The cat chases its tail: Lessons from Latin America Kirsten Sehnbruch ILO, 8th February 2013

w w w. d e v -o u t. c l Chilean Labour Market Problems Informality and precarious employment conditions in the formal sector High job rotation, sub-contracting, multiple tax IDs, Freelance contracts for salaried workers, etc. Labour market segmentation with little mobility (esp for older workers) Even universal social policies cannot compensate for deficient employment conditions Antiquated legislation that segments labour market further (esp. severance pay) Weak unions, unconstructive in development process

w w w. d e v -o u t. c l Problems with current LM doctrines in LA Economic growth improves variables on the quantity of employment, but not necessarily on the quality of employment: eg. Income up, Types of contract down The emphasis on flexibility ignores its costs (voc. training, long-term skill dev, fiscal subsidy of LM and long-term cost, Shift of risk from companies to individual

w w w. d e v -o u t. c l Types of Contract Data discrepancy: survey data to administrative data Formal sector: 77 indefinite vs 23 atypical contracts

w w w. d e v -o u t. c l Employment Duration

w w w. d e v -o u t. c l Subcontracting

w w w. d e v -o u t. c l Part-time work Seen as a solution to low female participation rates, esp in lower income deciles Seen as a solution to poverty Seen as a solution to childcare/ work-life balance (with no consideration of gender roles) Fits with the “flexibility” doctrine of the last 40 yrs

w w w. d e v -o u t. c l Problems with those arguments Is any job better than no job???? Lack of sophisticated data Lack of integration/intermediation between social programmes (eg CCTs and LMs) Add another method of flexibilisation into the mix and precariousness will probably worsen Social security dilemma worsens, and do not discuss part-time work in isolation of childcare institutions or gender roles

w w w. d e v -o u t. c l The Cat Chases its tail: The Social Security Dilemma LM flexibilisation Requires more social security (flexicurity) Social security is based on ISAs Increased fiscal cost of universal benefits

w w w. d e v -o u t. c l Two possible solutions: Decouple social security benefits from employment conditions and move towards universal systems and/or Policies that encourge employment stability (in spite of flexibility doctrine)