Social Dialogue to Achieve the Sustainable Development Goals: Formalising the Informal Economy in Argentina (SDGs 1, 8 and 10)
Description
During the 1990s, the informal economy grew exponentially in Argentina. Following the 2001 crisis, many economic variables improved, giving rise to a substantial decrease in informal employment. Although the percentage of informal workers, both salaried and self-employed, remains high, undeclared employment went from 48.3% in 2003 to 33.5% in the second quarter of 2017.<br />
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Social dialogue is considered to have been a key tool to create mechanisms aimed at facilitating the formalisation of entrepreneurs and workers operating in the informal economy. These formalisation processes are directly linked to the fulfilment of several of the Sustainable Development Goals (SDGs).
The main objective was the formalisation of the informal economy in Argentina (related to SDGs 1, 8 and 10). This was done through social dialogue that contributed to: the promotion of wage increases, the establishment of a social and food emergency law, the establishment of a law on the promotion of declared work and the prevention of employment fraud, the simplification of the system for individual contributions of self-employed workers to social security and formalisation through collective bargaining.<br />
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Social dialogue brings together differing interests and views and in so doing, faces many challenges to reach joint agreements. Throughout the dialogue process, consisting of many meetings and discussions, the different views are confronted in the search for a consensus that will satisfy all sides. Trust and the willingness to reach joint solutions are key elements to reach agreements.
The main beneficiaries have been informal economy workers and informal economic units in Argentina.
The different policies were elaborated, implemented and monitored through social dialogue. According to the International Labor Organisation (ILO), social dialogue refers to all types of negotiation, consultation or information sharing among representatives of governments, employers and workers or between those of employers and workers on issues of common interests relating to economic and social policy. It can be bipartite, between workers’ and employers’ (which the ILO refers to as the social partners), or tripartite, including government, and can take place at national, sectorial and enterprise level. Tripartite social dialogue brings together the social partners to discuss public policies, laws and other decision making that affect the workplace or interests of workers and employers. It is both a means to achieve social and economic policy and an objective in itself, as it gives people a voice and stake in their societies and workplace.
Through social dialogue policies are negotiated and jointly elaborated. Tripartite structures also serve to implement, monitor and assess the joint policies that are put forward.
- Since 2004 and until 2016, there have been yearly minimum wage increases. Between 2004 and 2013 the minimum wage in Argentina increased by 1440%. This had a spill-over effect on the pay and income of informal economy workers.
- Passing of a Social and Food Emergency Law: it declared a nationwide social emergency for a year, called for efforts to bolster the people’s economy (cooperatives in the informal sector), and proposed a 15% monthly increase in the Universal Child Allowance. It also foresaw the creation of a Register of Workers in the People’s Economy, a social wage for workers in the people’s economy (equal to 50 per cent of the minimum wage, to supplement the income generated by their work) and the establishment of a People’s Economy and Complementary Social Wage Council.
- Approval and implementation of the Law on the Promotion of Declared Work and the Prevention of Employment Fraud: includes proposals to combat informal employment. It strengthened labour inspection, while ensuring coordination between national and provincial authorities to detect and penalise any breaches of the labour legislation. It established a Public Register of Employers with Employment Sanctions, aimed at highlighting employers that fail to comply with the regulations. The law also established a special scheme for micro-employers (of up to five workers), with reductions in employer contributions and the amounts they must pay to Occupational Risk Insurers.
- Establishment of a simplified single contribution system for informal economy workers, which entitles them to partially subsidised health insurance and a fully subsidised pension scheme. This has contributed to increase the number of self-employed workers registered for social security.
- Formalisation through collective bargaining: Between 2011 and 2017, 33 Collective Bargaining Agreements included some reference to the informal economy and more specifically to undeclared work. These included general provisions on promoting the regularisation of employment relationships, discouraging evasive practices and underlining the need to join forces to eradicate informal employment.
First of all social dialogue requires a conducive and enabling environment and in turn contributes to sustain one. The international framework established at the ILO is the core support for social dialogue. For workers to engage in social dialogue as a way to promote their rights, the different ILO Conventions and particularly its Fundamental Conventions guarantee that they can defend these rights through the democratic organisations in which they take part. In this sense, Conventions 87, on Freedom of Association and Protection of the Right to Organise, and 98, on the Right to Organise and Collective Bargaining, uphold the very basic rights for social dialogue to take place.
Nevertheless, an enabling environment per se is not enough for social dialogue to work. Together with the need for an enabling environment, we need to add the element of trust amongst the parties that engage in social dialogue. Trust leads to greater levels of transparency and to a positive and constructive attitude from all partners. This is especially important on the side of governments. The experience in Argentina showed that with the change of government in December 2015, trust amongst the parties was negatively affected and progress has stalled over the last two years.
The good will of governments to engage in social dialogue can be manifested in terms of the institutionalisation of the dialogue process. Going beyond information sharing or ad-hoc consultations, calls for the creation of tripartite bodies that will not only design the policies but also implement, monitor and assess them. This requires clear mandates in which each part’s rights and responsibilities are acknowledged in light of sustainability when changes in government occur. This institutionalisation exists in Argentina and the different processes and policies that were put forwarded were negotiated within these institutions.
Finally, the need to build the capacities of the social partners that engage in dialogue is also an important factor. The social partners that engage in social dialogue need to be representative and have the capacities to engage in dialogue with adequate knowledge and analysis in order to make their demands and comply with their obligations.
Social dialogue is a practice that is common in many countries and using social dialogue to contribute to the SDGs through formalising the informal economy could be extended to many other countries.
Despite the persistence of high levels of informality in Argentina, the importance of social dialogue in addressing the informal economy and improving the conditions of informal workers is clear. Many collective agreements now include clauses on undeclared work, along with mechanisms designed to control it, demonstrating the importance attributed to this issue by both trade unions and employers. However, in the light of recent practices, such as the governmental decision to unilaterally set the wage increase in 2017, social dialogue is being undermined. In addition, the systematic inclusion of the informal economy in broader or national-level tripartite structures is something that needs further reinforcement. However, the extension of social dialogue forums in the country illustrates the value attributed to it by social actors and different levels of governments: not only in terms of the policies it has generated, but also in terms of its contribution to building more inclusive democratic institutions and a more equal society. These are key elements to achieve the SDGs and ensure that no one is left behind.
Report of Thematic Seminar at the OECD: Social Dialogue in the SDGs Era - 19 March 2018: https://www.ituc-csi.org/IMG/pdf/social_dialogue_seminar_2018_report.pdf
How Social Dialogue combats inequality and ensures social cohesion. Workers and Trade Unions Major Group submission to the High Level Political Forum 2016: https://www.ituc-csi.org/IMG/pdf/hlpf_-_tu_submission_en.pdf
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Diego Lopez Gonzalez, Development Partnerships Officer