OECD Reviews of Labour Market and Social Policies: Colombia 2016

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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.



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.




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