Germán Arce calls for commitment to end informality in the country – Sectors – Economy

Of all the structural problems that Colombia currently has, that of labor informality, which affects 60 percent of the population, is the largest and the one that urgently requires an immediate solution, because it would allow the country to improve on issues such as savings, taxation, production and economic growthamong other fronts.

It will not be an easy task, Germán Arce, president of the National Trade Union Council (CGN), told EL TIEMPO, warning that the Government, businessmen and, in general, the entire country have a great opportunity today to put an end to this problem, for which reason he called for the discussions that are beginning to take place around social reforms to have enough time to analyze their long-term impacts, discuss and debate them for all Colombians.

What is the photo that entrepreneurs are seeing today compared to August 2022?

The president (Petro) was elected with a banner of change on transcendental issues, such as social security that affects all Colombians, health, labor, pension issues, old age protectionThis package of conversations and discussions are very deep and have a great impact for the country. There is another front that is related to the provision of public services, which has been a factor of discussion in recent weeks, and there is also a discussion about Colombia’s ability to manage its medium-term fiscal framework, that is In other words, how to manage this entire agenda of changes within fiscal restrictions that are associated with the deficit and the level of indebtedness of the country. This forces you to have some conversations about how these transformations can take place, how they become sustainable and how the fiscal situation of the country is recognized. But also, send some signals of long-term stability, because that is what keeps the productive apparatus moving.

How to move towards those goals?

Investors are making decisions, budgeting, the State sending signals that allow these investments to have a stable long-term horizon and that one makes these two things reconcile. In this there are never perfect balances, but an exercise so that between the public and the private there is the right balance for the country to advance in closing gaps in social matters. But also, resolving structures that have aged poorly, such as informality that is linked to productivity problems and the ability we have to grow above our enormous potential, to generate more employment, more tax capacity in society. This is a great challenge for the State, the President and businessmen, but respecting the institutional framework that has taken us years to build.

But with the situation, many investors are afraid of coming to the country…

Colombia has always had an attribute and that is that it is a social State of law, it is the first thing investors are told. The second is that we have strong institutions. Colombia would not have been able to grow and close the gaps that it has closed in recent decades in the midst of an armed conflict without this, it has maintained increasing levels of investment, achieved important things, perhaps below the expectations of the citizens, but well above the financial and economic capacity that the country had just two or three decades ago. Now, we have to be able to manage these reforms from the institutional framework, it is the obligation of all of us who represent these institutions to guarantee that within the rules of the game we can discuss, disagree and build, because if we manage to provide solutions for citizens, change has a meaning for society, which is expecting a lot from us and its institutions.

And what do these reforms proposed by the Government tell you?

Until now we are beginning to know the texts of some. What has the Trade Council prioritized? The discussion of the development plan… I would add the law of adding (budgetary). This plan brings two important signals for the economy: the first, those flagship sectors with which the State will generate the stimuli to maintain economic activity, the weight that investment has, the way in which programs and projects that have a Medium and long term impact. This should shed light on how those emphasis are from the investment point of view of the public and private sectors, and the objectives to achieve some goals of reducing some indicators that are raised in that plan. I hit the supplements law because it includes the extraordinary income of 2022 and the extraordinary ones that come from the entry almost simultaneously of the last two tax reforms. It is necessary to measure whether, due to the way in which they are allocated in spending, they will become pocket money or factors that generate growth and employment.

What is the other point?

The big package reforms the social protection system. The first one that was presented is health. From Andi some proposals were made and we are in the task of understanding them and supporting that effort. But what worries us the most is labor because we have identified that the main structural problem that the Colombian economy has is high informality, It is the problem with the greatest difficulties to solve and in which he believes the opportunity should be seized to break some old discussions that have not allowed us to have a labor system that helps to formalize workers, who are linked to the formal activity of younger, adult, and that in this way we can have a larger economic apparatus and a higher level of contribution to social security

And in that regard, what is the message to advance the discussion?

Without knowing the project, it must hit to reduce informality, we have to include in the discussion those who do not have a formal job and not fall into the trap of becoming a discussion of union rights. The problem is that 60 percent of Colombians do not fit into the category of employees, a percentage that needs effective solutions. that allow you to recognize the new challenges of the forms of work: automation, digitization, the incorporation of population that has been vulnerable in the generation of formal employment, women, youth, work for the elderly. We believe that there is an opportunity to give it from a long-term perspective that solves the problem of informality or that generates incentives to reduce it in a reasonable time horizon. We are working with other unions that have their own concerns, We want to put proposals on the table that address the big problem of informality, the elephant in the room.

How are you seeing the pension issue?

Asofondos is doing a very rigorous task, that must be recognized. But the first thing is that we have to be able to understand that there is a problem for some 3 million people who have reached pension age, did not meet the requirements to retire and today are in vulnerable conditions. This problem of old age protection is not derived from the pension system, but from a weakness of the State to meet the needs of this vulnerable population, who does not have access to work and does not have a protection system. There are assistance programs, but they are not necessary to get these adults out of the extreme poverty lines, so an effort of a fiscal nature must be made to help this population. How much, for whom and how to make it sustainable is another discussion almost with the Minister of Finance.

And the discussion of managing people’s savings…

That is a fundamental issue on how we preserve the savings built in these 30 years and How do we ensure that it contributes to old age protection?It is an issue related to the responsibility we have with the following generations, because if that savings is spent today, we are opening a gap for young people who will retire later, we must protect that savings regardless of who manages it. If it becomes an expense, we are building a problem that will be very difficult to solve. In addition, it must fulfill its function of activating or investing in the productive sectors so that they can grow, create employment and pay taxes.

Where is the health reform?

We just started looking at it. I would just say that to solve problems, such as rural coverage, the system of protection or provision of services in the cities must not be deteriorated, which has made it possible to level the subsidized and contributory plan and give him access to health in a country that he did not have access to 30 years ago.

Are you concerned about the control that the President will make of energy rates?

Assuming the functions of the Creg is a risky idea, among other reasons in the generation of expectations and long-term investment signals, which is what this sector requires to meet a growing demand for energy that costs billions of dollars. This discussion, acknowledging that there are coverage and quality problems to be resolved, can take place within the framework of the built institutionality, because the risk is that we will alienate investors and without these investments it will be difficult to provide a quality service in the future. You can not send confusing signals or instability to long-term investors.

You help yourself with President Petro, what is the reading, after that appointment?

I had the opportunity to speak with the President a couple of weeks ago about this agenda, about these prioritized issues in the CGN, to tell him that our will is to be proactive and constructive in the solutions that the public expects and that is where our will is set. What I sensed is that he has a positive attitude. What happens is that this discussion of the reforms will have to take place within the framework of the powers of Congress, hence the importance of the meeting, because beyond the media noise and the networks, we have an orderly debate. Next week we will start the meetings with different benches, we hope to arrive with proposals, ideas, numbers and priorities, which will allow us to have a more precise discussion.

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