lunes, 25 de noviembre de 2013

Better skilled labor supply and trained entrepreneurs: a challenge for the Dominican Republic

By Odalis F. Marte
Frequently, business managers complain that the universities are not producing the kind of skilled labor supply they require noting that the market needs less lawyers and more engineers. Furthermore, there is a shortage of skills in certain trades such as plumbing, mechanics, etc.  There is a mismatch between demanded skills and what the labor market offers to employers in the Dominican Republic, which is consistent with a global shortage of skills[1]. That disconnect reflects the absence of coordination between the public and private sectors and a failure to  harmonize curricula in order to meet businesses’ needs, while at the same time, the historically low investment in education in the country.

To cap the skill shortage, both private and public sectors can cooperate in order to establish training programs to better serve the real needs of businesses for specific skills. Those training programs can be both in trade schools and at the college level. In the DR, the National Institute for Technical and Professional Training (INFOTEP) exists, a trade school that has served the private sector with technicians for several years. Also, the country has numerous universities, including a public one, that pretty much offer the same types of subjects although with different levels of quality.

The DR is somehow offering financing and training programs to its entrepreneurs since management skills can boost productivity as we have seen throughout the international experience. Lots of people operating micro- and small businesses don’t have a notion of basic accounting and don’t use banks. More education in general and institutional changes to ease financial integration of small business is necessary.
Competition in the markets would tend to enhance the quality of management as well as the need for better trained labor supply, as well as institutional reforms to improve the business environment.




[1] http://www.internationalbusinessreport.com/Press-room/2013/skills.asp. In different proportions, Latin America lacks sufficient skilled labor to supply the increasing demand for well-trained personnel.

lunes, 18 de noviembre de 2013

Sobre inmigración haitiana en la República Dominicana: simplespropuestas

Por Odalis F. Marte

A Jean-Louis Pierre lo conocí en el batey Esperanza en el año 1994 cuando realizaba una visita junto a un grupo de estudiantes dominicanos y estadounidenses para conocer las condiciones de vida de los haitianos residentes en esos lugares, por lo general, fuera de nuestras vistas e intereses. Siendo de mi misma edad, Jean-Louis nació en un hospital público en Mao, provincia Valverde, República Dominicana, pero nunca recibió un acta de nacimiento. Este hombre joven, que habla español como cualquier dominicano de esa región del país y de esa condición social ha crecido sabiéndose descendiente de haitianos, pero nunca ha visitado Haití ni conoce a nadie en ese país.

A cualquiera que se digne en sentirse dominicano le debería preocupar la problemática de la inmigración desordenada de nacionales haitianos a la República Dominicana (RD). Pero más aún debe alarmarnos el desdén con que, por décadas, las autoridades dominicanas han manejado esta problemática y el antihaitianismo que predomina en la opinión pública dominicana.

Inicialmente, los dominicanos debemos admitir que, dada las enormes disparidades en el desarrollo económico entre ambas naciones fronterizas, la RD siempre atraerá a haitianos deseosos de mejorar sus condiciones de vida residiendo en un país donde, al menos, pueden de algún modo trabajar y vivir con relativa paz. La alternativa para esos haitianos emigrantes sería permanecer en su país donde el desempleo asciende a cerca de 80% de la población económicamente activa, y donde campean la violencia y la inseguridad. Por lo tanto, para muchos haitianos, emigrar a la parte occidental de la isla es un asunto de supervivencia, tal vez no muy distinto a la razón por la cual miles de dominicanos han cruzado – y cruzan - el Canal de la Mona en frágiles embarcaciones por décadas...

Por otro lado, es importante ser conscientes de que muchos de los haitianos que residen ilegalmente en la RD fueron traídos por los ingenios azucareros (muchos de ellos entonces estatales), varias empresas agrícolas no azucareras y varias compañías constructoras (algunas de ellas contratistas de obras públicas), frecuentemente con el concurso o el consentimiento de alguna autoridad dominicana.

Como es natural, los haitianos indocumentados residentes en la RD se han reproducido por años y la mayoría de sus descendientes han heredado la condición social y migratoria de sus padres gracias a una interpretación ambigua del artículo de la Constitución dominicana que define la forma en que se adquiere la nacionalidad.

En mi visión personal, como ciudadano dominicano con cierta educación y que alguna vez fue extranjero en tierra firme, mal hacen las autoridades dominicanas en negar lo que por derecho corresponde a Jean-Louis: Su nacionalidad dominicana por haber nacido (y crecido) en la República Dominicana. Jean-Louis es tan dominicano como yo, pero, lamentablemente, se le ha condenado a vivir como un indocumentado apátrida sin más opción que la marginalidad, la falta de oportunidades que pondrían a él o a sus descendientes a un paso de convertirse en antisociales, en enemigos públicos que alimenten la criminalidad y la desadaptación social gracias a una fallida política de Estado. Jean-Louis nunca se irá de la RD pues es el único país que conoce, su país.

Eliminar el Ius solis de la constitución dominicana para enfrentar la inmigración haitiana no resolvería problema alguno dado que su carácter no sería retroactivo, pero sí prevendría al país de adquirir nuevos dominicanos de ascendencia extranjera con potencial de hacer grandes aportes, ilustres dominicanos fueron hijos de padres extranjeros, como el caso de Juan Bosch, hijo de puertorriqueña y español.

Lo que corresponde es otorgar la nacionalidad dominicana a todos los hijos de extranjeros nacidos en la República Dominicana (a excepción de los diplomáticos, como ordena la Constitución), y ordenar la inmigración haitiana bajo una política de estado comprehensiva y moderna. No es una amenaza al Estado dominicano el reconocimiento de una minoría nacional, pero sí representaría riqueza cultural para el país lo cual puede ser incluso explotado turísticamente…

A continuación mis simples propuestas: que, entre otras medidas de reordenamiento del mercado de trabajo ante el influjo de extranjeros se tomen las siguientes medidas:


1)      Que se le exija a las empresas que contraten extranjeros (haitianos), que los mismos deben poseer pasaporte de su país con una visa de trabajo dominicana renovable que le permitirá trabajar con ese patrono, según contrato de trabajo amparado en la legislación laboral dominicana.

2)      Si la empresa empleadora despidiera al trabajador extranjero, ésta deberá pagarle sus prestaciones, según la legislación laboral, y deberá cubrir los gastos de repatriación de trabajador.

3)      Si otro empleador solicitara los servicios del trabajador extranjero, el mismo podría solicitar una renovación de su visado, bajo las condiciones legales correspondientes, amparado en un contrato laboral.

4)      A partir de la implementación de estas normas sugeridas, todo empleador que contrate extranjeros indocumentados deberán cargar con una multa más los costos de repatriación del indocumentado.

5)      Se debe implementar un plan de regularización de los residentes extranjeros indocumentados y reducir los costos de regularización y residencia legal en la RD, que parecería elevados para la mayoría de los indocumentados.

6)      En el caso de los haitianos, acordar con Haití documentar a sus nativos residentes en RD.

Informal Sector in the Dominican Republic: Thinking about solutions

By Odalis F Marte 
     @ofmarte

In the context of the Dominican Republic´s (DR) economy, informality is an absolutely critical issue, reflecting both the inability of the economy to generate enough formal businesses and thus jobs because of structural constrains, and also inadequate labor market policies, especially those implemented in the last few decades. In the DR, around half of those employed works in the informal sector (http://www.bancentral.gov.do/publicaciones_economicas/otros/mercadolaboral_informalidad.pdf). According to the World Bank, “Informality can be defined along different dimensions such as operating without registration, income tax evasion, labor tax evasion, or operating outside the legal framework of an economy”. (http://www.enterprisesurveys.org/data/exploreTopics/Informality)

Policies for the labor market can be focused toward protecting jobs or protecting workers. Many developed countries (before the onset of the financial crisis in 2008) were considered operating close to full employment and as a result, labor policies tended to move from protecting jobs to systematically protecting workers. That scheme proved not to work for developing countries as the lack of opportunities in the labor market only pushed workers and businesses to the informal sector.

To reduce the informality in the DR, the government should engage in short-to-mid term microeconomic reforms to render the labor market more flexible and thus boost business and employment:

1.       Implement targeted employment programs throughout disadvantaged communities;

2.       Modify labor code to make it less costly for businesses to hire employees;

3.       Simplify tax code to make it easier for business to register and pay taxes, eliminating incentives to remain informal;

4.       Implement policies to promote more competition in the domestic market in order to expand entrepreneurship letting more people to start new businesses;

5.       Facilitate more access to financial services to small business.

martes, 12 de noviembre de 2013

On the Challenge of Job Creation in the Dominican Republic

By Odalis F. Marte

Creating jobs in a developing country may not be an easy task given the multi-faceted constraints, especially when it comes to poor policy management and market imperfectionsIn the case of the Dominican Republic (DR), unemployment is on the rise, particularly for young and unskilled people. This can be attributed in large part to the lagged effects of the international financial crisis having an impact on the economy through diverse channels such trade, investment, remittances and tourism.

External shocks, coupled with domestic policies that are simply not doing enough in terms of job creationpose an important challenge to the DR. In this regard, the World Bank’s MILES Framework (Macroeconomic policies, Investment climate institutions and infrastructure, Labor market 
regulations and institutions, Education and skills, and Social Protection) can provide a comprehensive outline to address some of the main issues surrounding the job market.  Under this assessment, the macroeconomic policies (both monetary and fiscal) should work in order to boost declining aggregate demand, thus fiscal policy should remain expansionary and short-term job policies, such as crisis-hit-targeted subsidies for hiringcan be considered as a way to ease the pain of the unemployed.

In recent years, the DR has tried to keep aggregate demand afloat by increasing government expenditure in public works, specifically between 2008 and 2012. Nonetheless, consolidated public debt has increased from 32.2% of gross domestic product (GDP) in 2007 to 42.1% of GDP in 2012, according to figures of the Central Bank of the Dominican Republic. This trend has attracted attention because the economy has been subject to a fiscal reform, on average, every two years since 2000 (At the end of 2012 a tax reform package was approved that combined an increase in taxes with a reduction in spending, 
which is expected to lead to a fiscal consolidation of 4% of GDP for 2013).

Monetary policy can play role working to help maintain price and financial stability, along with adequate exchange rate flexibility to help the economy absorb external shocks that minimize volatility in economic activity.

Continuing with the MILES Framework approach, an important factor to take into consideration is the investment climate for businesses including risks, costs and barriers to competition. These factors include property rights, rule of law, macroeconomic stability and fair competition. The 2014 Doing Business publication (http://www.doingbusiness.org/data/exploreeconomies/dominican-republic?topic=getting-credit) suggestthat the DR has just fell in key areas such as starting a business, dealing with construction permits, getting credit, and registering property. Isuggests that the DR fell many positionsthe DR was just praised as a major reformer by the Doing Business publication a few years ago. That result should be taken as a challenge for microeconomic policies oriented to boost a business friendly environment for the private sector to invest.

Regarding labor market regulation, the DR government has engaged in talks with the private sector in order to explore ways to make the labor market more flexible. This represents a formidable task, particularly given the power of the unions and their tendency to oppose possible reductions of certain benefits for the employed.

In the case of education and efforts to raise the skills in the labor supply, recently the government decided to start implementing a law that would oblige it to spend up to 4 percent of GDP on education for the poor. In the first year of implementing this strategy, the DR proved to have a lack of managerial ability to spend a large increase in budget for building new schools and hiring new teachers. Nonetheless, by 2014 it is expected there it will be possible to comply with the Education Law.

In terms of social protection, the DR has a way to go, but has experienced important advances in the last ten years. For example, while the country has been relatively successful in extending social protection coverage, it has not had as much success in targetingemployment programs throughout disadvantaged communities.

jueves, 7 de noviembre de 2013

A brief on the Dominican Republic’s Labor Market Conditions: The SupplySide

By Odalis F. Marte
@ofmarte

During the last forty years, the Dominican Republic has transitioned from an agriculture-based economy to a services one, despite efforts to create an import-substitution-based national industry that failed to absorb the excess labor out of the primary sector. That import-substitution-based industry received generous incentives and subsidies that ended up hurting the economy as a wholeas it constituted a burden for the agricultural export sector. This, in turn, fueled the mass migrations from the countryside to the cities, leading to a rise in informal economic activities, as well as emigration to more developed countriesas young people’s efforts to seek employment proved to be in vain.

After a domestic financial crisis in 2003 that reportedly accounted for 20% of GDP, the Dominican Republic’s economy began a strong recovery, growing by an average of around 6% between 2005 and 2008. Following the international financial crisis and ensuing global economic slowdown, the Dominican economy decelerated and the unemployment rate began to rise. In fact, according to official figures from the Central Bank of the Dominican Republic, in 2004 the open unemployment rate was 6.3% with a decreasing tendency until 2008when it fell to 4.6%. Beginning in 2009this rate started to climb, rising to 4.9% in that yearfollowed by 5.0% in 2010, 5.6% in 2011, 5.9% in 2012, and the current 7.0% in the first half of 2013.

During the past six years, the participation rate in the DR’s labor market has been around 56% (68% men; 44% women), except in 2009 when in dropped to 54%. It is important to mention that the informal sector accounts for around 60% of the labor market, and more than half of the new jobs were generated by informal small businesses. Between 2000 and 2012the government was responsible for 62% of the 285,000 formal new jobs created in the economy.

Overall, the unemployment rate in young people is around twice the labor market’s unemployment rate, which can be explained by lack of skills, deficiencies in the education system (including its coverage and quality), as well as the rigidities in the labor market that makes firing expensive for businesses. This benefits those individuals who are currently employed, at the expense of those seeking employment, especially the unskilled and less experienced ones.

The Dominican government has expressed its will to help create 400,000 jobs in 4 years, so it is actively implementing some policies in other areas to support small businesses, especially in the rural areas. Nonetheless, the DR economy is experiencing the impact of the poor performance of the world economy, especially the United States’, its major trade partner.