The region urgently needs to start the engines of formalization

By Martin Padulla

Latin America grows. There is no doubt about it. The questions which leads to reflection are: how is it growing? How do we manage to crystallize the opportunities we have in the region? How do we settle the social debt? How do we more productivity? With which tools do we reach sustainability? Even though growth is a reality, informality persists and it is that area where poverty remains and produces inequality. We have a transcendental challenge ahead, to build dynamic economies, more modern labour markets and fair and more inclusive societies.

While I am writing down these lines, 127 million people work in informal conditions in Latin America. According to ILO, if carefull measures are not taken, it will take more than 50 years to reduce half of informality

The struggle against informality, as ILO has already mentioned, must be carried out in a continuous and systematic way, we must be aware that we live a relly dynamic reality. Each year, 5 million people get into labour market especially young people. Up to the year 2020, 40 million of formal jobs should be created just to avoid that the actual situation get worse. Are we on the right way?

The economic growth is a necessary condition to create jobs but it is not enough. It is necessary to work hard in several simultaneous fronts so as to attend our citizens´ growing needs. Especially our young people´s needs, focusing on employability.

What is an informal job? It is a labour relationship which is not under the regulations of a country, which does not pay taxes, which does not have social security coverage and which does not have benefits related to the job. It is an illegal relationship which is against the workers ´rights. It is a relationship which should not be allowed by any social representative chosen through the vote.

Elizabeth Tinoco, ILO Regional Director has claimed “we should start the engines of formalization”

According to a report based in an investigation developed by SEL Consultores, the temporary work agencies (TWA) are the main entrance to the formal labour markets in our region. Most of those who get into the market, do it from an informal and precarious situation. Through these companies, they can get decent jobs, have all their rights and besides they are better paid than in their previous jobs. These companies constitute the main engine of formalization for young people.

It is interesting to know that when user companies are surveyed, 72% express that they wouldn´t have created employment if they hadn´t had the role of a TWA. This means that this sector creates employment and this employment creation is formal.

The opportunities of the region are associated to the opportunities of this sector. It is vital to promote a sector which creates formal employment for the most vulnerable population.

It is necessary to ratify the ILO Convention 181 about Private Employment Agencies so as to assume the quality standards in all the countries of the region.

The penetration rate of this sector in Latin America does not reach the 1% of the EAP. It is a functional complement for perm contracts of employment. In fact, more than 40% of younf people who get in the formal labour market through a TWA, then they go on working for the user company. Substitution does not exist; there is a functional complementation, which beneficial for governments, workers and employers.

The TWA have a double role for the boosting of the labour markets: from informality or unemployment to formal employment and from temporary employment to permanent employment.

A growth of this sector to 1.5% would mean more formal jobs, less informality and less unemployment. The millions of young people in our countries, who have an informal job or do not have a job, deserve that all social actors involved in active policies for employment, consider a sector which contributes in a direct way to social and economic progress in Latin America

About Martin Padulla

Managing Director of Staffingamericalatina. Martin Padulla is Sociologist (USAL), MBA (UCA) and labour markets expert. He published “Flexible Work in South America” and “Regulatory framework for employment agencies in Latin America” two books about the new realities of work.

mpadulla@staffingamericalatina.com

About Staffingamericalatina

It is the unique independent digital media specialized in Latin American´s labour markets.

Produce and spread contents, researches and developments about issues such us Employability, Youth Employment, Training for Employment, Decent Work, Private Employment Agencies, Active policies for employment, Teleworking, Public and private actions for the creation of decent work, Green Jobs and Corporate Social Responsibility.

It is the meeting point for companies, providers, candidates, service´s companies, academics and independent professionals of Latin America.

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Es el punto de encuentro para empresas, proveedores, candidatos, empresas de servicios, académicos y profesionales independientes de América Latina y el Mundo.