Monday 14 March 2011

Policy options...

... to deal with “precarious” jobs and segmentation:

1. Increase public sector employment
2. Rule out temporary jobs, “recibos verdes” and traineeships
3. Cut dismissal costs for all permanent jobs
4. Cut dismissal costs for new permanent jobs
5. Merge temporary and permanent jobs into a new, single contract type


  1. Hi Pedro
    Are you setting them as alternatives or cumulative options? ;-)

    There a few more creative options: lotteries to assign people to jobs (permanent ones, of course) and then allow then to trade places against side payments; rotate job positions including unemployment -everyone is sure of having a permanent job, and of having unemployment spells, ...

  2. hi.
    one doubt: if dismissal costs do not exist (or are very low), aren't we making all jobs precarious, instead of the other way around?

  3. @Rui Dantas
    I guess Pedro S. Martins was joking with his proposals. Nobody would really serious apply something like that, don't worry!

    Regarding the post itself, maybe it would be better to start talking about this and finding alternatives for the current policy.

    My opinion is that we have to do a major overhaul to the system. Here's my simple contribution (please fell free to criticise/ask questions):

    1. Split Segurança Social in two: one will take care of the pensions, other takes care of the benefits;

    2. The Pension side has to have a coverage ratio of, for example, 110%. Every time it goes down, adjustments have to be made;

    3. Also, a new private system is in place. People should start to discount the 11% (or less) only to the Segurança Social and they will only have to guarantee that the pensionists will receive a mínimum pension (equal maybe to the minimum wage) when they retire (will be enough to survive). The rest, they have to take it out from the private system (highly regulated, of course);

    4. Shift the pensionists that never made discounts (old farmers, etc) from the Segurança Social system to the Santa Casa da Misericórdia beneficiaries. The gambling monopoly they have in hands is more than enough to take care of these pensionists (I allways wonder where the money goes, as it's so expensive to keep someone inside the Santa Casa system);

    5. The benefits sector has to be funded: a new discount had to be made to ensure that sector of the Segurança Social (i have no idea about the rate, as I have no idea about the SS figures);

    Basically, in the end, we would have something like this:

    Now: Worker discounts 11%, company discounts 23,75%. SS is a deepless, very dark hole;

    Future: Worker discounts 11% (or whatever-has to be calculated) to SS Pension (to ensure minimum pension), companies/workers discount a certain % for SS Benefits, companies and worker save for private Pension (or spend it away, whatever they prefer);

    This would sharply boost companies competitiveness and allow the market to create new jobs. Would enable a more fair system, biggest saving rates (the private plan could even be mandatory), stonger financial system and more liberty to the citizens to learn how to applu their money in the best options availlable. Plain and simple.