A labor policy that boosts productivity must support workers and promote their success throughout their careers. One objective of this book is to con-ceptualize an integrated package of labor policies to boost productivity and break the vicious cycle described earlier. This package meets the goal of creating more—and above all, better—jobs for the entire population as a me-chanism for overcoming poverty, reducing inequality, and stimulating greater social and economic development (see Diagram 2).
Within this context, Chapter 6 argues that the region needs a comprehensi-ve, people-centered vision of labor policy, promoting successful career paths throughout workers’ lives. Consequently, a labor policy aimed at boosting job productivity to promote workers’ welfare must ensure that they continue to improve their situations and their capacity to create value (for their countries and themselves) throughout their lives and various transitions. Thus, while it is not easy to defi ne what constitutes a good job or a successful career path, we subscribe to the concept of decent work (Box 2), which was deve-loped by the ILO, and we stress the temporal perspective—a good job is not defi ned simply by its present conditions but by its capacity to put the person
Source: Prepared by the authors.
ALMPs = Active labor market policies.
Diagram 2 How to develop a productivity-boosting labor policy
Promote increased investment in relevant worker training. Rethink the cost of dismissal.
Promote alternative ways of financing
social security benefits.
Review costs.
Improve the coverage and effectiveness
of ALMPs.
Rethink the way unemployment insurance works.
Improve linkage with ALMPs.
INFORMALITY LABOR INSTABILITY
“Bad” high turnover
BAD MATCHES
LACK OF UNEMPLOYMENT PROTECTION INEFFICIENT + JOB SEARCH
LITTLE (OR NO) TRAINING
LOW PRODUCTIVITY / COST
who holds it on a lifelong upward career path, thereby contributing to greater economic and social development.
Box 2. The concept of decent work
According to the ILO, having decent work means having “opportunities for work that is productive and delivers a fair income, security in the workplace and social protection for families, better prospects for personal development and social integration, freedom for people to express their concerns, organize and participate in the decisions that affect their lives and equality of opportunity and treatment for all women and men.”
Source: ILO, http://www.ilo.org/global/topics/decent-work/lang--en/index.htm.
Ensuring successful career paths requires guaranteeing that workers start out their working lives in formal jobs that coincide with their aspirations and education and that offer them the protections of social security and labor laws; it also requires that workers’ skill sets meet the requirements of their positions. Thus, before entering the labor market, workers must receive trai-ning in areas that have employment opportunities and acquire skills that em-ployers value to ensure rapid and effective entry into the labor market. This also implies that, once employed, workers must be encouraged to continue their training and learning in the workplace, as this has two positive effects: it promotes value creation and reduces the probability of involuntary job loss.
Moreover, if workers involuntarily lose their jobs, labor policy should facilitate their speedy and effective placement in another suitable formal job, which will enable them to keep growing along a successful career path (see Diagram 3).
Source: Prepared by the authors.
Diagram 3 A stylized successful career path
Young person finds good job Finds better job
INCOME
TIME Loses job, but
with smoothed income
After losing job, resumes successful career path
Wage rises due to investment in human capital Investment in
human capital continues
Comprehensive policies are necessary to achieve this successful career path, as it requires the coordination of a series of mutually complementary elements. Otherwise, there is a danger that efforts to improve one aspect of the career path will prove counterproductive due to unanticipated impacts on other aspects. For example, it would make no sense to promote the job stability of active workers if doing so discouraged formal hiring. It would li-kewise make no sense to promote formal employment if doing so resulted in unstable formal jobs. Nor would it be desirable to protect income during unemployment if this support substantially reduced the incentives to find new jobs. Chapter 6 therefore proposes a comprehensive labor policy package aimed at increasing formal employment and access to it while simultaneously achieving greater job stability—a policy package that, in turn, would promote higher levels of productivity and welfare.
Centering labor policy on creating successful career paths, boosting produc-tivity, and improving risk management is all the more important given the trends indicating that increasing the capacity to create value may also increa-se the risk that workers will suffer (increa-see Box 1).
Achieving successful career paths requires employers to be treated as part-ners rather than adversaries in the task of value creation. One aspect that differentiates a labor policy that fosters redistribution from one that boosts productivity is that, while the former may entail an adversarial approach—if one party gains, the other loses—the latter requires a cooperative approach in which employers and employees work hand-in-hand to create value. This requires that the labor policy also regards firms (not just workers) as clients and beneficiaries. To meet this objective, the region’s ministries of labor must have the technical know-how and operational capacity to handle these new roles and methods of operation.
Furthermore, labor policy that boosts productivity cannot be independent of a country’s other development policies. On the contrary, it must be coordina-ted with strategies relacoordina-ted to areas such as business development, clusters, innovation, capital market development, and education. This will require mi-nistries of labor to coordinate proactively both within government and with the private-sector and civil-society organizations that work in productive develop-ment to ensure that workers and firms create greater value together. This is, in fact, the goal of this book: to create jobs that foster the growth of workers and countries in the region.