The Regulatory f The Regulatory f frame work of the frame work of the Labour Marke Labour Marke Labour Marke Labour Marke et in a broader et in a broader et in a broader et in a broader perspe perspe ective ective Reynold Simons Reynold Simons Senior Specialist Employment Senior Specialist Employment Senior Specialist Employment Senior Specialist Employment and Labour Market policies and Labour Market policies 1 1
What do we w What do we w What do we w What do we w want discuss want discuss want discuss want discuss What labour marke What labour marke ets are ets are Why Governments Why Governments s, trade unions s, trade unions regulate labour ma regulate labour ma g arkets arkets Why over- Why over -regulatio regulatio on is bad for all on is bad for all players on the labo players on the labo players on the labo players on the labo our markets our markets our markets our markets Initiate the discuss Initiate the discuss sion on regulation in sion on regulation in Caribbean Labour Caribbean Labour Caribbean Labour Caribbean Labour markets markets markets markets 2 2
What Labour What Labour r Markets Are r Markets Are Definition (a market): Definition (a market): “a material/ visible or “a material/ visible or immaterial/ invisible pla immaterial/ invisible pla immaterial/ invisible pla immaterial/ invisible pla ace where supply and ace where supply and ace where supply and ace where supply and demand meet and whe demand meet and whe ere exchange takes place” ere exchange takes place” Highly abstract definiti Highly abstract definiti on on – H l H l Helps with understanding t Helps with understanding t ith ith d d t t di di t t th th the essence but the essence but b t b t – Critical facts or aspects tha Critical facts or aspects tha at are left to debate at are left to debate A complex set of inter- A complex set of inter p -related labour markets related labour markets including : including – National, Regional and Mic National, Regional and Mic cro cro – Industry and Occupational Industry and Occupational Industry and Occupational Industry and Occupational – Formal and informal Formal and informal – Male and female Male and female 3 3
Markets are man Markets are man n-made complex made complex i i institu institu tit tit utions utions ti ti For commodities, cap For commodities, cap , , p p pital and labour markets pital and labour markets p to ultimately produce to ultimately produce e socially desirable e socially desirable results they depend o results they depend o on: on: – – The underlying value s The underlying value s The underlying value s The underlying value s system of the societies that system of the societies that system of the societies that system of the societies that created and operate th created and operate th hem (property rights, hem (property rights, currency, enforcement currency, enforcement t of basic behaviour rules t of basic behaviour rules and standards) and standards) – The type and extent o The type and extent o of imperfections due to (i) of imperfections due to (i) the impact of external the impact of external influences, (ii) information influences, (ii) information bias and power asymm bias and power asymm metries) metries) – The success of the res The success of the res sponses of the primary sponses of the primary market actors and the market actors and the e Government aimed at e Government aimed at correcting imperfectio correcting imperfectio ns ns 4 4
Free vs regulated Free vs regulated d labour markets d labour markets Despite differences in ty Despite differences in ty ype and level of intervention ype and level of intervention labour markets are the m labour markets are the m most regulated markets most regulated markets – Institutions are needed to m Institutions are needed to m utually sunk investments are utually sunk investments are “insured” against risks result “insured” against risks result insured against risks result insured against risks result ting from the nature of the ting from the nature of the ting from the nature of the ting from the nature of the transaction: the object is tied transaction: the object is tied d to a person and this can easily give d to a person and this can easily give rise to opportunistic behavio rise to opportunistic behavio ur ur – Measures aiming at income d Measures aiming at income d distribution and social equity distribution and social equity F F Free versus regulated la Free versus regulated la l t d l l t d l abour markets abour markets b b k t k t – “Free (labour) markets” are e “Free (labour) markets” are e essentially a theoretical construct and essentially a theoretical construct and in the empirical sense “free in the empirical sense “free markets” don’t exist markets” don’t exist – There is a wide variety in ter There is a wide variety in ter y rms of “regulation” of the labour rms of “regulation” of the labour g market with currently two ex market with currently two ex xtremes: USA and EU … xtremes: USA and EU … employment employment at will principle, minimum wa at will principle, minimum wa ages, unemployment benefits and ages, unemployment benefits and social protection social protection All regulation of a marke All regulation of a marke All regulation of a marke All regulation of a marke et carries cost . Successful et carries cost . Successful et carries “cost”. Successful et carries “cost”. Successful interventions are those interventions are those that result in a more that result in a more positive outcome than t positive outcome than t hat of a ‘pure market” based hat of a ‘pure market” based solution solution 5 5
Who regulates … Who regulates … … and the policy … and the policy challe challe h ll h ll enge enge The “regulators” The “regulators” The regulators The regulators – – Government Government – Employers and their org Employers and their org p p y y g g ganisations ganisations g – Trade Unions Trade Unions – Tripartite or bi Tripartite or bi- -partite partite A reactive vs a policy a A reactive vs a policy a approach approach – Policy informed by emp Policy informed by emp irical analysis irical analysis – Consultation of Social P Consultation of Social P artners on draft policies artners on draft policies – Monitoring and evaluati Monitoring and evaluati on of policies on of policies 6 6
What is regulated in What is regulated in What is regulated in What is regulated in n a policy approach n a policy approach n a policy approach n a policy approach (Pro (Pro- -)Active (discretionary )Active (discretionary y) vs Passive (non- y) vs Passive (non - discretionary) Labour mar discretionary) Labour mar ket policies ket policies Addressing market failures Addressing market failures s: s: – Competition policies includin Competition policies includin ng those addressing asymmetric ng those addressing asymmetric relations (ownership rights, f relations (ownership rights, f freedom of association, freedom of association, termination of employment, termination of employment, termination of employment termination of employment minimum wages basic standards minimum wages basic standards minimum wages, basic standards minimum wages, basic standards – Structural policies aiming at Structural policies aiming at t changing resource allocation t changing resource allocation (subsidies (minimum wages, (subsidies (minimum wages, , TVET etc), tax differentiation, , TVET etc), tax differentiation, etc) etc) – Income policy aimed at nega Income policy aimed at nega l l d d ative market outcomes including ative market outcomes including k k l d l d social security systems etc) social security systems etc) – Public provision of goods and Public provision of goods and d services by the state (education d services by the state (education infra infra-structure) a st uctu e) st uctu e) structure) Income distribution and eq Income distribution and eq quity: quity: – Macro economic and fiscal po Macro economic and fiscal po olicies olicies – Minimum wages Minimum wages g 7 7
Areas covered Areas covered d by regulation d by regulation y y g g (in the Ca (in the Ca aribbean) aribbean) Freedom of association an Freedom of association an d industrial action: d industrial action: – TU recognition TU recognition – Statutory regulation of dispu Statutory regulation of dispu ute settlement (via conciliation or ute settlement (via conciliation or arbitration) arbitration) – The enforceability of collecti – The enforceability of collecti The enforceability of collecti The enforceability of collecti ive bargaining agreements ive bargaining agreements ive bargaining agreements ive bargaining agreements Contracts of employment Contracts of employment Social protection Social protection National insurance National insurance N N i i l i l i Occupational health and sa Occupational health and sa afety afety Holiday with pay and overt Holiday with pay and overt y y p y p y time, time, , Termination of employmen Termination of employmen nt, redundancy and nt, redundancy and severance, severance, Minimum wages Minimum wages Minimum wages Minimum wages Gender equality Gender equality 8 8
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