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Ministerio del Trabajo y Previsión Social Adopted Measures by the Ministry of Labor and Social Welfare of Chile facing the crisis Washington DC, May 20 , 2009

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Ministerio del Trabajo y Previsión Social. Adopted Measures by the Ministry of Labor and Social Welfare of Chile facing the crisis. Washington DC, May 20 , 2009. Ministerio del Trabajo y Previsión Social. Agenda. Chilean context Summary of adopted measures until March 2009 - PowerPoint PPT Presentation

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Page 1: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión Social

Adopted Measures by the Ministry of Labor and Social Welfare of Chile

facing the crisis

Washington DC, May 20 , 2009

Page 2: Ministerio del Trabajo   y Previsión Social

Agenda Ministerio del Trabajo y Previsión Social

1. Chilean context

2. Summary of adopted measures until March 2009

3. May 2009: National Agreement for the Employment, the Training and the Labor Protection

Page 3: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión Social

Chilean context

Page 4: Ministerio del Trabajo   y Previsión Social

Context Ministerio del Trabajo y Previsión Social

Chile has had an acknowledged economic performance in the past two decades.

Annual Growth compared GNP. Fuente Informe OECD Chile 2009

-4

-2

0

2

4

6

8

10

12

14

1985 86 87 88 89 90 91 92 93 94 95 96 97 98 99 2000 01 02 03 04 05 06 2007

%

Chile

Argentina, Brazil and Mexico

OECD

Page 5: Ministerio del Trabajo   y Previsión Social

Context Ministerio del Trabajo y Previsión Social

1. Diagnóstico

2. Origen de la propuesta

3. Principales elementos del Proyecto de Ley

LABOR MARKET IN CHILE:Occupancy by Sector

Ocupados por Rama de Actividad Septiembre - Noviembre 2008

Minas y Canteras2%

Comercio20%

Transporte, Almacenaje y

Comunicaciones8%

Servicios Financieros9%

Agricultura, Caza, Pesca11%

Servicios comunales Sociales Personales

27%

Industria Manufacturera

13%

Electricidad, Gas y Agua1%

Construcción9%

Page 6: Ministerio del Trabajo   y Previsión Social

Contexto Ministerio del Trabajo y Previsión Social

LABOR MARKET IN CHILE :Distribution of enterprises by size

Page 7: Ministerio del Trabajo   y Previsión Social

Context Ministerio del Trabajo y Previsión Social

LABOR MARKET IN CHILE :WORKFORCE (Jan-March 2009, Informe INE)

Workforce7.276.663

Unemployed669.160 (9,2%)

Employed6.607.503 (90,8%)

Unemployed by sex:

Mujeres: 10,9% / Hombres: 8,2%

Page 8: Ministerio del Trabajo   y Previsión Social

Context Ministerio del Trabajo y Previsión Social

LABOR MARKET IN CHILE :(Jan-March 2009, Informe INE)

8,4%

8,6%

9,5% 9,6%9,2% 9,2% 9,1%

8,4%

6,7%

7,6%

9,2%

5,0%

7,0%

9,0%

11,0%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Tasa de DesempleoEnero-Marzo 1999-2009

Page 9: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión Social

Summary of adopted measures until March 2009

Page 10: Ministerio del Trabajo   y Previsión Social

Summary of adopted measures until March 2009

4 packages of measures for $ 6.000 USD millions (around 4% of the GNP)

- $ 850 USD millions in October 2008; Support smaller businesses and exporters, investment, labor’s capital, bank factoring and encouragement of the finantial market.

- $ 1,150 USD millions in November 2008; Support to SMEs : housing subsidy; strengthens fund of guarantees for small entrepreuneurs, National Bank capitalization, improvement in taxes return

Ministerio del Trabajo y Previsión Social

Page 11: Ministerio del Trabajo   y Previsión Social

Summary of adopted measures until March 2009

- $ 4.000 USD millions in January 2009; Emphasis in social expense, public investment, support to SMEs and to the purchasing power of the most vulnerable sectors. New credit line CORFO

- Announces Pro Crédito in March 2009; Support the micro- undertaking, stimulate bank and not bank credit, promoting greater competence in the finantial system and encouraging more options of finantial assistance for persons and enterprises. These measures could generate $3.600 USD millions in additional private credit

Ministerio del Trabajo y Previsión Social

Page 12: Ministerio del Trabajo   y Previsión Social

Fiscal Stimulus Plan (January 2009) Ministerio del Trabajo y Previsión Social

This plan is a fiscal contra-cyclical strategy to estimulate employment and growth that compromises resources for $4.000 USD millions equivalent to 2,8% of the GNP.

- Stimulus to investment and consumption, some of these measures are:

- Increase in $ 700 USD millions of public investment. This created 60 thousands new jobs.

- Elimination of the postage tarifs

- Extra-ordinary contribution of $41 USD millions to the Fondo Común Municipal, destined to support su tarea de servicio e inversión en las comunidades locales

- Strengthening of the access to private funding

- Transitorily reduction of PPM in 15% to small and medium sized enterprises, and in 7% for bigger ones.

- Implementation of a line of CORFO with a capital of $ 50 USD millions to brindar guarantee en la reprogramación de créditos.

Page 13: Ministerio del Trabajo   y Previsión Social

Fiscal Stimulus Plan (January 2009) Ministerio del Trabajo y Previsión Social

- Support to Persons

Payment of a special bonus of $70 USD per family load for vulnerable families. To March 2009, 740.000 payments (90% of the beneficiaries) for a total of $ 80 USD Milliones were completed.

- Strenghtening Employment and Training (aprooved in March 2009)

- Create a subsidy to work to encourage formal employment for under payed workers between 18 and 24 years. The beneficiaries will receive a subsudy equivalent to 20% of its salary, and the employer one equivalent to 10%.

- Requirements: Belong to the poorest 40% of the population and have gross remunerations under $ 600 USD per month (like $466 USD cash)

or $7.200 USD annually.

- Effets: will benefit a universe between 250 and 300 thousands young men, and it will have a fiscal cost of $80 USD millions this year.

Page 14: Ministerio del Trabajo   y Previsión Social

Fiscal Stimulus Plan (January 2009) Ministerio del Trabajo y Previsión Social

- Strenghtening Employment and Training

- Re-adjustment of maximun value granted by the Tributary Franchise SENCE to carry out courses in the Tecnical Formation Center accredited from $335 USD to $880 USD.

It is expected that this measure, that will be of gradual application, will mean an increase of 15% on the demand for curses CFT, only in the first semester of 2009 in respect to the observed in 2008.

Page 15: Ministerio del Trabajo   y Previsión Social

Extension of the Unemployment Insurance coverage

Ministerio del Trabajo y Previsión Social

It began operating in 2002. To this date, more than 5 million workerd have joined (it’s madatory).

Recent Improvements to insurance (February 2009)

- It incorporates workers in fixed terms as beneficiaries of FSC for two months with replacement rates of 35 and 30%.

- It adjusts maximun values (in a 28%) and minumun (between 14 y 35%) of FSC

- It stablishes replacement rates that start in 50% of the remuneration and reach 20% of it.

- In high unemployment cases , an additional 2 wire transfer will be paid.

Page 16: Ministerio del Trabajo   y Previsión Social

Other permanent character measures Ministerio del Trabajo y Previsión Social

- Fiscal usage Plans : Proempleo

- They exist since 2001. They are oriented to reduce high unemployment rates, promoting labor re-insertion of unemployed workers, through training and participation in productive projects for the community.

- They are activated through the fiscal accountability law (2006) which specifies that these may operate when the national trimestral unemployment rate exceeds the average of the last 5 years or when this rate on any given zone is equal or higher than 10%.

- Today, the direct and indirect employment programs reach 51 thousand posts, which allows to cushion unemployment in 0,7 points. Is predictable that in the next months its coverage will increase due to the increase of unemployment.

- National Program of Decent Work (Nov 2008)

- 5 axes: Child labor eradication ; incorporation of gender in public policy design; Promotion of youth employment; disign of national policy of hygiene and security and implementation throughout tri-party mechanisms; and Diffussion of welfare reform (March 2008)

Page 17: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión Social

National Agreement for Employment, Job-training and Labor Protection

May 2009

Page 18: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión Social

- Repercusions of the crisis in the latin american economies and in Chile

- Contraction due to economic activity and unemployment growth (9.2% Jan-March 2009).

- Workers need protection of their jobs before the economic contraction.

- Employers need supporting toold to keep workers.

- Need of anticipating to the most severe consecuences of the economic contraction.

- The good management of macro-economic and of the public policies of Chile, alowed roominess for the design of new instruments.

- These instruments should be temporary and answer the needs of labor protection, income and job training.

Origin of the proposal. Shared Diagnosis

Page 19: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión SocialOrigin of the proposal. Actors

- Social dialogue between the different, relevant actors relevantes of the labor market.

- National agreement subscribed by the Governement, workers, Small , Medium and Big entrepreneurs.

- Wide consensus among the main actors of the labor market.

Page 20: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión SocialObjective of the agreement

“Labor Protection and encouragement of the job training of Chileans to face the present contraction scenery of the world economies”.

Workers, entrepreneurs and governement are engaged to spread and apply these measures to achieve its success.

Page 21: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión SocialThe measures

1. Retention of workers and Job training2. Permit Job training3. Pre-Contract of Job training4. Scholarships program MYPE for working/employed

women 5. Program for the recognition of previous learning6. Expand access to the Cesantía Solidario Fund (FCS)

to workers with a fixed rate (PF) and Obra o Faena (OF).

Measures 1, 2, 3 and 6 are within the framework of the Draft Law send to the National Congress on May 7, 2008

Page 22: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión Social

1. Retention to Workers and Job training

Measure:

- Authorize enterprises to imput against its PPM an additional amount of discount equivalent up to 2.5 times the monthly job training expense.

- This will apply only to the job training expense of dependent workers with taxable incomes less than U$600 per month, encouraging the employability of less qualified workers.

Page 23: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión Social

Requirements:- Entrepreneurs must maintain the same number of

workers in their monthly list, in respect to the one they had in April 2009

- For this, as a requirement it will be stablished that the average of the last three months prior to the declaration of the PPM must be equal or greater to the number of workers in April 2009.

1. Retention to workers and Job training

Page 24: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión Social

2. Job training Permit

Measure: - Workers that are members of the SC, will be able to pact a permit for job

training without the benefits of income (as an alternative to despido)- Workers and employers will sign a t of job training agreement before a

minister of faith.- The permit has a maximun extension of 5 months, continued or not, in a 12-

month period.- The job training classes will have a minimun duration of 60 hours per

month, and they will be given in institutions with a recognized path and quality.

Requirements: - To access: The worker must be a member to the SC, with a undefined-term

contract and have 6 welfare contributions that must have been continued and with the same employer.

- To obtain benefit: Keep attendance to the job training classes that will be given ,and not be receiving another remuneration.

Page 25: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión Social

Benefits for the Worker:- He receives a monthly payment equivalent to 50% of the average of his

taxable remunerations of the last 6 months. - The maximun benefit is U$300.

- The employer pays an additional benefit fee from the second month to the fifth equivalent to 10%, 20%, 30% y 40% of the individual account, respectively, plus the law of labor and professional accidents

- Welfare contributions to pensions system are paid by the FCS.- Access to health through FONASA.- Those who posses a balance in his individual account greater than the

benefit’s limit, will receive as payment that same balance divided by 5.- If workers are fired and meet requirements to access the FCS, they will

have access to the Unemployment Insurance.

2. Job training Permit

Page 26: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión Social

- Example of the benfit (remuneration $240.000):

- Funding:- Tri-party: employer, individual unemployment account of and

solidarity fund.- Job training is funded in the first hand with the surpluses of OTIC and

later with charge to the FCS.

Mes 1 Mes 2 Mes 3 Mes 4 Mes 5

0 10% 20% 30% 40%12,000 24,000 36,000 48,000

50% 45% 40% 35% 30%120,000 108,000 96,000 84,000 72,000

Pagos que recibe el trabajador 120,000 120,000 120,000 120,000 120,000

Pagos de la CIC y FSC

Pagos del empleador (% del Beneficio)

2. Job training Permit

Page 27: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión Social

- Job training courses:

- Job training modularized courses, based in labor competences, which may lead in some cases to the certification of competences, technical formation and tasks.

- Extent between 60-90 hours monthly, without counting number of months.- The courses are modularized each month, and an certificate is given to the

participant that certifies that such module is part of an offer that may continue a long term training trajectory.

- OTEC and other accredited entities (universities, CFT, IP, Leveling of studies) will teach the courses.

- The enterprise will nominate its workers in a web enabled in the SENCE. All job training offer will be in it.

- The worker will be able to access each month to these courses; the permit is individual and must be negotiated between worker and employer (the agreement is signed once and renewed monthly).

2. Job training Permit

Page 28: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión Social3. Pre-contact of Job Training

- Measure: - Enables to assign FT resources to train potential workers.

- In 2008, 25.803 were trained through this program (big, medium, micro and small entreprise)

- The maximun amount of the FT, destined to this type of training, is amplified (from 1% to 1,25% of the remunerations).

- The extent of the training of the funded by FT wides to 6 meses.

- A nourishment and tranportation bonus may be given to the beneficiaries.

- It covers work accidents during the training period.

Page 29: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión Social

6. Expand acces tothe FCS for workers PF y OF

- Measure:- Expand workers to PF and OF in their access to FCS.

- Recognize as already paid to the FCS teh contributions, continued or discontinued, executed to the individual accounts of these workers during the 24 months prior to May 1of 2009.

- Requirements:- Have contributions in the individual account. Meet with the condition

of having 12 contributions in 24 months.

Page 30: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión Social

Monthly benefits of the measures

Medidas BeneficiariosRetención de Trabajadores y Capacitación Laboral 18,200 Permiso de Capacitación Laboral 70,000 Pre Contrato de Capacitación 15,000 Potenciamiento al accedo al FCS para trabajadores PF OF 25,000 Total 128,200

Page 31: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión Social

Measures 4 and 5

- Measure 4, The Scholarships program MYPE for working women, seeks to expand the current program by duplicating its budget, so that it may open 20 thousand new places for working women heads of household.

- Measure 5, The Program for the recognition of previous learning, seeks to validate knowledge that hasn’t been learned in the formal system for 1000 workers, certifying them throughout an evaluation system in certified academic institutions. This, to recognize articulately such learning

Page 32: Ministerio del Trabajo   y Previsión Social

Ministerio del Trabajo y Previsión Social

Thank you