Pro-employment macroeconomic frameworks, sectoral strategies for - PowerPoint PPT Presentation

Pro-employment macroeconomic frameworks, sectoral strategies for employment creation and the informal economy. A knowledge sharing workshop Employment Policy Department, ILO Geneva Geneva, 20-23 September 2011 Macroe Macr oeco cono nomic polic mic policy y for or full full an and d pr prod oduc uctiv tive e emp emplo loymen yment t and de decent t work for all. r all. An An analysis ysis of th the Ar Argentine tine exp xper erienc ience Mario Damill, Roberto Frenkel and Roxana Maurizio CEDES Buenos Aires, Argentina 1

1. Introduction: A tale of two decades • Periods: 1981-82: Debt crisis 1 the eighties: "Lost decade" 1989-1990: Two hyperinflations 2 1991-2001: Hard peg ("Convertibility") 2001-2002: Crisis, default, devaluation 2003-2006: New macropolicy setting (SCRER) 3 2006 on: Inflation, weakening of the SCRER model Global crisis 2

and employment rate Graph 2.1. Seasonally-adjusted real GDP (in millions of pesos of 1993) (%) 32 34 36 38 40 42 44 1991 M 1991 O 1992 M 1992 O 1993 M 1993 O 1994 M 1994 O 1995 M 1995 O Employment rate (left axis) 1996 M 1996 O 1997 M 1997 O 1998 M 1998 O 1999 M 1999 O 2000 M 2000 O 2001 M 2001 O 2002 M 2002 O 2003 M / S1 2003S2 2004S1 GDP (right axis) 2004S2 2005S1 2005S2 2006S1 2006S2 2007S1 2007S2 2008S1 2008S2 2009S1 2009S2 2010S1 150000 200000 250000 300000 350000 400000 450000 (millions of pesos of 1993) 3

2. The Convertibility program and the labor market 4

semester 1986 = 1). Graph 2.2. Multilateral real exchange rate (Second 0,4 0,8 1,2 1,6 2,4 2,8 3,2 0 2 1986Q1 1987Q1 1988Q1 1989Q1 1990Q1 1991Q1 1992Q1 1993Q1 1994Q1 1995Q1 1996Q1 1997Q1 1998Q1 1999Q1 2000Q1 2001Q1 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 5

Graph 2.3. Balance of Payments (Four quarters m.a. in millions of dollars) 25,000 20,000 15,000 10,000 5,000 0 -5,000 -10,000 -15,000 -20,000 I 1993 I 1994 I 1995 I 1996 I 1997 I 1998 I 1999 I 2000 I 2001 I 2002 I 2003 I 2004 I 2005 I 2006 I 2007 I 2008 Current Account Net Capital Inflows Reserve Variations 6

(% of GDP). Graph 2.5. Primary result of the National Public Sector -3,0 -2,0 -1,0 0,0 1,0 2,0 3,0 4,0 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 7

Graph 2.6. Aggregate financial surpluses by sector (% of GDP) Public Sector 13 Private Sector 9 External 5 1 -3 -7 -11 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (e) 8

The labor market in the nineties Graph 2.8. Average wage and unit labor costs in constant US dollars in the manufactures (first quarter of 1986=100) 160 140 120 100 80 60 40 20 0 1990Q1 1991Q1 1992Q1 1993Q1 1994Q1 1995Q1 1996Q1 1997Q1 1998Q1 1999Q1 2000Q1 2001Q1 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 Wages in constant US dollars Unit labour costs in constant US dollars 9

Graph 2.10. Labor market indicators: Participation rate, Employment rate, Employment rate excluding PJJHD; full-time employment rate excluding PJJHD (as % of total urban population). 48 Methodological change >>> 44 40 Unemployment 36 Involuntary underemployment 32 28 24 1980 1985 1990 1995 2000 2005 2010 (1) (3) (2) (4) 10

Graph 2.12. Real per capita family income (in pesos of May 1998) . 400 23% 360 320 1% 280 240 -31% 200 91 92 93 94 95 96 97 98 99 00 01 02 11

Graph 2.13. Gini Indexes of labor incomes (Greater Buenos Aires, May 1991- October 2001) 0.48 0.47 First half of the '90s: Constant trend Second half of the '90s: Growing trend 0.46 0.45 0.44 0.43 0.42 0.41 0.40 0.39 0.38 0.37 0.36 0.35 O91 O92 O93 O94 O95 O96 O97 O98 O99 O00 O01 Monthly labour income. Total workers Monthly labour income. Wage earners Hourly labour income. Total workers Hourly labour income. Wage earners 12

Graph 2.14. Relationship of the per capita family income between the fifth and first quintiles (Greater Buenos Aires, May 1991- October 2001). 22 20 20 18 18 17 16 16 16 16 15 15 14 12 12 11 10 M91 M94 M98 O98 M99 O99 M00 O00 M01 O01 13

Graph 2.15. Poverty rates (Greater Buenos Aires, May 1991- October 2001). 40 35 35 33 30 30 29 29 28 27 27 27 26 26 26 25 24 25 22 22 19 20 19 18 18 17 16 15 10 5 M91 O91 M92 O92 M93 O93 M94 O94 M95 O95 M96 O96 M97 O97 M98 O98 M99 O99 M00 O00 M01 O01 Individuals Households 14

3. Macroeconomic policies and the labor market in the 2000’s A radically new scenario 15

Macroeconomic policies after 2006: the SCRER framework looses coherence Table 3.1 CPI annual rates of inflation (%). Year (%) 2002 41.0 2003 3.7 2004 6.1 2005 12.3 2006 9.8 2007 26.6 2008 23.0 2009 14.8 16

economies and for Argentina and Brazil (in basis points). Graph 3.1. Average country-risk premium for emerging market 1000 1200 1400 1600 1800 2000 200 400 600 800 0 02/01/2006 02/03/2006 02/05/2006 02/07/2006 02/09/2006 02/11/2006 02/01/2007 02/03/2007 02/05/2007 02/07/2007 02/09/2007 02/11/2007 02/01/2008 02/03/2008 02/05/2008 02/07/2008 02/09/2008 02/11/2008 02/01/2009 02/03/2009 02/05/2009 02/07/2009 02/09/2009 02/11/2009 02/01/2010 02/03/2010 02/05/2010 02/07/2010 02/09/2010 Brasil Argentina EMBI+ 17

Graph 3.2. External asset accumulation of the non-financial private sector (millions of US dollars). 2,000 1,419 894 377 307 500 -165 -207 -251 -349 -274 -609-440 -525-580-729-862 -1,000 -672 -970-728-922 -972 -1,299 -1,671 -1,850 -2,500 -3,246 -4,000 -4,210 -4,778 -4,727 -5,500 -5,440 -5,509 -7,000 -8,155 -8,500 I 2003 II 2003 III 2003 IV 2003 I 2004 II 2004 III 2004 IV 2004 I 2005 II 2005 III 2005 IV 2005 I 2006 II 2006 III 2006 IV 2006 I 2007 II 2007 III 2007 IV 2007 I 2008 II 2008 III 2008 IV 2008 I 2009 II 2009 III 2009 IV 2009 I 2010 II 2010 18

Graph 3.4. Fiscal impulse (% of GDP) -2,0% -1,5% -1,0% -0,5% 0,0% 0,5% 1,0% 1,5% 2,0% 2,5% 3,0% mar-04 jul-04 nov-04 mar-05 jul-05 nov-05 mar-06 jul-06 nov-06 mar-07 jul-07 nov-07 mar-08 jul-08 nov-08 mar-09 jul-09 nov-09 mar-10 jul-10 19

dollars). Graph 3.5. Stock of foreign reserves of the Central Bank (billion 12.000 16.000 20.000 24.000 28.000 32.000 36.000 40.000 44.000 48.000 52.000 4.000 8.000 0 I 2003 II 2003 III 2003 IV 2003 I 2004 II 2004 III 2004 IV 2004 I 2005 II 2005 III 2005 IV 2005 I 2006 II 2006 III 2006 IV 2006 I 2007 II 2007 III 2007 50.039 IV 2007 I 2008 II 2008 III 2008 IV 2008 I 2009 II 2009 45.193 III 2009 IV 2009 49.229 I 2010 II 2010 20

the US dollar (December 2001=100). Graph 3.6. Multilateral real exchange rate and real exchange rate with 100 120 140 160 180 200 220 240 260 280 300 Dic-01 Mar-02 Jun-02 Sep-02 Dic-02 Mar-03 Jun-03 Sep-03 Dic-03 Mar-04 Jun-04 Sep-04 Dic-04 Mar-05 RER (US dollar) Jun-05 Sep-05 Dic-05 Mar-06 Jun-06 RER (multilateral) Sep-06 Dic-06 Mar-07 Jun-07 Sep-07 Dic-07 Mar-08 Jun-08 Sep-08 Dic-08 Mar-09 Jun-09 Sep-09 Dic-09 Mar-10 Jun-10 21

Graph 3.7. Evolution of monetary aggregates in real terms. 100 150 200 250 300 350 400 450 500 50 0 Ene-02 Abr-02 Jul-02 Oct-02 Ene-03 Abr-03 Jul-03 Oct-03 Ene-04 Monetary Base Abr-04 Jul-04 Oct-04 Ene-05 Abr-05 Jul-05 LEBAC & NOBAC Oct-05 Ene-06 Abr-06 Jul-06 Oct-06 Ene-07 Abr-07 Jul-07 Passive Swaps Oct-07 Ene-08 Abr-08 Jul-08 Oct-08 Ene-09 Abr-09 Jul-09 Oct-09 Ene-10 Abr-10 Jul-10 22

Employment, unemployment, wages and income distribution in the 2000’s 23

programs).Total urban centers, May 1991-II semester 2010. Graph 3.8. Employment rate (with and without employment 30 32 34 36 38 40 42 44 1991 M 1991 O 1992 M 1992 O 1993 M 1993 O 1994 M 1994 O 1995 M 1995 O Employment rate 1996 M 1996 O 1997 M 1997 O 1998 M 1998 O 1999 M 1999 O 2000 M 2000 O 2001 M Employment rate without employment programs 2001 O 2002 M 2002 O 2003 M / S1 2003S2 2004S1 2004S2 2005S1 2005S2 2006S1 2006S2 2007S1 2007S2 2008S1 2008S2 2009S1 2009S2 2010S1 24

Graph 3.9. Employment and Full-time Employment rates. Total urban centers, I quarter 2003-II quarter 2010 44 93 42 91 40 89 38 87 36 85 34 83 32 81 30 79 28 77 26 24 75 2003 1 2003 2 2003 3 2003 4 2004 1 2004 2 2004 3 2004 4 2005 1 2005 2 2005 3 2005 4 2006 1 2006 2 2006 3 2006 4 2007 1 2007 2 2007 4 2008 1 2008 2 2008 3 2008 4 2009 1 2009 2 2009 3 2009 4 2010 1 2010 2 Full Employment /Total Employment (right axis) Employment rate Full Employment rate 25

11 13 15 17 19 21 23 5 7 9 October 1995-II quarter 2010. Graph 3.10. Unemployment rate. Total urban centers, O95 M96 O96 M97 O97 M98 O98 M99 O99 M00 O00 M01 O01 M02 O02 M03/ 2003 2 2003 3 2003 4 2004 1 Semi-Annual EPH 2004 2 2004 3 2004 4 2005 1 2005 2 2005 3 2005 4 2006 1 Continuous EPH 2006 2 2006 3 2006 4 2007 1 2007 2 2007 4 2008 1 2008 2 2008 3 2008 4 2009 1 2009 2 2009 3 2009 4 2010 1 2010 2 26