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LBC 105 OK.Indd Regulation, Worker Protection and Active Labour-Market Policies in Latin America Jürgen Weller Editor Economic Commission for Latin America and the Caribbean (ECLAC) Santiago, Chile, December 2009 Libros de la CEPAL 105 Alicia Bárcena Executive Secretary Antonio Prado Deputy Executive Secretary Osvaldo Kacef Director of the Economic Development Division Susana Malchik Officer-in-Charge Documents and Publications Division Cover design: José Domingo Arrieta United Nations Publication ISBN: 978-92-1-121717-9 LC/G.2416-P Sales No. E.09.II.G.139 Copyright © United Nations, December 2009. All rights reserved Printed in United Nations, Santiago, Chile Applications for the right to reproduce this work are welcomed and should be sent to the Secretary of the Publications Board, United Nations Headquarters, New York, N.Y. 10017, United States. Member States and the governmental institutions may reproduce this work without prior authorization, but are requested to mention the source and inform the United Nations of such reproduction. Regulation, Worker Protection and Active Labour-Market Policies in Latin America 3 Contents Foreword ..................................................................................................11 Chapter I The improvement of labour-market institutions in Latin America: progress and challenges ......................................................................... 15 A. The global economy and labour-market challenges ..............15 B. Labour markets in Latin America and the Caribbean: current situation and trends ....................................................17 C. Labour-market institutions ......................................................23 D. Labour-market regulation ........................................................28 E. Unemployment protection .......................................................32 F. Active labour-market policies ..................................................35 1. Direct and indirect generation of wage employment ..... 35 2. Training ............................................................................... 37 3. Employment services ......................................................... 39 4. Support for self-employment and micro-enterprise ........ 39 G. Flexicurity and lifelong learning .............................................40 1. Flexible labour market ....................................................... 41 2. Social security ..................................................................... 42 3. Active labour-market policies ........................................... 42 H. Flexicurity and the challenges facing the Latin America and the Caribbean region ......................................................... 46 1. Active labour-market policies ........................................... 49 2. Protecting the unemployed ............................................... 51 3. Labour-market regulation ................................................. 52 4 ECLAC I. Improving labour institutions: some strategic considerations ...........................................................................57 Chapter II The Danish “flexicurity” system and the relevant lessons for Latin America .................................................................................... 63 A. Diverse government approaches to adaptation .....................63 B. Institutional pillars of the Danish flexicurity system .............66 C. The Danish flexicurity system in operation ............................ 69 D. Active labour-market policy and lifelong learning strategies .....................................................................73 E. Dysfunctional elements within the Danish flexicurity system .....................................................................80 F. Policy lessons to be learned .....................................................82 G. The relevance for Latin American countries ........................... 85 Chapter III Labour flexibility and worker security: an Argentine perspective ........................................................................ 89 Introduction ...................................................................................... 89 A. The employment situation and the normative framework of individual working relations ........................... 90 B. Collective labour relations ........................................................93 C. On the (in)effectiveness of labour rules .................................. 94 1. Inefficacy and “in black” work ..........................................94 2. Inspection of labour ........................................................... 95 D. Social security ............................................................................96 1. Health-care coverage ..........................................................96 (a) The social works regime ..............................................96 2. Unemployment coverage ...................................................96 3. Work and family: labour rules and social security .......... 97 E. Labour-market policies .............................................................98 F. The position of the stakeholders ............................................ 101 G. Conclusions .............................................................................102 1. Prior considerations .........................................................102 2. Worker security in Argentina .......................................... 104 (a) Employment security and registration .................... 104 (b) Security of income and health coverage .................. 105 (c) Professional training ..................................................106 (d) Work and family obligations ................................... 107 3. Labour flexibility ..............................................................107 Regulation, Worker Protection and Active Labour-Market Policies in Latin America 5 4. Internal flexicurity ............................................................108 5. External flexicurity ...........................................................109 (a) Severance indemnization ..........................................109 (b) A severance benefit? ...................................................110 Chapter IV Flexibility and security in the labour market: improving social protection for Brazilian workers .................................................111 Introduction .....................................................................................111 A. Regulation of labour relations: implications for flexibility in the Brazilian labour market and social protection for workers ...................................................112 B. The system for protecting unemployed workers ...................115 1. The trend and size of unemployment insurance in Brazil ..............................................................................116 2. A summary of the distortions and shortcomings of UI in Brazil ....................................................................118 3. Brief history of FGTS as a system for compensating workers who are laid off ...................................................119 4. The main FGTS statistics ...................................................119 5. Access for unemployed workers to the health sector and Previdência Social ............................................ 120 C. Active labour-market policies in Brazil: history, scale and balance ..............................................................................121 1. History of active labour-market policies in Brazil ........121 2. The trend of ALMP expenditure in Brazil ...................... 124 3. A balance sheet of ALMPs in Brazil ............................... 125 D. The attitude of the main Brazilian social actors towards the need for reforms in labour relations and social security ..........................................................................128 1. The attitude of workers towards labour and union reforms .................................................................. 128 2. The attitude of employers towards labour and union reforms .................................................................. 130 3. The Federal Government and labour and union reforms .................................................................. 132 4. Social actors and efforts to implement a public employment service in Brazil ......................................... 133 E. The scope and limitations of the flexicurity model, in terms of strengthening the labour market and expanding protection for workers in Brazil ......................... 134 6 ECLAC 1. The need for reforms towards flexicurity aimed at social inclusion ............................................................. 135 (a) Reforms in the labour and union areas .................... 135 (b) The changes needed in active policies ..................... 136 2. Obstacles, difficulties and bottlenecks for reforms to strengthen the labour market and expand social protection ..............................................................137 (a) Lack of official leadership and little political will to impose a model leading to change ............... 138 (b) The interests of social actors in relation to the changes are highly antagonistic ................................138 (c) Incipient development of social dialogue and only recent emergence of suitable negotiation forums..................................................... 138 (d) The new model will have to respect
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