This report analyses people-centred development in Paraguay linking two paradigms: Human Development and Decent Work, used by the UNDP and the ILO respectively.

The focus of Human Development (HD) maintains that social and economic policy should expand individual capabilities and human freedoms in order to achieve greater wellbeing. As a result, one essential test of development, which includes a reduction in poverty rates, is if, de facto, people have indeed achieved greater freedoms. Human Development is founded on two basic constructs: a) the formation of human capabilities, such as better health and knowledge and abilities, and b) the use of these capabilities for productive activities, recreation and to enhance participation in social, cultural and political activities.

Following this definition of human development, monetary income is only one of the dimensions that generates and defines wellbeing. Income can be and frequently is instrumental in enabling access to capabilities and in realizing freedoms, but it is not, in and of itself, the goal of the development process.

The Human Development concept allows us to move beyond economic growth, measured narrowly in terms of GDP per capita, to the concept of people-centred development, linking freedoms and capabilities to embrace wellbeing. That is, to move beyond the economy to the people themselves.

The concept of Decent Work (DW) is strongly linked to Human Development through the expansion of the real freedoms that individuals and collectives possess. The ILO defines Decent Work as productive work for men and women in conditions of freedom, equality, security and human dignity. That is to say, Decent Work requires that individuals can secure 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, the freedom for people to express their concerns, to organize and participate in the decisions that affect their lives and equality of opportunity and treatment for everyone. These objectives should exist for all workers, in both the formal and informal economy, in salaried employment or own account work, in the countryside, in the factory, and finally in the home or the community.

Paraguay is a country with a Human Development Index (HDI) that places it among other middle income countries, and, as in other parts of Latin America, which has registered improvements over the last decade as a result of the expansion of capabilities such as education and increments in life expectancy.

These improvements notwithstanding, Paraguay lags behind in the continent together with other countries with high levels of poverty and inequality such as Bolivia and El Salvador. In a similar fashion, Decent Work indicators demonstrate important improvements in the quality of employment, in the extension of social protection and in the gradual reduction in informality. Although significant, these advances have been relatively slow, reflecting structural impediments that inhibit the formalization of employment, the persistence of relatively weak institutions, and the lack of more opportunities for social dialogue.

As can be seen from the following diagram, achieving the strategic objectives of Decent Work (DW) expands human capabilities and agency in the realm of work and increases opportunities in the labour market, actions which contribute to the overarching objective of greater Human Development (HD) by increasing income, improving the health of workers, and guaranteeing access to fundamental freedoms such as social dialogue. As a result, a better HD creates a more favourable environment for DW. The synergies between the two concepts are positive, one engenders the other and vice versa, through the expansion of capabilities and opportunities.

Throughout this report we analyse the key dimensions of HD including: a) human capabilities and agency, b) opportunities in the labour market, c) the normative, institutional and political framework, and d) how these dimensions are reinforced and magnified by the objectives embedded in the concept of DW. We study the complementarities between these two paradigms and how their dimensions mutually reinforce and foster each other.

In order to explore changes over time in indicators of HD and DW in Paraguay we analyse data from the Permanent Household Survey from 2001 to 2011.

Throughout this decade life expectancy has improved for all members of the population, more people have higher levels of formal education and real per capita income grew slightly between 2001 and 2011, despite the occurrence of various crises. Poverty rates for workers fell from 36.6% in 2001 to 34.3% in 2011.

Furthermore, today there is greater gender equality in terms of employment, and given that the wage gap between salaried men and women is declining.

More workers have access to social security, and the proportion of salaried workers, including domestic labour, rose to 35.5% in 2011.

The reduction in informal employment continues at a very slow pace, however, declining from 87.1% in 2001 to 81.3% in 2011. This slow decline notwithstanding, the legal and institutional framework has improved with the creation of new technical departments within the Vice Ministry for Labour, such as the Social Security Division and the Youth Employment Division. There is also a law being developed to create a Ministry of Labour, Social Security and Employment, the enactment of which will constitute an important step towards establishing labour institutions with which to face the challenges of the 21st century.

Today new policies for Youth Employment are being implemented and economic and public investment policy has incorporated a focus on employment. There have been significant changes in access to Social Security and the Institute for Social Prevision has increased its coverage allowing domestic workers and own account workers to become members.

During the last few years, new opportunities for social dialogue have emerged around the topic of employment and existing ones have been strengthened, although the political crisis of 2012 reduced the intensity and quality of this social dialogue. There have also been active debates in the public sphere and in the media over the enactment of the Law for the Promotion of Youth Employment and the Law Governing Micro, Small and Medium Enterprises (Mipymes).

These debates, despite all the differences of opinion, demonstrate interest in promoting the labour market insertion of particularly vulnerable groups of workers and strengthening the economic dynamism of small enterprises through the expansion of credit programs and support for these enterprises, as well as through the application of labour market regulations. The ratification of Conventions such as 169, on the rights of indigenous and tribal peoples, and 189, in support of Decent Work for domestic workers, represents a significant expansion of the opportunity for governmental action, social dialogue and the vindication of the rights of workers and indigenous peoples.

As a result of this progress, both the Human Development Index (HDI) and the Employment Quality Index (EQI),which captures some of the dimensions of DW generated in this report, register improvements over time. The HDI incorporates education, measured by the average number of years of formal instruction, and the expected years of education; health, through life-expectancy at birth; and a measure of the standard of living, using per capita national income (PPP). The EQI reports the percentage of the population that is economically active, whose principal employment generates an income which raises them above the poverty line, which has medical insurance and is contributing to a pension plan. The second diagram graphs the relationship between the HDI and the EQI for 2011, demonstrating that with higher levels of HD there is greater access to better quality employment which improves the EQI. These indicators are distinct for different regions of the country, proving their association in the realm of employment and human development as measured by the HDI.

For example, Asunción and the Central department report better indicators for both the HDI and the EQI when compared with other departments such as San Pedro and Caaguazú.

In a similar fashion, both the HDI and the HDI adjusted for inequality (HDII) and the Gender Development Index (GDI) demonstrate improvements over the last decade—even though these improvements favoured particular sectors, — urban residents, workers with formal employment, and individuals with higher levels of formal education, etc.–, to the detriment of other sectors.

These significant improvements in

HD and DW notwithstanding, we also observe stagnation in some indicators and limited or very slow progress in others. Without a doubt, informality (which affects 8 out of every 10 workers) continues to be one of the principal problems to affect the labour market in Paraguay: which means precarious employment, exclusion from benefits such as pensions, medical insurance, and, frequently, the lack of access to fair wages. At the same time, half of all salaried workers (including domestic workers) lacked a written contract having only a verbal assurance of their employment. Moreover, gender gaps persist for the different occupational categories in both wages and labour market participation.

The EQI also reveals stark gaps between workers that live in urban and rural areas and economic sectors or in public and private employment, which reflect differences in terms of wages, access to health insurance and contributions to a pension. The data underscore that living in the city, working in the secondary or tertiary sector and in the public sector, for example, means a higher quality of life and a greater possibility of obtaining DW.

The report concludes that better conditions of work are associated with improved indicators of HD and vice versa. By ensuring DW one contributes to better HD; investing in HD in order to improve capabilities contributes to expanding DW opportunities for all people. The simultaneous improvement registered in HD and DW, however, is not automatic, and depends on political will and the development of institutions. Investing in and strengthening institutions such as the Vice Ministry of Labour as part of the Ministry of Justice and Labour, or in an eventual Ministry of Labour, Social Security and Employment and in the oversight, inspection and application of labour law; improving the functioning of schools and hospitals; and ensuring social dialogue and tripartism contributes both to Human Development and to a favourable environment for Decent Work. The institutional and democratic environment should also guarantee the sustainability of these changes and the extension of benefits to all members of society and workers.

Investing in the capabilities of workers, in the State, and in mechanisms of social dialogue, fosters a better functioning labour market, reduces the violation of fundamental rights at work, for example, forced work and child labour, favours the employment of vulnerable groups and foments social dialogue.

The report points out that there are various opportunities to improve the functioning of the labour market and to invest in the capabilities of the State to secure Decent Work and as a result greater Human Development. It is of utmost importance to continue to invest in oversight and labour inspection together with the generation of State capacity to monitor the labour market and the compliance with labour legislation.

We should continue to invest in the capacity of the State to collect data and monitor the terms and conditions of employment. Moreover, efforts should be redoubled to promote the formalization of many jobs and, at the same time, ensure the inclusion of precarious workers in the social security system. The expansion of the social protection system will be essential during this process of formalization, ensuring access to basic services, health and solidarity pensions. Furthermore, social protection can play an important role in in reinforcing attempts to eliminate child labour through programmes such as Tekoporá and Abrazo. As a result, the creation of an effective Social Protection Floor will contribute to improving the quality of life and achieving Human Development and Decent Work for all people.

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http://www.undp.org/content/dam/paraguay/docs/Informe%20nacional%20sobre%20Desarrollo%20Humano%20Paraguay%202013.pdf