23%

77%

22%

100%

8% 8% 7% 8%

95%

7%

86%

8%

79%

7%

-

-

70%

30%

52%

33%

14%

54%

40%

7%

17%

94%

6%

68%

32%

52%

33%

15%

54%

39%

7%

17%

90%

10%

67%

33%

58%

29%

13%

49%

42%

9%

21%

85%

15%

62%

38%

52%

32%

16%

54%

39%

7%

22%

72%

28%

63%

37%

63%

25%

13%

46%

48%

7%

28%

91%

9%

66%

34%

42%

39%

19%

56%

37%

6%

21%

92%

8%

68%

32%

38%

39%

23%

56%

36%

8%

19%

-

-

-

-

19%

32%

50%

13%

56%

32%

47%

71%

29%

89%

11%

17%

36%

47%

15%

55%

30%

50%

69%

31%

88%

12%

18%

32%

50%

12%

57%

31%

47%

65%

35%

86%

14%

10%

34%

56%

13%

57%

30%

45%

65%

35%

88%

12%

12%

33%

55%

13%

59%

28%

40%

72%

28%

94%

6%

14%

34%

53%

12%

54%

34%

49%

69%

31%

93%

7%

10%

31%

59%

11%

50%

39%

51%

Type of firm

Private

Public

Skill level

Skilled (skilled informal salaried workers)

Unskilled (unskilled informal salaried workers)

Seniority

Less than 1 year

1 to 5 years

Over 5 years

Firm size

Small

Medium

Large

All (% of employed)

-

-

69%

31%

53%

30%

17%

61%

34%

4%

17%

65

Graph A.2Evolution of amount of serious penalties as percentage of minimum monthly salary, 2000-2014

IN DECEMBER OF EACH YEAR

Source: Regulation in effect.

600%

500%

400%

300%

200%

100%

0%2004 2005200220012000 2003 2006 2007 2008 2009 2010 2011 2012 2013 2014

Graph A.3Evolution of amount of very serious penalties as percentage of minimum monthly salary, 2000-2014

IN DECEMBER OF EACH YEAR

Source: Regulation in effect.

3000%

2500%

2000%

1500%

1000%

500%

0%2004 2005200220012000 2003 2006 2007 2008 2009 2010 2011 2012 2013 2014

APPENDIX

66

Graph A.4Evolution of the number of collective bargaining agreements authorized by the Ministry of Labour, Employment and Social Security, 1991-2013

Source: Ministry of Labour, Employment and Social Security.

2500

2000

1500

1000

500

0

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

FIRM ACTIVITY BRANCH

Graph A.5Ratio of minimum wage for domestic work1 and overall minimum wage, 1991-2013

Note: (1) Based on the minimum wage of the fifth category, that is, personnel with retirement that works eight hours per day.Source: Own elaboration on the basis of the regulation in effect.

1.80

1.60

1.40

1.20

1.00

0.80

0.60

0.40

0.20

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013


67

Graph A.6Non-compliance with the specific legislation on the minimum wage of domestic work, 1992-2014

Source: Own elaboration on the basis of Permanent Household Survey data.

NON-COMPLIANCE - MW FOR DOMESTIC WORKERS NON COMPLIANCE - NATIONAL MW

1.80

1.60

1.40

1.20

1.00

0.80

0.60

0.40

0.20

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

APPENDIX

68

Chart A.2Coverage of training and employment insurance and benefits delivered, 2006-2013

Source: Own elaboration on the basis of Ministry of Labour, Employment and Social Security.

YEARS

2006 2007 2008 2009 2010 2011 2012 2013

53.8%

36.4%

0.0%

0.0%

0.0%

0.0%

0.0%

8.6%

0.3%

8.3%

0.0%

0.8%

0.0%

0.0%

0.0%

0.0%

0.0%

0.4%

100%

4,742

4,652

33.7%

28.6%

11.5%

0.2%

8.3%

0.0%

3.1%

6.8%

0.4%

6.0%

0.4%

17.0%

0.0%

0.0%

0.0%

0.0%

0.2%

2.0%

100%

32,436

30,925

26.9%

19.0%

10.6%

0.2%

6.5%

0.0%

3.9%

8.1%

0.4%

7.1%

0.6%

30.4%

0.1%

0.0%

0.0%

0.0%

0.0%

4.8%

100%

42,179

39,317

15.4%

17.5%

18.0%

0.1%

13.5%

0.0%

4.4%

7.1%

0.1%

6.8%

0.3%

34.1%

3.0%

0.0%

0.0%

0.0%

0.1%

4.8%

100%

54,865

52,565

7.4%

14.0%

16.4%

0.4%

10.4%

1.3%

4.3%

8.2%

0.1%

8.0%

0.1%

16.7%

3.0%

2.4%

0.7%

27.9%

0.3%

2.9%

100%

78,065

71,389

2.3%

7.7%

24.0%

0.2%

8.7%

11.9%

1.8%

5.5%

0.2%

5.3%

0.0%

4.7%

1.0%

5.6%

2.6%

45.4%

0.1%

1.0%

100%

150,043

121,680

1.7%

6.1%

34.4%

6.1%

6.3%

22.2%

0.2%

2.8%

0.6%

2.1%

0.0%

2.6%

0.3%

9.6%

2.3%

38.8%

0.2%

1.3%

100%

138,931

89,860

1.8%

6.5%

58.8%

9.1%

9.3%

40.6%

0.0%

3.5%

1.5%

2.0%

0.0%

3.6%

0.0%

7.8%

2.3%

14.1%

0.1%

1.7%

100%

77,709

75,557

Improvements to Employability

Finishing school

Vocational training

Job training

Private sector

Public sector

Social organizations

Local public works

Assisted labor insertion

Labor Insertion Program (PIL)

Private sector

Public sector

Local public works

Individual and associative prod. enterprises

Others

Job orientation

Job Orientation Workshops (TOL, for the acronym in Spanish)

Management training courses

Face-to-face orientation at employment offices

Others

Special Regime for Domestic Work

Total benefits in the year (distribution %)

Total benefits in the year (number)

Total beneficiaries covered in the year

TYPE OF BENEFIT


69

Chart A.3Coverage of the Program for More and Better Youth Employment (PJMyMT) and benefits delivered, 2008-2013

Source: Own elaboration on the basis of Ministry of Labour, Employment and Social Security.

2008 2009 2010 2011 2012 2013

6.3%

0.7%

1.1%

1.1%

0.0%

0.0%

0.0%

0.3%

0.0%

74.1%

0.0%

0.0%

0.0%

0.0%

0.0%

17.6%

0.0%

100.0%

9,526

12,514

34.1%

6.8%

1.1%

0.7%

0.4%

0.0%

0.0%

0.1%

0.1%

40.5%

2.7%

1.1%

0.0%

0.0%

1.1%

12.4%

0.0%

100.0%

75,229

143,772

34.7%

6.2%

3.4%

1.4%

1.7%

0.3%

0.0%

0.1%

0.2%

29.6%

7.5%

0.7%

0.1%

0.0%

3.4%

13.4%

0.6%

100.0%

124,686

202,363

44.3%

5.6%

3.6%

1.3%

1.9%

0.1%

0.3%

0.3%

0.3%

27.7%

7.6%

0.8%

0.0%

0.2%

0.8%

3.9%

5.0%

100.0%

317,497

500,188

32.5%

4.9%

6.7%

2.1%

2.7%

0.0%

2.0%

0.4%

0.4%

22.8%

9.9%

0.8%

0.8%

0.0%

0.5%

5.6%

14.6%

100.0%

286,455

454,134

22.9%

6.8%

12.6%

2.9%

4.4%

0.0%

5.5%

0.6%

0.4%

30.7%

4.5%

1.4%

0.9%

0.2%

0.5%

0.2%

18.2%

100.0%

259,699

408,336

Improvements to Employability

Finishing school

Vocational training

Job training

Private sector

Public sector

Local public works

Social organizations

Assisted labor insertion

Labor Insertion Program (PIL)

Individual and associative prod. enterprises

Job orientation

Orientation and Introduction to the World of Work (POI, for the acronym in Spanish)

Employability and social integration assistance

Management training courses

Job club

Work skills

Educational orientation and building citizenship

Assistance in job search

Orientation at an employment office (attending 2 appointments during the month)

Total benefits

Total young people covered in the year

Total benefits in the year

YEARSTYPE OF BENEFIT

APPENDIX

ISBN: 9789221306368

Labour Institutions and Labour Market Performance in Argentina · Labour institutions pursue distributive and allocative goals. In terms of the latter, free market balance is not

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