The experts who took part in the Node i+i event discussed the potential for job creation in the formal sector and how this might impact inequality.
There is no better social inclusion strategy than the creation of genuine quality jobs. This was the conclusion reached by the specialists that met on September 25 and 26, 2015, at Columbia University, New York City. The Inspiring Ideas to Narrow the Inequality Gap in the Americas event was organized by INTAL with the aim of bringing together experts from different countries in the Americas to present and debate initiatives described as “social elevator pitches”: that is, actions that have led to the narrowing of the inequality gap in the region.
Dimensions of Inequality and Inclusion
Christopher Sabatini, Columbia Professor and former Director of Americas Quarterly, focused on the need to redesign the indicators for measuring social inequality. The presenter introduced an index that includes a wide range of variables related to the following issues: GDP growth, the percentage of GDP invested in social programs, respect for civil liberties, respect for the rights of women and the LGBT population, financial inclusion, citizen participation, the percentage of the population with access to formal employment, access to adequate housing, enrollment in secondary school, the exercise of political rights, the percentage of the population living on more than US$4 per day, personal empowerment, and government efficiency. The index is based on an understanding of equality that aligns this with equal opportunities.
Access to financial services is key to creating formal jobs. This was the topic broached by Santiago Peña, Finance Minister of Paraguay, who observed that various factors relating to Paraguay’s low population density and specific geography mean that financial transaction costs are extremely high in the country. Given this situation, the government has set out to develop innovative policies to overcome financial exclusion in unconventional ways, to which end it has developed “a national strategy for financial inclusion,” in conjunction with several international agencies. There are positive aspects to the financialization of lower income sectors, as it is a way of including them in economic circuits.
From the perspective of the United States, Jan Perry, General Manager of the Economic and Workforce Development Department for the City of Los Angeles, talked about the city government’s strategies to reduce unemployment and income inequality. She underlined the importance of working with two specific approaches: increasing the minimum wage and making a sustained effort to reintegrate the homeless, ex-convicts, and people with special needs into the workforce. Perry stated that, as a result of these policies, over the past five years 24,000 adults have been reintegrated into the labor market, and 11,000 young people have gone back to high school or found employment. The Los Angeles city government has also generated a cell phone application for job seekers that provides the community with employment- and training-related information from all worksource centers, placing this literally “in the palm of your hand.”
Productive Integration: the Greatest Vector for Equality
In the field of social inclusion, there are some interesting aspects to the case of Cuba. Juan Triana, Professor at the University of Havana and the Polytechnic University of Cuba, focused his analysis on the ways in which the labor market may be an agent for social inclusion. The presenter emphasized the importance of government regulation of the labor market to ensure that it operates as a tool for inclusion and that it actually contributes to improving the population’s living standards. He argued that job creation incentives play a fundamental role in this process. He then discussed Cuba’s recent experience of reopening the private sector and said that this has led to a slight improvement in the living conditions of the sectors that are involved. His colleague, Ricardo Torres, Professor and Researcher at the Center for the Study of the Cuban Economy, described a similar challenge. His particular focus was the importance of creating quality employment as a way of promoting social development. The speaker began by commenting that, although in 1989 the Gini index for Cuba was 0.24, it currently stands at around 0.4. Torres lamented this “Latin Americanization” of Cuba.
The panelists agreed that labor productivity is a key variable when measuring economic development. In this regard, Sebastián Torres, Director of Planning at the Planning and Budget Office of Uruguay, began by arguing that distance is what defines inequality and went on to propose that this gap be analyzed in productive terms. He argued that the distance between Latin American and central economies is due not only to productivity levels but also to what is produced: “Tell me what you produce, and I’ll tell you what level of development you can reach,” he quipped. In this context, he argued that social policies can easily go on indefinitely, taking the form of mitigation strategies, unless specific policies are developed to change the production model. He proposed a matrix that differs from the system currently used in Uruguay, one in which energy is no longer obtained from outside the system but is instead generated within factories themselves. He mentioned that policies in favor of renewable energy are key in Uruguay, where 50% of the energy matrix is renewable and where this is clearly favored by state policy in this regard.
The case of Bolivia was analyzed by Fernando Rios-Avila, Researcher at the Levy Economics Institute, who focused his analysis on the causes of labor inequality. The presenter began by noting that over the last decade there have been reductions in both general inequality, measured using the Gini index, and wage inequality, particularly in urban areas. He argued that this was due to profound changes in the wage structure in cities, which were manifested mainly in the large-scale increase in lower wages and, secondarily, but also significantly, in a reduction in higher salaries. Rios-Avila claimed that economic recovery has driven growth in the demand for labor in favor of less-skilled occupations, which has also had an impact on the level of the lowest wages, thus reducing overall wage inequality.
A central dimension to this is the relationship between territorial inequalities and productive enterprises. The presentation from Cristian Breitenstein, Minister of Production, Science, and Technology of the Province of Buenos Aires, Argentina, continued in this vein. The minister presented the province’s experience in creating industrial parks to improve equality, the numbers of which tripled between 2008 and 2015. These parks have been strong generators of employment, both direct and indirect, and are primarily conceived of as a federal development policy. In terms of reducing inequalities, this initiative has also aimed to mitigate the historic inequality between the center of the province and the more outlying areas, given that 80% of these new industrial parks are located outside metropolitan areas.
The final speaker on the panel was José Adán Aguerri, President of COSEP and member of the Board of Directors of the Central Bank of Nicaragua, who highlighted the benefits of a partnership between the government and the private sector in terms of national economic development. The panelist argued that businesspeople and the government have been working together over the past five years in Nicaragua and that this has resulted in tangible benefits for the population.
Searching for Shared Solutions
The different presentations showed a variety of experiences, concerns, and institutional contexts, but in general terms, certain core themes and concerns emerged. First, the central role of quality employment as an inescapable vector for social integration and the key factor for the reduction of inequality. In this regard, there is a need to redouble efforts to reach the most disadvantaged sectors: in some cases, this can be said to be part of the current agenda in Latin America (which is not to say that the problems themselves have been solved), as is the case with the inequality suffered by descendants of the African diaspora and indigenous peoples. Other cases, particularly the experiences from North America, highlighted the situation of social sectors that are also highly marginalized but not taken sufficiently into account by quality job creation policies: the homeless, ex-convicts, and people with chronic mental illness and special needs, particularly of a cognitive type. The right to quality employment must necessarily encompass all marginalized groups, and this is an important lesson that should be included in local agendas.
Second, taxation is a key factor if states are to have funds available for these types of policies. The tax base is low in many countries in the Americas and the tax systems are regressive in almost all of them. The transformations in question are not simple, but instead imply, on the one hand, major institutional challenges and the coordination of various state agencies, coordination at subnational levels, and public–private sector partnerships. These points were highlighted by Maria Victoria Murillo, Professor at Columbia University, as she gave her conclusions on the panel. On the other hand, in relation to economic development, a significant degree of creativity and innovation is needed, in that we must think differently about the articulations between the primary, secondary, and tertiary sectors; be aware of environmental challenges and specific agendas; and be able to respond fully to the demands of different social groups and movements.
This necessarily leads to another question that was present in one way or another in the different presentations: the multidimensional nature of inequality and integration. This implies that some of the biggest challenges facing our governments and societies include creating indicators for measuring inequality, designing policies to reduce it, articulating between different state agencies, and forging public–private sector partnerships to make headway on each of these different fronts. Seminars such as this contribute by sharing experiences and solutions for a multiplicity of challenges that are in a constant state of flux.