DECENT WORK IN THE MERCOSUR ILO

1. DECENT WORK IN THE MERCOSURILO EMPLOYMENT IN A GROWTH STRATEGY: THE FOCUS

2. 1.The starting point: employment and external insersion • More than 50 % of the EAP with serious employment problems + the expected growth of the EAP => this can not be managed only by active policies towards the labour market. • Week insertion in foreign commerce => increase in competitiveness for better insertion in more dynamic foreign markets which demand goods and services with a greater value added and a greater internal diffuser effect. • Integrated action is needed to increase rapidly the number of quality jobs, so that in 5, 7 or 10 years, depending on each country, the problem would have been reduces to manageable proportions => • Development strategy, with employment as a key objective, and to improve competitiveness as one of the most important means to reach it.

3. 2. Growth of marketable investment • In order to rapidly increase quality employment, during long periods of time, it is essential to accelerate the growth in investment, in X and CM. • He/she has to accelerate in X and CM, i) to help to the reinsertion in the world trade; ii) to generate the foreign currencies required by the acceleration of the growth; iii) to contribute to the increase of the domestic demand and of the investment in not marketable. If we invest the process, = > it doesn't work . • The acceleration of the marketable investment demands two things : i) profitability adapted in foreign currencies, for the investment in those activities • ii) a dynamic demand for marketable products. through the promotion of exports; invigoration of the MERCOSUR; and measures for the increase in the production tame competitive with imports that he/she goes to the domestic market.

4. 3. Reach of the report • To activate investment decisions in X and CM, it is indispensable to improve the competitiveness of the countries and of the companies. = > Macro, meso and micro policies that improve competitiveness. To be able to accelerate the investment and to sustain the increase of the employment of quality = > to reduce unemployment and informality. • Political and active programs to improve the employment, and to contribute to reduce the unemployment. Social expense to sustain to the most affected • Politicians guided to articulate to a segment of the informal activities , to the acceleration of the growth of the modern segments • From the MERCOSUR, to generate instances to strengthen the objective employment, to advance in the coordination of political, to stimulate the investments bi, tri or multinationally; to stimulate the access to the diffusion of innovations, to contribute to the vocational training, to contribute to the support to the MYPES, to strengthen the commercial negotiations of the countries, to advance toward the coordination of active programs, with the agreement of the countries

5. 4. The focus • Macroeconomic regime of the type of competitive and stable real exchange rate, like general framework for the remaining policies • Policies toward networks, clusters and productive chains = > to expand the marketable ones that face markets with more dynamic demands (of the MERCOSUR or external) • Policies to increase systematically, the total productivity of all the resources. (basic education, vocational training; National System of Innovation; articulation of MYPES; negotiations and institutionalisation of labour. Displacement of EAP toward activities of more productivity . • Policies to improve the context of the investment (productive infrastructure, artificial security; financial system; practical managerial; funds, etc.) • Policies to promote the exports, to strengthen the integration in the MERCOSUR, and to energize competitive production with imports. • Active policies toward the labour market • Policies from the MERCOSUR oriented to consolidate the objective employment at level of the countries. It includes National Agreements and at level of the MERCOSUR, regarding the essential policies for their role in a strategy with objective employment .

6. Graphic 1. Sequence of policies, objectives y quality employment. Macroeconomic regime for real, competitive and stable exchange rate -Productivity policies -Labour Institute -Educ. and Formation pol- -MYPES Pol. -Innovations Pol. - Microeconomic policies - Infrastructure develops. - Financial system - Legal Security - Business practices - Others Export Integration pol. Inst. Mercosur Development pol. Competitive networks Improvement in rentability of Increase in the demand for the marketable investment production of marketable goods (X y C.c/ M.) Acceleration of the marketable investment Acceleration of the investment on the aggregate demand and on the non-marketable investment Pol. of Employment activ Pol. for Informal activ Acceleration on the creation of quality employment and increase in real salary Informal Trans. And activ.

7. 5. Comparative Advantages versus Competitive Advantages • In the past, the emphasis was in intensive strategies in natural resources and cheap manpower; that proposed = > emphasis in bs. and intensive ss in knowledge and capacities; + bs. and ss. intensive in natural resources but several processing stages to increase the added value for unit of resources • Variable combination of the mixture of policies according to national realities (example of Paraguay in MYPES and tariffs) Flexibility of the mixture in the time. indispensable competitive exchange rate for the ignition phase. • Effective protection in closed economies = > tariffs, quotas, administrative handlings, special regimes, etc. • Effective protection in this approach = > interaction of the five exposed politic context elevates the protection in transables = > it elevates the added value, utilities and real wages. But in a coherent way with the requirements of an open economy and without violating the WTO - • Action of the Public Sector is complementary and it prioritizes the productive development of the Private sector. Apart from maintaining its other responsibilities

8. 6. Macroeconomic Regime of real, competitive and stable exchange rate • It recaptures the expansible role, but not based on excess of expenditure or increase in the money supply. Essential for the employment. Profitability of the marketable investment and effect relative prices . • It is a regime: it implies the alignment of the foreign exchange policies, fiscal and monetary = > stability of prices and goal of competitive and stable real exchange rate. It is not only" inflation targeting." • It is vital for the ignition of the process. phase that can last years; experiences; limitations and obstacles. • Adoption easiness for countries that already made significant real devaluations. as those of the MERCOSUR . • Base for the formal or informal coordination of political macro-economic that is a requirement for an advance of the integration • Special situation of Paraguay, (Tariffs and small company)

9. 7.Policies to increase the total productivity at a micro level. - Institutionalisation of Labour: reduction of labour costs versus increase of the total productivity and reduction of total unitary costs • National Sist of Innov = > current Weakness = > to Potentialize innovations and the articulations among the centres of CyT, of innovation, and the demands of the companies; promotion funds; lines for testing of innovations. • Basic education and Vocational training a) to learn how to learn; b) regulated market of ss. of formation, mainly toward the MYPES. • Articulation and access to resources for the MYPES. a) Organization and associative like basic step. Insert in Clusters, chains or productive networks = > smaller mortality. b) invigoration of varied politicians to increase the productivity, but converging toward this objective. - Evolution of the wages and of the productivity.

10. 8. Meso policies to improve the context for the investment • Development of infrastructure. - Goals for 2010, to get closer, without arriving, to the indicators of Korea and Portugal. => aprox. 1% annual, additional, to the investment forecasts in infrastructure . • Artificial and judicial security. Greater transparency, preventive functions of the continuous analysis of the sentences. At general level: i) social cost of those "transgressions" e) to set down examples for the population. • Financial System: the vehicle to redirect resources toward transables; adaptation or "reconstruction”. Ventures y risk capital. • Diffusion of managerial strategies of total productivity and quality. • The stabilization funds district attorney to soften the fluctuations of the economic activity, and to reduce the uncertainty for the investment -

11. 9. The meso policies towards the productive networks • The networks like predominant organization. clusters, chains and other associative forms. • The specific policies to remove obstacles for the development and the networks in environments that that benefits to the country and the companies of the networks = > optimisation of the suplementarity with the private sector. • Policies are guided toward the companies nucleus that lead each network, and through agreements, they go impacting toward the remaining companies of the network. • Consequently = > the public policy they impact via specific agreements, on the companies nucleus, to induce goods mainly the group • The specific policies toward the networks, include the priorization of more national component of inside the MERCOSUR, greater exports to the MERCOSUR, and greater exports to the rest of the world. • They constitute a vehicle to remove obstacles and to enlarge access to political environment. • Networks and MYPES

12. 10. The policies of export promotion, and the integration to MERCOSUR • An arsenal of different policies of promotion of exports exists, exposed in the Report. The topic is that to adopt them in such a form that they are adapted to the conditions of each country. Risk of insufficient managerial decisions to absorb the directed resources = > coherence Programs of quality and productivity at level of the MERCOSUR • Promotion of regional productive nets with good participation of MYPES, guided to the production of marketable. • Combined negotiation of commercial, necessary agreements not only because they expand the trade, if not because they attract investments when giving horizons of certainty in different foreign commerce lines • Greater and better use of instances at the level of MERCOSUR to speed up the integration processes and to potentialize the complementary activities. • Instances de promotion of bs and ss intensive in natural resources but with consecutive processing and more value added (Ex. Tourism)

13. 11.The active policies of employment • They cannot be dissociated of the macro, meso and micro economic tendencies. In particular = > to modify the composition of those policies as one is living a contraction or a recovery. this way in the 1st.case, the programs will tend to be of direct creation of employment, or of transfers for the public sector, while in the 2nd case the programs will tend to depend more on private activity than ´potencialize the resources´ it uses, ex. subsidized programs to the recruiting for deprived companies. • Decentralization of their execution, and identification of the mix at local level • Much more priority in the programs toward the MYPES and informal micro companies. They are the greatest decent working source for the future. They are profitable, and it is the best way to improve the employment and the distribution of income. Attention to their articulation. Increase of Total Productivity more than reduction of labour costs. • But coordination and convergence, and better use of technology of information, evaluations in process and impact evaluations. but that of acting.

14. 12. Policies toward informal activities and solidarity networks • An improvement is necessary of at least those activities that possess potential. Not for all - because the universe is enormous. • The optics is to support them so that they improve and they can be formalized. • Fostering of the association to arrive to them with policies, and to potentialize their articulation to the growth of the modern segments. subcontract, insert in small networks. • Acceleration of the demand of the companies, and the consumption. spread by the increase of the employment and real wages. it elevates the demand for bs.and ss. Informal. • The important thing, then is to allow that they benefit of her, with more association and articulation and access programs to resources. credit, training in administration, labour training, technology and information of markets.

15. 13.The policies toward the labour context • Labour Institutionalisation and productivity • Active policies of employment • System of labour formation. • Pol. Informal segments • Pol. toward the MYPES. • Information and Labour Policies • The institutionalism for the employment in the MERCOSUR.

16. 14. Social Dialogue and the MERCOSUR • The strengthening of meso and micro collective bargaining • The macro instances: toward a National Agreement (political and social) on the main State Policies that constitute the base and fabric of a development strategy with objective employment. The consent perimeters to define them. • Governance and democratic stability. Less uncertainty and investment decisions. • Once achieved the National Agreements, amplification at the level of the MERCOSUR. A consent perimeter around the state politicians that sustain a development strategy with objective employment. • Gradual convergence of strategies = > MERCOSUR something more than a common market.

17. 15. Expected Results • Sustainable growth of the employment of quality, around which it is possible to establish an increase of the decent work. • Growth of the real wages, to the rhythm settled down by the advance of the productivity • Significant reduction of the poverty for revenues. • Strengthening of the insertion of the MERCOSUR in the most dynamic external markets • Greater competitiveness of the countries of the MERCOSUR based on a high total productivity and a more favourable environment for investment. • Development of the MERCOSUR as an extended market and as a platform for policies