Setting and Recalibrating Wages for Public Works Programs
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1 Wages for Public Works Programs Cash Transfer and Employment Programs ARGENTINA National Director of Employment Promotion
2 TRABAJAR (Work) PROGRAM ( ) Cash transfer CONTEXT Economic instability. Public works Higher unemployment (15%). JEFAS YJEFES DE HOGAR (Household Heads) PROGRAM ( ) Universal cash transfer Employment projects Initially: Economic, political and social crisis (20% poverty rate). High level of unemployment (more than 20%). Under implementation: Economic recovery. Lower unemployment levels. SCyE (Training & employment insurance) (2006 to the present) Employment Programs Greater economic activity (7% annual GDP growth) High unemployment level (15%) JÓVENES (Youth) (2008 to date) 2
3 Wage levels and employment conditions for participants in Public Works Programs as a social safety network must take into consideration: The goal of Decent Work (ILO) The country s legislation Social and employment conditions at the local or regional level The profile of the program s target population 3
4 Adequate income. CHARACTERISTICS OF DECENT WORK Social protection. (ILO) Work conditions and environment. Stability. 4
5 General Employment Relationship Specific Employment Relationship (P.I.T.) No Employment Relationship (Trabajar and Jefes de Hogar) COUNTRY LEGISLATION Minimum wage levels and employment conditions are established by law (the program has little bearing on them; it can only make improvements) Same as above, with a few variations For a specified period of time (6 to 18 months). Employer contributions are 50% lower. Other reductions in non wage-related labor costs. Financial aid in-kind (non-wage income). The level is set on the basis of: Market rate Income needed to escape from poverty Budget / coverage 5
6 Mean wages reported to social security Minimum wage Junio
7 TRABAJAR PROGRAM In-kind aid for participants was equivalent to 2/3 of the mean wage of workers in the lowest decile. Participants are insured against accidents and injuries (Civil Responsibility Insurance), have health coverage, and can receive additional minor benefits (allowances). In-kind aid for participants was equivalent to 75% of the adjustable minimum i wage in 2002 and dropped d to 11% in JEFAS Y JEFES DE HOGAR PROGRAM ( ) Participants are insured against accidents and injuries (Civil Responsibility Insurance), have health coverage, and can receive additional minor benefits (allowances). 7
8 50% Location of Trabajar participants in the national distribution of household income percapita (1997 sample households ) TRABAJAR PROGRAM 40% 30% 20% 10% 0% Deciles JEFAS Y JEFES DE HOGAR PROGRAM 30% 25% 20% 15% 10% 5% 0% Location of Jefes participants in the crosssectional distribution of income (2002 sample households) Deciles 8
9 Conclusions of the Experience in Argentina The amount at which (non-wage) cash transfers are set is a political decision. Governments make these decision on the basis of: 1. The goals of their employment policies. 2. Labor market conditions (employment / unemployment). 3. Market salary levels. 4. The income needed to escape from poverty. 5. The profile of the program s target population. 9
10 Secretaría de Empleo Subsecretaría de Políticas de Empleo y Formación Profesional Dirección Nacional de Promoción del Empleo Alem 638, piso 11 - (011) Luis Castillo Marín lcmarin@trabajo.gob.ar 10
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