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Productivity of workers is basis of Dominican economy

SANTO DOMINGO. The Dominican economy grew by an average of nearly 4% a year since 2000, nearly double the average growth of the region and four times more than the average of the group of industrialized countries that make up the Organization for Cooperation and Economic Development (OCDE).

But what is surprising in this growth is its principle factor: “Labor productivity in rapid growth, and although less relevant, the changes in the occupation rates and in the population of working age.”

In contrast with the increase in worker’s productivity (which in simple terms means what the worker provides with his work, in relation to what he is paid) the real salary that the Dominican workers receive had been falling since 1990, creating a growing gap between both tendencies.

This means that the purchasing power of the workers’ salaries not only has stalled, but rather that each year it has regressed more, in spite of the increases in the nominal amount received over the last 20 years.

For example, when comparing the years 2000 and 2011, the real income for a work/hour by self-employed or private sector workers fell by 27%. In the case of women, the decrease is much more pronounced, 35% in comparison with the 27% of the men that are self-employed.

In reference to what appears to be the limited right to unionization which in practice the Dominican workers have, the authors stress that the big gap between the growth of productivity and salary in some sectors is in accordance with the fact that the workers have little negotiating power.”

The conclusions are part of the findings of the study “Growth and employment in the Dominican Republic: options for growth that generates employment”, published in February 2013 by the economists Umidjon Abdullaev and Marcelo Estevão. It was carried out for the International Monetary Fund which together with the International Labor Organization (ILO) carried out a project designed to create policies that promote the creation of jobs and promote inclusive growth. The Dominican Republic was chosen as a pilot case for this initiative.

In spite of this tendency, also documented by other recent reports from the ILO and the World Bank, the National Council for Private Enterprise (Conep) feels that labor legislation in the country is one of the principle causes for the falloff in formal employment in the Dominican Republic.

On 10 December 2013, Manuel Diez Cabral, the Conep president, said before the Presidential Commission for the Reform of the Labor Code the following: “Some have pointed out, with limited vision, that the right to work does not generate or destroy jobs. Nevertheless, this argument is destroyed when the labor legislation imposes elevated economic burdens on the companies, limiting their entrepreneurial spirit and forcing thousands of businesses to exist in informality.”

The market for products

The report attributes to the distortions in the market of products the causes in the short and medium term of the decrease in the creation of good jobs. They cite a survey by the World Bank that identifies as the principle problems for the countries the following: the costs related to bureaucracy, the administrative requisites, the corruption, the cost of tax compliance, the problems in the electricity supply among other factors. While in the long term, it is education which influences positively in the quality of the jobs.

Source: DiarioLibre

Category: DR News |

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Last updated March 25, 2017 at 5:40 PM
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