Monday, December 11, 2023

Comprehensive reform, not labor patches

The recent proposal to resume a discussion on a so-called “salary pact” once again brings to the fore the need to reach an agreement on a comprehensive labor market reform pact, something positive for the Dominican Republic. Our labor market requires a deep and complete review to improve the efficiency of the economy.

In the case presented, it basically focuses on a reform through which adjustments and automatic increases in salaries would operate, without the intervention of the National Salary Committee (CNS). This is a mistake, because, although the proposal covers other points, this aspect is harmful and implies a structural rigidity in the economy that would be very difficult to solve.

Instead, what we understand should be the starting point of any discussion on labor reform is the recognition that it should have a double purpose: the protection of the worker and the promotion of economic efficiency through the regulation of a flexible labor market. and of reasonable cost. The need for the Labor Pact arises from the premise that the Labor Code and its complementary regulations are outdated compared to current needs, and have been conceived to protect the worker without considering the cost-efficiency elements required for the competitiveness of the company. economy.

One of the elements with the greatest incidence in this analysis are the high costs and the inflexible regime that is imposed in the labor market.

There are costs that are not transparent, such as: an extraordinary bonus of between 45 and 60 days of salary (depending on the seniority of the employee); severance pay that continues to grow year after year (not capped); and the payment of 1% on the total amount of fixed salaries for the Professional Technical Training Institute (Infotep). In fact, it is counterproductive to say that this aspect cannot be discussed, since in an open and frank conversation, all elements must be on the table.

In another order, the inflexible rules that impose restrictions on the establishment of working hours also prevent the efficient development of the modern economy. One of the fastest growing sectors in our economy, that of services, requires personnel available at various times; For example, the “call centers” that answer calls from all over the world must be available at different times.

Another element that must be reformed is teleworking, because if the pandemic left us something positive, it is the evidence that it is possible to work remotely and productively. But the current labor rigidity makes it difficult to establish this modality, which is also beneficial to the worker, in a broad way.

In this sense, union leaders, both representatives of the worker and business sectors, must address the issue in a comprehensive manner, without closing in on inflexible positions. While it is true that current labor legislation must protect the worker, the promotion of public policies to encourage employment is also required, something that benefits all members of society.


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