Observation (CEACR) - adopted 2019, published 109th ILC session (2021)

Employment Policy Convention, 1964 (No. 122) - Paraguay (Ratification: 1969)

Articles 1 and 3 of the Convention. Active employment measures. Informal economy. The Committee notes that, according to the ILO technical report of 2018 on critical segments of labour informality in Paraguay, it is one of the countries in the region with the highest incidence of informal employment. The technical report indicates that, in 2016, seven out of every ten active persons were informal, which has led to a growing prioritization in national public policies on the formalization of workers. The Committee also observes that, according to the technical report, most informal workers receive income for the tasks performed that are far from the minimum levels set for formal employed persons. In particular, the report indicates that 68.7 per cent of informal employed persons in 2016 received wages below the statutory minimum wage which covers formal employed persons in a dependent employment relationship. In the case of own-account informal workers, income levels are substantially lower than those received by employed persons (83.8 per cent receive wages below the statutory minimum wage). Moreover, four in ten informal own-account workers are not able to rise above the poverty line with the income that they earn. In this context, the Committee notes the approval in February 2018 of the Integrated Strategy for the Formalization of Employment and Social Security by the Tripartite Advisory Economic Council, the objective of which is to achieve growth of approximately 25 per cent in the formalization of employment by 2030. This Strategy is included in the priority objectives and actions of the Paraguay National Development Plan 2030, which includes as a target the formalization of the economy with the objective of achieving 90 per cent formalization of economic activity in the principal economic sectors in the country by 2030. The Government adds that the Strategy includes social information and awareness-raising (such as decent-work fairs, visits to schools and free advisory services), as well as coordination and articulation between the institutions producing data on formality levels of enterprises, employment and social security. The Government reports the preparation of a proposal for the reinforcement of social security inspection with a view to promoting effective social security inspection and strengthening inter-institutional collaboration and coordination mechanisms between the Ministry of Labour and Social Security (MTESS) and the Social Insurance Institute (IPS). A protocol has also been prepared for application by various institutions, such as the General Directorate of Social Security and the General Directorate of Workers’ and Employers’ Contributions of the IPS, in the event that unregistered employment is identified through complaints, mediation, controls and inspection. However, the Committee notes that, according to the ILO technical report, the major challenges to formalization relate to those on the margins separating the informal economy from the formal economy, such as workers in rural areas. The technical report indicates that almost all own-account workers in agricultural, stock-raising and fishing are informal and that nine out of ten employed persons in those sectors are also informal. The formalization initiatives that have been carried out in the country do not cover work in rural areas, as they are focused on employed persons in urban areas. The report emphasizes that in certain cases the difficulty lies in the invisibility of the activity or in the low incomes associated with low-productivity activities which are insufficient to cover the costs of formalization. In other cases, the difficulty is particularly related to the lack of a public policy or the weaknesses of design and implementation that undermine its effectiveness. Finally, the Committee notes that, according to the report of 20 July 2018 of the United Nations Special Rapporteur on contemporary forms of slavery, including its causes and consequences, “[w]orkers in the informal economy – who are more likely to be women – are often subject to a high degree of precariousness, have no access to social or workplace protection (a fundamental feature of decent work) and work in sectors not fully covered by labour laws, making them highly vulnerable to exploitation, including contemporary forms of slavery” (A/HRC/39/52/Add.1, paragraph 33). The Committee draws the Government’s attention to the guidance provided in the Transition from the Informal to the Formal Economy Recommendation, 2015 (No. 204). It requests the Government to continue providing detailed and updated information on the scope of the informal economy and the measures adopted in accordance with its national employment policy to facilitate the transition to the formal economy, particularly in rural areas of the country, including the measures adopted within the framework of the Integrated Strategy for the Formalization of Employment and Social Security, and their impact.

Coordination of employment policy with economic and social policies. The Committee notes, based on the report of the United Nations Special Rapporteur on contemporary forms of slavery, including its causes and consequences, that “[a]lthough it has witnessed sustained growth in GDP over the past five years, it continues to be affected by significant levels of both poverty and inequality, and is one of the poorest countries in the Latin American region.” The report adds that “while the macroeconomic policy of attracting foreign investment to promote agribusiness (such as soya production and cattle farming) and establishing maquiladoras (manufacturing plants that import and assemble duty-free components for export) bolsters the economy, poverty and inequality continue. The fiscal benefits received by private businesses are not passed on in the form of job creation or social development for poorer communities. The policy aimed at transforming the country into a low-tax haven, with low minimum wages and labour market and administrative flexibility creates a situation whereby forced labour, child labour and hazardous child labour thrive, as many families send their children to work in order to survive. The policy also facilitates labour exploitation and obscures the State’s lack of investment in public policies” (A/HRC/39/52/Add.1, paragraphs 4 and 30). With regard to the implementation of social programmes, the Committee notes the Government’s reference, among other measures, to the implementation of cash transfer programmes with co-responsibility “Tekopora” and “Abrazo”, and the pilot project “Incubating Opportunities Family by Family”, intended for people in extreme poverty. The Committee notes, based on the information available in the ILO technical report of 2018, that in 2016 the “Tekopora” programme covered 700,000 people in poverty. Around half of those covered were children, while responsibility under the programme was assumed in 76 per cent of cases by women and 88 per cent of the participants were in rural areas. Finally, the Committee notes the implementation of the socio-economic programme to support inclusion known as “Tenodera”, which has the objective of providing families with productive, financial and social resources to generate their own incomes. The ILO technical report indicates that in 2016 some 11,540 families participated, in 75 per cent of which responsibility was assumed by women. However, the Committee notes that, according to the report of the United Nations Special Rapporteur, “[s]ocial investment has dropped while structural problems perpetuate discrimination and the marginalization of vulnerable and indigenous peoples, compounding their vulnerability and leading to their entrapment in contemporary forms of slavery” (paragraph 30). The Committee therefore requests the Government to provide information on the measures adopted or envisaged with a view to giving priority to full, productive and freely chosen employment in all growth and development strategies. The Committee also requests the Government to provide detailed information, disaggregated by age, sex and region of the country, on the results achieved in terms of the generation of employment as a result of the implementation of government programmes.