Colombia needs a great labor reform. That is the fundamental conclusion reached after talking for several hours with the president of Andi, Bruce Mac Master. Our dialogue arose as a result of the concern caused by the intense action of the senior business executive before the Congress of the Republic to deny the reform presented by the Government. The business leader has already been leading Andi for 10 years.
Is a labor reform necessary in the country?
Yeah. We need it for a long time. The fact that we have a lot of unemployment and such a high level of informality is proof that Colombia has a labor structure with enormous problems that have to be corrected.
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Do you need a labor reform to establish adequate standards?
First, create employment. Second, social protection for workers. Third, reduction of informality. Fourth, increased labor productivity. Fifth, modernization of the world of work. We need modern contracts, contracts that conform to international labor relations, to the digital world.
Unfortunately, don’t you think that the modernization of the world of work is seriously threatened by artificial intelligence?
We have to prepare for that and do everything possible so that it does not produce unemployment, but it is a great risk.
But isn’t modernizing work robotizing it?
All these new tools have to be made available to the human being and look for activities in which humans are irreplaceable. Change is coming and we have to be ready. The labor reform cannot deny that this is going to happen. Everyone today has an artificial intelligence tool on their cell phone and is only now beginning to know it.
How should we prepare?
The OECD (Organization for Economic Cooperation and Development) today has the same discussion. What do we do to ensure that artificial intelligence does not harm humanity. That is the big question.
Can it produce unemployment?
Sure, we have to prepare. And for the growth of the digital world. The government’s labor reform does not say a single word about that. And we are not just talking about labor costs. The reform is a reform for the 20th century. It does not recognize that we are in the 21st century.
In addition, unemployment is seriously affecting young people…
Yeah. We have to make a very big effort to try to legislate for this world that is coming, which is different, modern, flexible. Colombia has the opportunity to legislate very well and also to legislate in a modern way. See for example Spain. He made a reform similar to this one. Unemployment skyrocketed. Look: all the decisions we are making right now are decisions of the 20th century. Not from the 21st century. There are many things that change or are changing. Today the most serious problem that exists in the world of work is unemployment. About 10%. And we have the biggest distortion, which is informality.
Why does Andi maintain that the government’s labor reform creates unemployment?
Andi is not the one who says it, the Bank of the Republic, Eafit, Anif, Fedesarrollo say it, they have all shown that the reform creates unemployment. Studies estimate that 425,000 jobs will be lost. We ask the Government and Congress to hear the technical studies. The Government has the Macro Analysis Unit in the Ministry of Finance. Hear them.
You don’t defend the bank’s position, but do you agree with it?
Yes sir, I think it is a correct study.
The serious problem that affects work is informality. What causes it?
Many studies show that one of the causes of informality is the costs associated with work. Especially those who do not receive the worker, parafiscal or social benefits and that make there workers who are in the world of informality. The reform has a series of provisions that increase the barriers to formality, therefore, they generate informality. The Minister of Finance even said in the Chamber that most likely those 425,000 of whom the Bank of the Republic spoke were not going to be new unemployed, but new informal ones.
Why do you think the minister said that?
Surely because he knows that conditions are created that discourage the creation of formal employment. Is right.
Conditions as appropriate?
Like the costs associated with work, the parafiscals, the extra costs that companies pay beyond the salary that workers receive. 60% of economically active people in Colombia are in the informal sector. Remember this: Colombia has 22 million economically active people, of which 12 million are in the informal sector. So, are we going to make a labor reform that forgets about those people? An informal is not someone without a pension, without ARL (occupational risks), without unemployment, without an employment contract, without dominical and without extras. An informal has none of that. He is a worker without rights.
The great informality in Colombia occurs in what activity?
Almost always in small and medium-sized, in the field, in self-employment.
President Petro accused you businessmen of being responsible for the failure of the labor reform in Congress. Is that Andi’s position?
That is our position, but we are not asking to vote against the reform. What we did was argue. Even here I have a document that shows that the reform is not convenient for workers, nor for informal workers, nor for SMEs nor for entrepreneurs, and the congressmen made their decision.
But it is that public opinion in general has considered that the labor reform supposes one more night hour, higher wages for Sunday workers…
Yes of course. That is the message that the government is trying to spread. But we are talking about a relatively small group of workers. It is estimated that these benefits will not reach 3 million people. Remember Yamid that we are 22 million workers. The reform had many other things that were actually, in our opinion, very radical and biased from the point of view of the world of work, which referred to issues such as collective bargaining. It included provisions to allow strikes in public services, which is unconstitutional, it provided very bad provisions for SMEs and MSMEs.
For you, in general, what did the reform mean?
The death certificate for SMEs and entrepreneurs, because it established that SMEs and entrepreneurs, in order to be able to sell to a company, necessarily had to offer the same working conditions that the buying or contracting company offers their own. So, it is very strange that Colombia would carry out a reform against the small ones, forcing the big companies to do everything directly, to have their own trucks, their own accountants, their own software developers and never hire.
In other words, did the reform end up generating great vertical integration?
exact Forgetting the chains, which must occur for SMEs, MSMEs and entrepreneurs to grow. Lots of mistakes.
So what should be done?
Arrange to find the best decisions for everyone. There are many things to be done on the issue of unemployment and informality.
The Minister of Finance announced that he will present the reform again. Will Andi maintain her opposition?
If it is the same reform, yes. We believe that a great harm would be done to the workers by approving it, being able to approve a good reform, we have the opportunity to do it.
So, what is the concrete, specific proposal of the businessmen?
It is that we make a reform based on, for example, the work done by the World Bank economist, the Mexican Santiago Levy, accompanied by the ILO (International Labor Organization), which was delivered as an employment mission. It’s a good foundation. That we take into account the digital work or the cross-border work of someone who works here, but is hired by someone in Norway. The President has asked that labor productivity be increased. Colombia has very low labor productivity. The President even says that we work too many hours and produce little. He is right.
And what to do to not work so many hours, but to produce more?
That is achieved with labor productivity. Conditions must be created to include informal workers. We have proposed to implement a progressive inclusion process; a kind of transitional justice for the informal, where we allow them to enter the system little by little, but that their costs do not increase so quickly, but instead we can take five or ten years in which, for example, the parafiscal costs disappear.
One of the reasons for informality is the cost of hiring. Don’t you agree?
Yeah. And it can be fought by generating incentives, reducing costs for informal workers to enter the formal world.
How would that be done?
Recognizing rights to workers who do not have them, starting with universalizing pension contributions, strengthening compensation funds. Or work on creating unemployment insurance. There are a lot of things to do.
How is the idea of unemployment insurance?
We have many ideas to implement at work. There are ways to implement unemployment insurance, or new types of contracts.
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But who will pay the insurance?
The system; you have to design it well. Informality is a source of poverty and a source of inequality. Colombia is one of the most inequitable countries in the world, a very important part of that inequality is in the informal sector.
Does the private company effectively contribute to combating informality?
Of course, Yamid, it is precisely the formal company that offers the formal job. Europe has an informality of less than 5%, almost always represented by illegal immigrants. And we are at 60%.
How is formality built?
Creating the conditions. Lowering the cost overruns to employment. Employment has a number of cost overruns, which is why informal workers consider that formal employment is very expensive. It must be attractive to be formal. A strong State is required that protects formality, monitors informality and does not encourage it. It is a process that must be progressive, slow.
What do you mean very slow?
That it last ten years, that the first year, for example, they pay only 10% of the extra costs paid by formal stimulants, that the second year they pay 20%, which is very little, and so on.
Is your proposal for ten years?
I say ten years, it can be less.
Does a salary weight mean how much final cost?
One peso means 1.65 of total cost, or mar, an additional 65 cents.
You told me that you called the President to request an audience. Has he already responded?
No, he has not answered me.
YAMID AMAT
Special for EL TIEMPO
