OECD Reviews of Labour Market and Social Policies

English
ISSN: 
2074-3408 (online)
ISSN: 
2074-3416 (print)
http://dx.doi.org/10.1787/20743408
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This series of country-specific reviews of labour makret and social policies examines policies and institutions and makes recommendations for improvements.
 
OECD Reviews of Labour Market and Social Policies: Colombia 2016

OECD Reviews of Labour Market and Social Policies: Colombia 2016 You do not have access to this content

English
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    http://oecd.metastore.ingenta.com/content/8115241e.pdf
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Author(s):
OECD
20 Jan 2016
Pages:
216
ISBN:
9789264244825 (PDF) ;9789264244672(print)
http://dx.doi.org/10.1787/9789264244825-en

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Colombia has made major economic and social advances in recent years. The combination of strong economic growth and policies targeted at the most vulnerable groups improved considerably the living standards of the Colombian population. Today, the country enjoys higher employment and labour force participation rates than the average of OECD countries and unemployment is steadily declining. Nevertheless, despite these positive trends, deep structural problems remain. Labour informality is widespread, the rate of self-employment is high and many employees have non-regular contracts. Income inequality is higher than in any OECD country and redistribution through taxes and benefits is almost negligible. In addition, half a century of internal conflict and violence has displaced a significant part of the population, and many of them are living in extreme poverty. Despite considerable progress, violence continues to be a challenge and also affects trade union members and leaders. The Colombian Government has undertaken important reforms in recent years to address these labour market and social challenges, and the efforts are gradually paying off. However, further progress is needed to enhance the quality of jobs and well-being for all. The main trust of this report is to support the Colombian Government in tackling labour market duality, generate trust between the social partners, develop inclusive and active social policies, and get the most out of international migration.

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  • Foreword

    This volume consists of a background report prepared by the OECD Secretariat to support the Labour Market and Social Policy Review of Colombia, which is currently being undertaken by the OECD Employment, Labour and Social Affairs Committee as part of the process for Colombia’s accession to the OECD [see the Roadmap for the Accession of Colombia to the OECD Convention: C(2013)110/FINAL]. In accordance with paragraph 14 of Colombia’s Accession Roadmap, the Employment, Labour and Social Affairs Committee agreed to declassify the report in its current version and publish it under the authority of the Secretary General, in order to allow a wider audience to become acquainted with the issues raised in the report. The publication of this document and the analysis and recommendations contained therein, do not prejudge in any way the results of the ongoing review of Colombia by the Employment, Labour and Social Affairs Committee as part of its process of accession to the OECD.

  • Acronyms and abbreviations
  • Executive summary

    Colombia has made major economic and social advances in recent years. The combination of strong economic growth and policies targeted at the most vulnerable groups improved considerably the living standards of the Colombian population. Today, the country enjoys higher employment and labour force participation rates than the average of OECD countries and unemployment is steadily declining. These favourable economic conditions are also attracting more immigrants from neighbouring countries.

  • Assessment and recommendations

    Colombia has experienced strong and sustained growth over the past decade and a half, driven by an oil and mining boom, foreign direct investment in the commodity sector and measures to reduce barriers to trade and investment. A sound monetary, fiscal and financial framework also moderated macroeconomic volatility that characterised previous decades. Yet, Colombia needs to sustain high growth rates to converge towards the living standards of OECD countries. With GDP per capita at 34% of the OECD average in 2013, Colombia ranks well below Mexico (46%) and Turkey (50%), the two OECD countries with the lowest GDP per capita.

  • Strong growth but unequal Colombian society

    Strong and sustained economic growth over the past 15 years translated into significant improvements in labour market outcomes, especially among youth, women and older workers. Policies targeted at the most vulnerable groups further improved the living standards of most Colombians. Nevertheless, Colombia remains a very unequal country due to large regional differences and very little redistribution. In addition, deep structural problems in the labour market are visible through the unusually high share of self-employment and widespread informality. With the global economic downturn and the overall improvement in living conditions in Colombia, the emigration flow has declined and immigration from neighbouring countries is gradually increasing. Finally, half a century of internal conflict and violence has displaced a significant proportion of the Colombian population, many of whom live in extreme poverty.

  • Towards more equal job opportunities in Colombia

    Recent initiatives to promote labour formalisation are slowly paying off but more efforts will be needed to further reduce the costs and increase the benefits to workers and businesses of operating formally, including the labour market distortions related to social insurance programmes, the high minimum wage and the weak implementation of the labour law. Overall, the Colombian employment protection legislation is in line with those in OECD countries, but fixed-term contracts and subcontracting through temporary work agencies is widespread and workers labour rights are regularly violated through the use of civil-law contracts instead of employment contracts. Finally, a new unemployment protection system has been put in place to address the country’s high levels of unemployment. Income support focusses on individual unemployment savings accounts and public employment services are being harmonised. Yet, negligible funding severely limits the reactivation support employment service providers can offer.

  • Enforcing labour rights in Colombia

    High informality and a strong reliance on non-standard contracts have weakened the bargaining power of workers in Colombia. Violence continues to be a challenge in spite of considerable progress and strongly affects trade union activities. While social dialogue in the public sector has been recently enhanced, legislative loopholes continue to affect collective bargaining in the private sector. A range of reforms have strengthened the labour inspection system, however more efforts are needed to improve the actual implementation of the reforms. In particular the collection of fines imposed by labour inspectors on employers violating the labour law remains very problematic.

  • Improving redistribution in Colombia through social policy

    Public social spending in Colombia, albeit increasing, remains low and has a very limited redistributive impact. The Colombian pension system is complex, restrictive and concentrated among higher income groups. While recently introduced programmes for vulnerable elderly have made significant inroads, coverage is low and payments are very limited. The family cash allowance is restricted to formal workers and does not reach most low-income families. Social policy programmes for poor and vulnerable groups are well targeted but more resources are needed to improve outcomes. The design of the programmes could also be revised to improve equity, work incentives and labour formalisation. Finally, higher spending and targeted measures for the large displaced population due to violence are paying off as shown by a significant reduction in (extreme) poverty for this group.

  • Making the most out of international migration for Colombia

    Colombia is a net emigration country, with about 1.3 million Colombians living in OECD countries. Emigration is characterised by an overrepresentation of women and highly-educated people. The United States and Spain are the primary destinations, in addition to Colombia’s neighbouring countries, Venezuela and Ecuador. With the global economic crisis, many Colombian emigrants in OECD countries lost their jobs and returned home. A number of initiatives have been put in place to engage with the emigrant community, but most are small scale.

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