Libertad sindical

CICIG y MP deben investigar las suspensiones ilegales, encarcelamientos y asesinatos contra los trabajadores.

Franco Martínez Mont

En Guatemala, el cumplimiento de derechos humanos es una utopía liberal –ni siquiera socialdemócrata– y la represión a los trabajadores organizados fue y ha sido la estrategia contrainsurgente para configurar el Estado neoliberal actual, donde las arbitrariedades de los oligopolios actúan con impunidad y corrupción.

La explotación de la fuerza de trabajo es la base para la acumulación de capital de los grupos de poder, creando amplias brechas de desigualdad, muerte y exclusión política.

Empero, en un contexto de posguerra, deben reconocerse las luchas de los sindicatos –no blancos–, quienes han creado un contrapoder ante las vejaciones patronales, desde las resistencias políticas hasta los avances en la institucionalidad pública. Finalmente, las demandas populares deben anclarse en el Estado.

Por ejemplo, a partir de 2017 se firma el Acuerdo en Ginebra para crear la Comisión Tripartita de Relaciones Laborales y Libertad Sindical, esta se hace efectiva en el país mediante el Acuerdo Gubernativo 45-2018.

Dicha instancia está acompañada por OIT y nace para velar por el cumplimiento de los compromisos internacionales a través del diálogo social, fomentando las buenas relaciones laborales (negociación colectiva, libertad sindical, mediación y resolución de conflictos, legislación y política laboral). Está integrada por representantes del Gobierno, sector empleador y organizaciones de
trabajadores.

La Comisión Tripartita contribuirá al empoderamiento de los sindicatos para fiscalizar, proponer y gestionar la aprobación de leyes e implementación de políticas públicas a favor de los trabajadores, ya que su realidad es alarmante, en muchos casos inhumana.

La OIT para 2018 registra 19 casos activos relativos a quejas de libertad sindical, 11 más están en seguimiento, mientras que 80 han sido cerrados.

La coerción y lobby de las cámaras empresariales es sistemático y contundente, pero la negligencia del Estado es aún más deleznable, un Estado que no garantiza derechos y no promueve el bien común de la clase trabajadora.

¿Qué toca ahora? A propósito de la jerga mundialera, la pelota está en la cancha, corresponde a los sindicatos presionar al Congreso para aprobar el decreto-ley que institucionalizaría la Comisión Tripartita, con un presupuesto razonable para su funcionamiento y con plenas prerrogativas democráticas para cumplir con el derecho a la libertad sindical y de asociación, tal y como lo contempla el Convenio 87 de OIT y la Declaración Universal de los Derechos Humanos.

framont@gmail.com

https://elperiodico.com.gt/opinion/2018/07/07/libertad-sindical-2/

Anuncios

Otra vez la renta global

La nueva propuesta de reforma fiscal que presentó el ministerio de Hacienda de Costa Rica incluye la creación del sistema de renta global para gravar y cobrar el impuesto a las utilidades de empresas y personas.

Martes 3 de Julio de 2018

Gravar la totalidad de los utilidades de las personas físicas y jurídicas, incluso las que en la actualidad pagan impuesto por aparte bajo la modalidad de renta cedular, es la principal novedad del nuevo plan de reforma fiscal que presentó el ministerio de Hacienda.

En la propuesta se indica que “… A los efectos de este impuesto, tendrán la consideración de actividades lucrativas debiendo tributar conforme a las disposiciones del impuesto a las utilidades, la totalidad de los ingresos, así como la obtención de toda renta de capital y ganancias o pérdidas de capital.

Ver “Finanzas públicas siguen empeorando

Sobre el alcance de la reforma, Allan Saborío, socio director de Deloitte, explicó a Nacion.com que “… la renta global implicaría incluir, en una sola canasta, la totalidad de los ingresos de un contribuyente aplicando una sola tarifa incluso sobre ingresos que hoy están gravados, por separado, con impuestos de carácter cedular.

Welmer Ramos, presidente de la Comisión de Reforma Fiscal en la Asamblea Legislativa, dijo que “… La renta global viene a facilitar el cobro de la verdadera carga tributaria que tiene que soportar cada una de las personas en la economía. Si no la globalizamos, entonces las personas se ven tentadas a hacer algunas ingenierías tributarias para mostrar que la renta se la ganaron en rubros en que hay menos carga. Eso permite la elusión y la evasión fiscal.

De ser aprobada, los cambios podrían ser incluidos durante los próximos días en el proyecto de Ley de Fortalecimiento de Finanzas Públicas.

https://www.centralamericadata.com/es/article/main/Otra_vez_la_renta_global

¿Qué es el monopsonio y cómo impacta al mercado de trabajo?

Varias décadas (y kilos y canas) después de haber estudiado por primera vez el concepto de un mercado laboral con competencia perfecta, su belleza me sigue maravillando. En este tipo de mercado no hay necesidad de que el gobierno intervenga, puesto que (de forma casi mágica) se da un equilibrio entre las empresas que buscan trabajadores y los trabajadores que buscan empleo. Si el gobierno fijara un salario mínimo muy alto, se generaría desempleo, puesto que los empleadores no estarían dispuestos a contratar a tantos trabajadores si les tienen que pagar un salario más alto. Por el contrario, si el gobierno estableciera un tope salarial, el número de trabajadores demandados por las empresas superaría el número de personas dispuestas a trabajar por ese salario. Más allá de su estética académica, sigo convencido de que las lecciones de este modelo deben estar siempre presentes en el diseño de políticas públicas. Pero, como dice el economista Dani Rodrik, “es un modelo, no el modelo”, y hay muchas posibles fallas de mercado que también deberían considerarse. Entre ellas, el monopsonio, que cada vez genera más atención.

No tan conocido como el monopolio, el monopsonio se genera cuando hay muchas personas buscando trabajo y solo hay pocos empleadores, quienes pueden darse el lujo de ofrecer un salario menor al que tuvieran que ofrecer si hubiera más competencia por los trabajadores. Además de ser malo para el trabajador, este modelo genera un resultado que es ineficiente en el sentido económico. Es decir, hay potenciales contrataciones que beneficiarían tanto a las empresas como a los trabajadores, pero estas contrataciones de beneficio mutuo no se llevan a cabo. Por muchos años, la posibilidad teórica de monopsonio no se consideraba importante para el análisis práctico ni para el diseño de políticas públicas, pero varios estudios recientes sugieren que el problema de monopsonio es relevante y creciente en el tiempo (véanse, por ejemplo, este estudio con base en la información del sitio web careerbuilder.com y este estudio con base en una plataforma en línea de crowdsourcing).

El monopsonio se genera cuando hay muchas personas buscando trabajo y solo hay pocos empleadores, quienes pueden darse el lujo de ofrecer un salario menor al que tuvieran que ofrecer si hubiera más competencia por los trabajadores.

El rol de las políticas públicas

El problema del monopsonio tiene al menos tres implicaciones para las políticas públicas del mercado laboral. La primera tiene que ver con el salario mínimo. En un modelo de monopsonio, un pequeño incremento del salario mínimo puede aumentar el empleo, lo cual podría explicar los estudios empíricos que no encuentran los efectos negativos de los aumentos del salario mínimo que el modelo de competencia perfecta predice. No obstante, cuando el salario mínimo llega a un nivel crítico, seguir incrementándolo tendría el mismo efecto dañino que expliqué anteriormente para la competencia perfecta: aumentar el desempleo (o la informalidad). En este sentido, la existencia del poder monopsónicopuede justificar el uso del salario mínimo para mejorar el funcionamiento del mercado laboral, pero no su uso desmesurado.

La existencia del poder monopsónico puede justificar el uso del salario mínimo para mejorar el funcionamiento del mercado laboral, pero no su uso desmesurado.

La segunda implicación tiene que ver con la importancia de los sindicatos. Según el Consejo de Asesores Económicos de Estados Unidos, los sindicatos pueden proveer un contrapeso al poder de negociación y el ejercicio unilateral del poder monopsónico, promoviendo mayores salarios, mejores condiciones de trabajo y hasta un nivel más eficiente del empleo. En otras palabras, la existencia del poder monopsónico podría justificar un intento de revertir una tendencia de largo plazo hacia menores niveles de sindicalismo. De hecho, un estudio reciente encontró que el impacto negativo del monopsonio en los salarios es menor cuando hay un mayor porcentaje de trabajadores representados por un sindicato. Este estudio también demostró que el vínculo entre productividad y salarios es más fuerte cuando los sindicatos tienen mayor representación.

La existencia del poder monopsónico podría justificar un intento de revertir una tendencia de largo plazo hacia menores niveles de sindicalismo.

La tercera implicación es tal vez la más obvia. Igual que existen esfuerzos orientados a combatir y regular los monopolios, los expertos están empezando a analizar cómo regular los monopsonios. Por ejemplo, Alan Krueger y Eric Posner proponen reforzar el escrutinio de las fusiones entre empresas para detectar efectos adversos en el mercado laboral. Igualmente, Krueger y Posner sugieren prohibir los convenios que impiden a trabajadores de salarios bajos buscar empleo en empresas que compiten con su empleador actual. También proponen prohibir los acuerdos entre sucursales de una sola empresa a no competir por los mismos trabajadores.

Monopsonio versus competencia perfecta

Mi impresión es que el debate sobre las mejores políticas públicas ante la existencia de los monopsonios está apenas comenzando. Las políticas orientadas a fortalecer el poder de negociación de los trabajadores o limitar el poder de los empleadores tienen mayor justificación ante la evidencia del poder monopsónico, pero no debemos olvidar por completo las advertencias del modelo “clásico” de competencia perfecta sobre un exceso de intervención del Estado. En mi opinión, los errores de “alabar demasiado las virtudes del mercado laboral libre” e “ignorar las consecuencias no anticipadas de intervenir demasiado en un mercado” son igualmente comunes y peligrosos.

https://blogs.iadb.org/trabajo/2018/03/23/que-es-el-monopsonio-y-como-impacta-al-mercado-de-trabajo/

“Contratos pene y contratos vagina”, por Marta Flich

Llega la segunda entrega del magnífico videotutorial para entender el mercado laboral español, centrado en los retos a los que se enfrentan las mujeres a la hora de encontrar un trabajo. Los conocidos “contratos vagina”.

https://www.huffingtonpost.es/2018/05/17/contratos-pene-y-contratos-vagina-por-marta-flich_a_23436355/

Trabajo infantil: dónde estamos y qué falta por hacer

A pesar de que el trabajo infantil se ha reducido en todo el mundo de forma significativa, todavía estamos lejos de su erradicación. De acuerdo con la Organización Internacional del Trabajo, aunque el trabajo infantil decreció un 38% entre los años 2000 y 2016, aún alrededor de 152 millones de niños de entre 5 y 17 años se encuentra en esta situación a nivel global. Si bien la región más afectada es África (donde 1 de cada 5 niños trabaja), en América Latina y el Caribe la incidencia de trabajo infantil es alta: alcanza al 7% de los niños. Dos países de la región, Haití y Perú, nos ofrecen evidencia para analizar mejor este fenómeno.

¿Por qué el trabajo infantil es un problema?

Como discutimos en este articulo anterior, al margen de las necesarias consideraciones éticas, el trabajo infantil es preocupante desde la óptica de las políticas sociales por sus potenciales efectos negativos sobre la situación actual y futura tanto de los niños como de sus países. El trabajo infantil reduce la posibilidad de que los niños puedan beneficiarse de la educación, ya sea porque el trabajar les impide ir a la escuela completamente, los lleva a reducir las horas para el estudio en la escuela o en casa, o porque afecta su capacidad de aprendizaje. Llevar a cabo actividades laborales extenuantes o riesgosas pueden afectar la capacidad de aprendizaje y, en general, la salud de los niños. Esta pérdida de acumulación de capital humano tiene efectos directos sobre el bienestar presente y futuro de los niños y de sus hogares, y sobre la productividad y crecimiento de los países en el largo plazo.

¿Quiénes son los más afectados?

La probabilidad que un niño trabaje depende de sus características individuales, las de su hogar y del contexto en el que vive. Los trabajos que los niños realizan también varían con base en estas características. Los datos longitudinales de Young Lives permiten analizar la evolución del trabajo infantil en una muestra de niños en cuatro países en desarrollo, incluido Perú, durante un periodo de 15 años.

Porcentaje de niños en trabajo remunerado

El gráfico muestra que la probabilidad de trabajar aumenta con la edad, particularmente después de los 15 años, que es cuando los niños están próximos a terminar la educación secundaria. Se ve también que los niños viviendo en hogares más pobres (tercil inferior) tienen más chances de trabajar que los niños en hogares menos pobres. En un estudio publicado recientemente, encontramos también que el terremoto del 2010 en Haití provocó que los niños provenientes principalmente de hogares más vulnerables estudien menos y trabajen más.

La parte inferior del gráfico muestra que, a edades tempranas, el trabajo infantil consiste mayoritariamente en actividades agrícolas, las que pierden importancia a medida que aumenta la edad de los niños. Existen también importantes diferencias de género en la asignación de trabajo remunerado y doméstico. De acuerdo con los datos de Young Lives para Perú (vea aquí la visualización interactiva) se observa que, a partir de los 10 años, las niñas se dedican a más tareas domesticas que los niños. En el mencionado estudio en Haití encontramos también que, mientras que los niños aumentan relativamente más sus horas de trabajo “para el mercado”, las niñas lo hacen relativamente en actividades domésticas.

Además del nivel de pobreza y la edad y género de los niños, hay otros factores que contribuyen a explicar la existencia del trabajo infantil. Los padres pueden decidir enviar a sus niños a trabajar, en vez de a estudiar, cuando sus expectativas sobre los retornos de la educación son muy bajos, ya sea porque la calidad de la educación es baja o porque los costos de atender a la escuela son altos. Como vemos, las preferencias de los padres también juegan un papel importante. Cuando los recursos son escasos, pueden decidir sacrificar la educación de los niños que consideran que tienen menos chance de beneficiarse de ella (por ejemplo, los que han mostrado peores resultados académicos previamente), de los que tienen más chance de obtener retornos trabajando (por ejemplo, los más fuertes), o diferenciar por otras razones (por ejemplo, por el nivel de cercanía biológica).

¿El trabajo infantil es siempre perjudicial?

Aunque el trabajo infantil excesivo o en actividades peligrosas afecta al bienestar y a la acumulación de capital humano de los niños, existen situaciones en las que resulta difícil calificar al trabajo infantil como perjudicial. Cuando no existen políticas sociales de apoyo, el trabajo infantil puede ser una estrategia familiar necesaria para lidiar con situaciones económicas adversas. Por otra parte, la evidencia cualitativade Young Lives muestra que algunos niños que trabajan manifiestan orgullo por apoyar económicamente a sus hogares, además de adquirir habilidades y redes laborales.

Para continuar disminuyendo el trabajo infantil es necesario seguir invirtiendo en políticas sociales. Son numerosas las medidas a impulsar: los programas de transferencias condicionadas, destinados a aliviar las restricciones económicas de los hogares; continuar mejorando la cobertura y reducción de los costos para el acceso a la educación y mejorando su calidad; y diseñar políticas focalizadas en aquellos niños en mayor riesgo de trabajar. Es también necesario reforzar los mecanismos de detección y sanción de formas de trabajo infantil que, por su intensidad o por ser peligrosos, ponen en riesgo el bienestar de los niños.

*Este artículo cuenta con la coautoría de Marta Favara.

 

https://blogs.iadb.org/trabajo/2018/06/11/trabajo-infantil-donde-estamos-y-que-falta-por-hacer/

How should job displacement wage losses be insured?

Wage losses upon re-employment can seriously harm long-tenured displaced workers if they are not properly insured

George Washington University, USA, and IZA, Germany

ONE-PAGERFULL ARTICLE

Elevator pitch

Job displacement represents a serious earnings risk to long-tenured workers through lower re-employment wages, and these losses may persist for many years. Moreover, this risk is often poorly insured, although not for a lack of policy interest. To reduce this risk, most countries mandate scheduled wage insurance (severance pay), and it is voluntarily provided in others. Actual-loss wage insurance is uncommon, although perceived difficulties may be overplayed. Both approaches offer the hope of greater consumption smoothing, with actual-loss plans carrying greater promise.

Earnings change of displaced workers by tenure, US

Key findings

Pros

Actual-loss insurance is the theoretical ideal, promising complete smoothing of consumption following job displacement.

Tenure-linked severance pay serves as scheduled wage insurance, helping offset re-employment wage losses.

Savings accounts may provide an alternative to insurance if the latter’s inherent moral hazard problems are severe.

Cons

Theoretical concerns about actual-loss insurance are manifold, and include measurement and moral hazard concerns.

Tenure-linked severance benefit schedules only crudely track actual wage losses.

Improvement in severance benefit schedules, say by introducing additional loss factors (e.g. general eco-nomic conditions), might be difficult.

Savings accounts are inferior to insurance if, as with job displacement of long-tenured workers, the event involves a small probability of a large loss.

Author’s main message

Lower re-employment wages following job displacement are a major concern in flexible wage economies; many countries address this issue by mandating scheduled benefit plans (severance pay). Potential problems with actual-loss wage insurance are easy to enumerate, but available, although limited, evidence suggests that these problems may be overstated. Ways of improving scheduled wage insurance are easy to identify, e.g. linking benefits to business cycle conditions, but may be hard to implement. The promise of performance efficiency in actual-loss plans argues for additional demonstration projects and small-scale testing.

Motivation

Job displacement generates substantial long-term earnings losses for workers, the result of both spells of unemployment and reduced wages when workers become re-employed. For long-tenured displaced workers in economies with flexible wage schemes, these losses are in most instances the result of sharply lower re-employment wages, which can persist for many years. This is not simply an issue of reduced worker hours, but holds true even for full-time displaced workers who secure other full-time jobs. It is thus natural to explore wage insurance as a way of offsetting these earnings losses.

Scheduled insurance benefits are by far the most common form of wage loss insurance. They provide displaced workers with a sum that is fixed at the time of displacement and linked to expected losses. One form of scheduled insurance is severance pay, which may be mandated by government, included in union contracts, or supplied voluntarily by displacing employers. The calculation of benefits typically takes into account the worker’s wage and how long they have been working for a firm–their tenure–perhaps offering the displaced worker one or two weeks of pay per year of service [2]. The resulting benefits, which may be paid out in installments, ideally compensate for (the discounted sum of) lifetime re-employment earnings losses. Many plans include upper limits for benefit calculations that may adjust crudely for the reduced remaining work life of long-tenured workers, although few plans actually reduce benefits as retirement approaches.

In contrast to the ubiquitous severance pay plan, actual-loss wage insurance has not been widely adopted. As the label implies, actual-loss insurance offers benefits linked to individual losses–for example some proportion of measured wage losses. This approach permits a complete offset of wage losses, and its absence hints at the seriousness of perceived moral hazard problems (a situation in which one party becomes involved in a risky activity knowing that it is protected against the risk because another party will incur the cost), including the possibility of displaced workers choosing less demanding, lower-wage jobs, knowing that they will be compensated for the difference.

Savings plans might be superior to actual-loss insurance plans if the moral hazard problems of insurance plans are serious. In savings plans, the funds available following displacement are the worker’s own assets, which should eliminate moral hazard concerns. Savings plans cannot fully offset job displacement losses though: they simply spread these losses over time. For savings plans to be preferred, moral hazard issues must be severe, and pension savings plans must be sufficiently ample that retirement security is not threatened by job displacement payments.

Discussion of pros and cons

Two alternative approaches to insuring against wage losses due to job displacement have emerged: (i) scheduled insurance that links benefits to expected wage losses, and (ii) actual-loss insurance that links benefits to individual wage losses. The first approach has been widely adopted in practice, but the second, in which all individual losses would be offset in a complete actual-wage loss plan provided without cost, is the theoretical ideal. Each approach has distinct strengths and weaknesses, with possibilities for improvement.

Severance pay is the most common approach

Severance benefits are mandated by government in most countries and supplied voluntarily by many firms in countries that do not mandate them. Severance pay offers scheduled benefits based on expected losses and its efficiency depends crucially on the quality of the earnings loss forecast. Both mandated and voluntary severance benefits are often linked to job tenure, reflecting a common finding in the literature that job displacement earnings losses increase with the length of time workers have been in their job, indeed almost linearly. The welfare value of a common severance benefit schedule of “x weeks of pay for each year of service” is transparent [3].

Unfortunately, a benefit algorithm that calculates benefits based solely on pre-displacement wages and years of service generally results in a modest fit to earnings losses at the individual level. Benefits that match losses only on average will undercompensate some displaced workers (those with unusually large wage losses) while overcompensating others. A benefit algorithm so good that it perfectly matches individual earnings losses would be equivalent to actual-loss insurance.

Improvement in loss forecasting and benefit schedules is conceptually possible even if not proven in practice. A review of the wage loss literature identifies covariates other than job tenure that might improve the efficiency of scheduled payments. It is well known, for example, that wage losses are on average higher in a deep recession [4][5]. Indeed, in good times, average losses may actually be negative (a wage gain)–average re-employment wages of displaced workers may exceed pre-displacement wages, as shown in Figure 1. Even in good years, large numbers of displaced workers experience large earnings losses.

The distribution of wage change across the business
      cycle: Long-tenured US workers

Almost all workers are covered in mandated severance programs, but coverage is a problem in voluntary severance plans [6]. In the US, for example, only about one-quarter of the workforce is covered by severance plans, though that quarter disproportionately includes workers with a high risk of being displaced from long-tenured jobs. Incorporating severance in the unemployment insurance (UI) system would seem an inexpensive way to expand coverage if policymakers accepted the importance of this insurance instrument.

The financing of severance benefits may explain the reluctance to vary benefits with business conditions. Both mandated and voluntary programs are employer funded, usually on a pay-as-you-go basis. The last-in, first-out (LIFO) principle of many layoff protocols causes the value of payouts to increase at a growing rate with the severity of the cutback. Clearly, additional payouts in bad times may strain firm finances.

Although severance costs may be substantial to a firm when it must make a major reduction in its workforce, the average cost to employers of severance plans is relatively modest. Many workers never qualify for severance benefits. For example, workers who leave voluntarily (quit) to seek better opportunities elsewhere are normally not eligible for benefits. Similarly, older workers who retire do not generally qualify for severance benefits. Moreover, many workers who do receive benefits receive only small payments or none at all if there is a minimum service requirement. Under the usual LIFO rule, long-tenured workers do not often experience permanent job loss. Large severance payouts require decades of relatively stable employment punctuated by a precipitous drop.

Moral hazard issues present challenges to policy design

There are a host of potential moral hazards to consider in any wage-loss insurance scheme. In case of severance pay schemes, firing cost problems–perhaps more usefully labeled layoff moral hazard–may arise because payouts at the time of displacement are substantial. The firm is the only fully reliable source of information on its own economic distress, and, if separation benefits are firm financed on a pay-as-you-go basis, it may choose to conceal low demand, retaining workers when it would actually be more efficient to release them. The practical importance of this concern remains under investigation, but the empirical record appears to reject claims of broader distortions of employment and unemployment [7].

The absence of actual-loss wage insurance, despite its policy appeal, suggests that moral hazard and other concerns are larger for this insurance instrument. Such concerns are not hard to imagine. Search moral hazard is an obvious problem. Finding a well-paid job likely involves more demanding search activities than finding a low-paying one, so the insured displaced worker is likely to engage in less vigorous search. Indeed, if fully insured, the worker would simply accept the first job offer, whatever its quality.

Further, less familiar moral hazard problems also emerge in actual-loss plans, including distortions in job choices by workers and in the provisions of jobs of various types by firms. For example, wages are only one dimension of a job; other dimensions include required effort, occupational safety, training opportunities, and fringe benefits. An extreme example might be labeled the “volunteer problem.” Individuals often work long hours for almost no pay for causes that they care about. If the wage insurance plan compensated displaced workers for half their wage losses, token wage payments would qualify volunteers for half pay from the wage insurance systems. Less extreme examples would be more common.

The non-wage dimensions of the job would not be so troublesome if they were modest in value relative to wages, but they are not. That is apparent in the distribution of wage changes across types of separation (or no separation at all), as shown in Figure 2. Many workers who quit voluntarily accept wage losses, presumably because of offsetting attributes of the new job. The distribution of wage changes over the course of one year for young workers in the US was quite large for displaced workers and voluntary separations alike, and even among job stayers. From 1981 to 1982, almost 20% of stayers suffered a year-to-year real wage loss of 10% or more, which is certainly lower than the 34% of layoffs who suffered a similar wage loss, but less dramatically different than one might imagine. The percentage of young quitters who suffer real wage declines of at least 10% is only slightly lower than that of young re-employed laid-off workers (29% versus 34%), despite the fact that these job separations are voluntary.

Real wage changes in the US, 1981–1982, by turnover
      status

Insurance may also affect the attributes of jobs that firms offer. In particular, firms have an incentive to shift their compensation packages toward non-wage aspects of the job from direct wage payments if the displaced are a significant proportion of their new hires. Non-wage elements of the compensation package might include better health insurance, improved job training, and reduced work intensity. Any compensating differential wage adjustments would be partly subsidized by the wage insurance program.

To curb such moral hazard distortions, proposed actual-loss plans usually have narrow ambitions, sharply limiting program generosity, which of course reduces the insurance value of the plans. Common restrictions in proposed wage insurance plans include:

  • permitting wage gainers to keep all their gain (full insurance among the displaced would call for pooling wage gains among winners and losers);
  • limiting the subsidy to 50% of wage losses; and
  • limiting the period of loss recovery to two years [8][9].

Additional features often found in proposed plans include re-employment bonuses: greater program benefits if the displaced worker finds their next job more quickly. For example, the two-year limit on loss recovery raises the question of when the two years begins? If the two years begins at the date of displacement, aggregate plan benefits fall with longer unemployment spells. A displaced worker who is immediately re-employed would receive benefits for the full two years, while a displaced worker who is re-employed after six months would recover only 18 months of lost wages. The re-employment literature gives little reason to believe that this refinement is of serious value [10].

Plan costs may also be limited by excluding high-wage displaced workers, where “high-wage” would of course be defined by the plan. For example, one could limit the program to low-earning individuals, say those making US$50,000 or less after displacement. However, there is no evidence that low-wage workers suffer higher proportional wage losses than higher wage workers following job displacement, which makes the rationale for this feature unpersuasive.

Alternative models of wage loss insurance

In addition to insurance plans, severance savings plans are relatively common (see [2] for specific examples). These are typically extensions of pension plans, which, if generous enough, can cover wage losses without threatening retirement well-being. The advantage of such saving plans is that workers have little incentive to game the system, because resources are the workers’ own. Search moral hazard in particular might not be a problem under these schemes.

However, adopting a savings structure may not be required to achieve reasonable job displacement earnings insurance. One large Canadian demonstration project has been undertaken to assess the distortions generated by the (limited generosity) actual-wage plan described above [11], and the results are reassuring, if somewhat surprising. The investigators undertook a project that offered displaced workers wage insurance that was more generous than the basic actual-loss plan. Although their study focused on the assessment of the re-employment bonus feature of actual-wage plans (there were no effects), the results bear directly and importantly on a variety of potential distortions in actual-loss plans. The authors find few behavioral distortions of any sort, implying that moral hazard distortions may not be substantial. However, take-up rates were low, which points to questions not often found in policy debates. Those who qualified for small payments chose not to enroll and, more importantly, many displaced workers who otherwise qualified for benefits did not secure another full-time job in the required time (two years).

The most common actual-wage insurance proposal ([8][9]) has been discussed for 25 years without being adopted, which at least hints that there is a problem with the basic design of the proposed plan. For example, the greatest threat to workers’ economic security comes from the persistence of wage losses among the displaced [12]. Initial wage losses of voluntary job quitters or even job stayers may be almost as substantial, but presumably more temporary (Figure 1). Perhaps “catastrophic” wage loss insurance would be more valuable to the worker. Loss coverage under current proposals is front-loaded, often only covering the first two years of losses. If the primary objective is to compensate workers for large losses, an alternative plan would be to cover wage losses only later, in say post-displacement years three through six. Under this type of back-loaded insurance, targeting would be improved as resources would be directed to those most harmed by the displacement.

There may be other gains to back-loaded benefits, such that moral hazard problems are likely to be eased. The adverse impact of the wage subsidy on one’s search for a better paying job may be reduced if displaced workers know they will face wage losses for one or more years before receiving wage loss compensation. The program could be integrated with the unemployment insurance plan to limit especially large income losses between the end of the UI program and the start of the wage insurance program.

Plan financing

Assuming that an actual-loss wage insurance plan is feasible, what might the ideal financing scheme look like? Actual-loss benefits are not easily administered by the pre-displacement employer. Unlike severance plans, total benefits are not known at the time of displacement, depending as they do on (i) the speed of re-employment and (ii) the wage that the re-employed worker secures. This information will not be known until the end of the second year in the most common wage insurance proposal and not until the end of, say, the sixth year in a catastrophic plan. Clearly, some formal insurance provider must track individual workers’ labor market activities. In the US, that would most naturally be the UI system.

In both mandated and voluntary severance plans, benefits are funded entirely by the displacing firm. This could also be the case with actual-loss plans, although there are practical advantages to organizing the actual-loss insurance market centrally, permitting firms to pool risk. The usual private market funding solution for actual-loss insurance would be to levy a premium per worker equivalent to the individual’s expected loss–in this case the likelihood of displacement times the expected benefits paid out to displaced workers. Alternative premium-setting plans are more common in social insurance plans, which are mandatory and need not be concerned about program participation. These include (i) a flat tax or lump sum contributions and (ii) contributions in proportion to earnings, i.e. a payroll tax. Both of these tend to subsidize high-risk workers, a common feature of social insurance programs.

Limitations and gaps

Wage insurance is distinct from UI because of its focus on wage rates or equivalent earnings at full-time work hours. Earnings records are relatively reliable because of the state’s income tax interests. Indeed, many state UI systems in the US use earnings as a proxy for “full-time work,” and make no attempt to measure work hours. Assessment of the cause of job separation is also a potential difficulty. Presumably, wage insurance, like the most common form of UI, requires that the wage loss be precipitated by an involuntary job loss without prejudice to the worker. This condition is not without cost to administer.

Even if individual wage rates were well measured and the only element of the compensation package to vary across firms, then problems arise. For low-income workers, means-tested welfare programs may cover some portion, and perhaps all, of earnings losses. These benefits vary, sometimes discontinuously, with earnings/income, and come in a variety of forms, of which monetary earnings are only a small part. Presumably, wage payments must adjust for these program benefits, or conversely the other programs must adjust. For higher-income workers for whom income taxes are significant, insurance benefits must be taxable. These are practical considerations and can be surmounted with sufficient effort, although political problems might arise in implementation.

Summary and policy advice

The earnings losses of long-tenured displaced workers threaten worker economic security in much of the world. In flexible wage economies, these losses are largely the result of sharply lower re-employment wages, which often persist for years. Certainly in the US, these losses are poorly insured, providing a challenge to social insurance system designers.

There are two basic approaches to relieving the strain of re-employment wage losses: (i) scheduled insurance benefits (severance pay), and (ii) actual-loss wage insurance, either as insurance or as a savings plan. Each has efficiency limits, including shared concerns over the measurement of wage rates, but struggle operationally in different ways.

The ideal wage insurance package is an actual-loss plan, with benefits linked to the full wage losses of the individual worker. However, the most popular proposals for actual-wage insurance differ sharply from this ideal. The modest extent of proposed wage loss offsets, often 50% of losses and only for a limited time, reveals serious concerns about moral hazard and may explain the limited public interest in implementing actual-loss plans. Search moral hazard is a common concern, for example if “good” jobs are harder to find than “bad” jobs, insurance may reduce the worker’s zeal to find the former. Other moral hazard problems also arise, including the possibility that employers may redesign jobs, perhaps easing effort requirements or increasing fringe benefits while lowering wages which can be subsidized by the system.

The moral hazard problems of actual-loss wage insurance could be eliminated by converting to a savings plan, in which case workers are dealing with their own money. This is an especially attractive option if public pensions are ample. That said, the savings approach is distinctly inferior to an insurance approach in situations where job displacement of long-tenured workers is characterized by a small probability of a large loss. Savings plans can only redistribute consumption, but consumption will be reduced over the displaced worker’s entire lifetime. Insurance compensates the worker for these losses, and in a complete insurance package would make the worker whole.

Both scheduled/severance and actual-loss insurance plans offer the potential for significant design improvement. The efficiency of severance insurance plans is directly related to the ability of the scheduled benefit algorithm to reflect wage losses. Linking benefits to wage and tenure certainly captures important elements of expected wage loss. Other well-established correlates of wage loss, including the general business cycle, might further improve the expected wage loss linkage. Improving awareness and recognition of the role of severance pay and its importance in the earnings security of displaced high-tenure workers is a valuable goal in countries with voluntary severance pay provision; coverage rates for voluntary severance pay are seriously incomplete.

Additional thinking on actual-loss designs might be fruitful. Standard proposals invariably offer to cover a fraction of early losses, but the main social concern is large, persistent losses extending over many years, possibly a lifetime. Perhaps catastrophic loss insurance models, paying benefits only after a lengthy period of low wages, would better insure this risk. For the moment, however, the threat of large wage losses upon displacement remains very real.

Acknowledgments

The author thanks an anonymous referee and the IZA World of Labor editors for many helpful suggestions on earlier drafts. Previous work of the author contains a larger number of background references for the material presented here and has been used intensively in all major parts of this article [6].

Competing interests

The IZA World of Labor project is committed to the IZA Guiding Principles of Research Integrity. The author declares to have observed these principles.

© Donald O. Parsons

 

https://wol.iza.org/articles/how-should-job-displacement-wage-losses-be-insured/long