Sunday, 4 January 2009

Hard-Working Colombians. What Does These Numbers Mean?

The Inter American Development Bank yesterday released a report called ''Beyond Facts: Understanding Quality of Life´´ (click here to access to the IADB's executive summary.) The findings are somehow interesting: surprisingly, 82 percent of the Latin Americans surveyed claimed they are satisfied with their jobs, in spite of the very high levels of labour informality. The IADB economists say that apparent paradox is explained by the ''greater value most people place on flexibility, personal skill development and recognition than on the conditions that conventionally define a job as good quality.´´

First I will make my comments on the overall report, and then will move to the title of the post: the interpretation by the Colombian media of the finding that says that Colombians spend more time than any other Latin American citizen at the workplace.

I would read the findings of the report in different ways. In general, Latins don't value properly the importance of having a retirement plan and are not net savers. We are, by default, short-term planners (if we are planners at all.) ''Dios proveerá´´ (''God will take care´´) is a common ditto. On the other hand, the banking system also is restricted, imposes lots of restrictions to access and pays little interest on savings. People tend to see their own business (either in the formal or informal labour market spectrum) as a way of investing and saving while maintaining job flexibility. I couldn't find this in the study but I am sure that the higher the education level of the interviewee, the bigger the desire to be a wage-earner, join a company as an employee and have access to pension and other social security tools. The IADB concludes that policymakers need to rethink their labour policies because objectives are running counter to the desires and aspirations of Latin Americans.

This takes me to
the recent labour market flexibilisation proposal made by Cia. Vale do Rio Doce Chief Executive Roger Agnelli in Brazil. As some of you may remember, Agnelli last month said he proposed Brazilian President Luiz Inacio Lula da Silva a flexibilisation of labour rules in Brazil (perhaps some of the most convoluted work laws for employers around the world) amid the steepest global recession in the post-war era. Labour reform is always tough because unionised workers often press lawmakers and politicians, and stage stoppages that affect production. On the other hand, informal workers lack the political clout, organisational infrastructure and knowledge to discuss rules that may help them. While Agnelli's proposal was more about easing salary ranges or limits (in this case, I assume wage floors) and making it easier for employers to sack people (in Brazil it is too costly to dismiss employees,) the real discussion should focus on how to include more market incentives that induce people to remain job-flexible but also tempted to pay for/contribute to their own retirement and health plans. The IADB says that ''proliferation of programs that treat formal and informal workers differently need to be avoided; in the end such programs make stable employment in more productive companies more expensive and subsidize less productive employment.´´

Now, let's examine the story by Portafolio, a Bogota-based financial newspaper. The story
(link here) focuses on a rather weird statement: ''Colombians, the hardest-working in Latin America, but they are happy with their jobs.´´ Then it says that, according to the IADB, Colombians spent 48 hours a week in the workplace, compared to an average 40 hours/week around the world and 43 hours/week in Latin America. Portafolio also says that temporary work contracts are surging in Brazil and Colombia, where there's one of the biggest share of long-term work contracts as a proportion of total employees. Labour stability is very low in Colombia, indicating that citizens tend to be more thankful for having a job here than in any other region. Venezuelans are happier with their jobs than Colombians (who work longer hours than their neighbours, and in general earn less.)

Nevertheless, Portafolio fails to mention that Colombia had a sweeping labour reform at the start of President Alvaro Uribe´s first term, and which led to more hiring but hampered job quality. The fact that more people are now able to get a job as a contracted worker and not as a company employee meets that aspect of flexibility that Latins like, but also adds to uncertainty as income turns more volatile -- requiring more work time while leading to a postponement of long-term savings. The fact that Colombians work longer hours than their regional peers doesn't necessarily reflect their optimism about life (as Portafolio suggests) but one consequence of Uribe's labour market reform.