IV. The Role of the Government in Combating Unemployment. How to Generate More and Better Jobs

 

I have sought to demonstrate that unemployment, like so many other social issues, has an international dimension. The very nature of globalized development generates dramatic effects, as is illustrated by the trajectory of some developed countries. One point which I have sought to emphasize is that we should not stand passively by in face of the problems which Globalization has caused to emerge. The definition

of the national strategies needed to combat these evils is absolutely imperative and urgent. For this reason I shall now reflect briefly upon the manner in which we in Brazil are dealing with the theme of unemployment.

One of the main problems of Government in a democratic country such as Brazil, which has vast social liabilities resulting from the historical neglect and negligence by its elites, is the misconception on the part of the population that the Federal Executive Branch can do anything, and has the capacity to overcome century-old distortions in the course of a single Presidential term of office. It is natural that this should be so, especially in light of the success which we are enjoying with the stabilization of the economy.

I am fully aware that the problem of employment, both in terms of the quantitative supply of jobs and of the qualitative aspect of the new jobs to be created, constitutes one of the most serious issues to be faced by political leaders throughout the world. This is because the preservation and generation of jobs are prerequisite steps not only for the success of any social policy, but also to ensure the very dignity of the citizenry.

Facing up to this complex theme, however, does not depend only upon governments, though some governmental policies may be essential to minimize the impact of structural unemployment.

I shall now focus upon the Brazilian case which, I believe, bears certain similarities to that of Mexico. Before pointing out some of the measures my government is adopting in this field within the context of a broader strategy for social development, it would be useful briefly to analyze some of the elements which prevail in the dimension of the labor force and on the side of the supply of jobs within the Brazilian economy.

With regard to the dimension of the labor force, we must be aware of the following aspects:

a) the demographic component will continue to exert strong pressure on the labor market over the next 15 years, the period after which the effects of the current drop in fertility rates will begin to be felt;

b) the socio-cultural impact of the rise of the participation of women in the labor force;

With regard to the dimension of the supply of jobs, it is important to stress that:

a) as a result of the opening of the economy and the imperative of competitiveness and productivity, it is necessary to know what will be the sectoral composition of a peripheral industrial economy which is integrated into the new international division of labor;

b) as I have already indicated, a profound restructuring of production is underway, as a consequence of new technologies which, on the one hand, devalue non-qualified labor, and on the other, demand great retraining efforts among the labor force; and

c) an organizational restructuring of the productive sector will demand the abolition of certain intermediate categories of jobs, at the same time as there is a growing trend towards the "informalization" of the labor market, which is further exacerbated by the outsourcing of functions.

In light of these conditioning factors _ and given the limitations of the actions of the State _ how best to seek innovative solutions which involve the different levels of government, civil society, labor unions and employers' organizations? It is not my task here to draw up a more detailed prescription to attack the problem. I merely mention some of the measures, both on the supply and the demand sides for Labor, which my Government has adopted or is in the process of implementing.

On the side of the supply of labor, I am committed to two points which I deem to be essential: massive investment in primary education and wide-reaching training and retraining programs, the costs of which are to be shared with the business community.

On the side of the demand for labor, our actions are to be concentrated on:

a) sustained economic expansion by means of policies to promote growth conciliated with stabilization;

b) the development of specific policies for the generation of employment, with a resumption of large-scale investments in the infrastructure and social areas (the social area, though overvalued as a significant generator of jobs, has enormous potential for employment generation);

c) technical and financial support for better training in labor-intensive sectors, such as construction, family-based agriculture, and tourism;

d) tax incentives, improved conditions of financing for production, and technical support for small and medium companies, which provide most of the jobs in the country;

e) the stimulus, through financing from state development banks, of programs which preserve and create jobs; and

f) the reduction of the cost of the labor factor in negotiations between Capital and Labor so as to make labor relations more flexible, including measures which provide greater autonomy to unions for the celebration of collective labor contracts.