By Luis Fierro Carrión (*)
Twitter: @Luis_Fierro_Eco
Ecuador faces the most serious economic crisis in its recent
history. Added to this is an almost complete absence of leadership, a
deterioration of its institutions, institutionalized corruption, and the loss
of public faith and trust.
A collapse of the economy of around 10% is anticipated in
2020. Adequate employment, according to the INEC, has fallen to an all-time low
of 16.7%; while unemployment has increased to more than one million people,
13.3%. It is urgent to achieve a sustainable and equitable economic reactivation
and promote job creation.
High levels of unemployment and underemployment will lead to
increased poverty, inequality and malnutrition, and probably also lead to
increased insecurity.
The most effective and sustainable way to reduce poverty and inequality is through the creation of quality employment.
Do you remember that
President Moreno offered to create a million jobs in four years? Instead a
million jobs have been lost.
Despite electoral offers and rhetoric, there is little a President
can do to create jobs. It is true that inadequate economic policies can lead to
a drop in private investment and, consequently, to job losses. It is also clear
that improper handling of a pandemic can lead to massive job losses. And a
pro-cyclical fiscal management, such as the one implemented by the “Alianza
PAIS” governments in the last 13 years, can lead to massive reductions in
personnel in the public sector in contractionary phases, such as the current
one.
But creating productive employment in the private sector is
more difficult. It is necessary to generate an environment conducive to
attracting national and foreign private investment, in order to increase
productivity, generate added value, and, if possible, increase exports.
Legal security must be sought, and an adequate tax framework
must be established, to avoid shocks and uncertainty. It was counterproductive
that the Correa government eliminated the Bilateral Investment Treaties, and
made no progress in signing Free Trade Agreements with our main trading
partners.
It is also necessary to improve the quality of the
educational system (the same one that has collapsed as a collateral damage of
the pandemic), and in particular to establish vocational training systems
linked to the demands of the labor market.
In the short term, you can:
• Provide professional protective equipment (masks, goggles, gloves) to the personnel, and try to operate with the required social distance. As far as possible, implement telework, which is more feasible for intellectual work.
• Channel the resources of multilateral organizations to
offer credits and guarantees to micro, small and medium enterprises (MSMEs), in
order to preserve and expand labor contracts.
• Make employment contracts more flexible, especially for
new workers and young people. Extend the trial period for new employment
contracts to two years. Allow part-time and temporary employment contracts.
• Strengthen the protection system for the unemployed.
• Create mechanisms to put job applicants and bidders in
contact.
• Allow agreements between the parties to renegotiate
working conditions in companies.
• Allow agreements between the debtor companies and the
financial system, to extend terms, without incurring default interest.
• Promote the development of the capacity of micro, small
and medium-sized enterprises for electronic commerce; the digitization of
services; and provide professional training in these areas.
• A profound reform of the social security system is
required, changing the governance and administration model of the IESS.
• Channel resources from multilateral organizations to face
climate change, increasing the energy efficiency of small and medium-sized
companies; and facilitate investment in renewable energy (solar, wind, biomass,
hydro).
In the medium term, it is necessary to establish a
productive, sustainable economy inserted in the world, regulated by the State,
based on the initiative of the private, social and solidarity sector, and
oriented towards the generation of quality jobs.
Some policies in this direction:
• Promotion of an economic model based on private
initiative, that will generate links with the social and solidarity economy.
• Incentive for the creation of new companies through the
streamlining of procedures, reducing the time and cost it takes to create a
company.
• Government support for exports in accordance with
parameters of sustainability and quality of employment, incorporation of
technology into the national human capital and increasing the national added
value.
• Provide technical assistance, infrastructure, logistics,
services, public funds to support the management of MSMEs.
• Establishment and development of free zones to facilitate
the importation of raw materials, intermediate goods and equipment, and then
export the final products.
• Incentive to national and foreign investment that helps to
promote the creation of productive employment, technology transfer, promotion
of renewable energy, energy efficiency.
• Promotion of clusters and development of productive
networks between companies-universities-government, and between large, medium
and small companies.
• Promotion of financial inclusion by simplifying the regulatory framework for microcredits so that they are less expensive.
• Promotion of microfinance entities and credit cooperatives.
• Promote access to information and communication
technologies. Boosting companies that invest in research and development,
either independently or in partnership with universities, ensuring mechanisms
for the protection of intellectual property.
• Promote corporate social responsibility actions: including
integration in value chains and clusters of MSMEs.
(*) This is an English translation of a column published in
the “El Universo” newspaper of Ecuador on October 2, 2020.
https://www.eluniverso.com/opinion/2020/10/02/nota/7997974/como-generar-empleo
