NewsWhore
04-01-2009, 06:00 PM
Leading business associations are lobbying to update the Dominican Labor Code in order to preserve and create jobs. The National Business Council, the DR Industries Association (AIRD), the Free Zones Association (Adozona), the Exporters Association (Adoexpo), the National Hotel & Restaurant Association (Asonahores), the Business Confederation (Copardom), National Association of Young Entrepreneurs (ANJE), and the Agribusiness Board (JAD) presented yesterday the reality that provisions in the Labor Code that dates back to 1992 have become obsolete and are an obstacle to competitiveness when it comes to doing business in the DR, especially now that the DR is one of the most open economies in the Americas.
Consultant Roberto Despradel stressed that the DR needs to look towards ways of making the most of its free trade agreements. The DR is only the sixth country in the world to have FTAs with Europe and the United States, he explained. This provides us with the opportunity to make internal changes in order to maximize this circumstance and reverse the present trends. He said that so far, the country stats show that the DR has a real problem with the current account of the balance of payments. Despradel indicated that the DR now is showing a 10% deficit of the Gross Domestic Product in the current account, a situation that had not occurred since 1980.
The sectors that showed growth in 2008 were services that do not generate foreign exchange, such as commerce, warehousing and telecommunications. "Because this is a country that does not export," he said. "The message is clear: "We have a competitiveness problem."
Marisol Vicens of Copardom said that formal jobs are being lost and more and more people are now employed in the informal sector. Roberto Capellan of Adozona stressed that the effects are being felt across the board, and are especially hurting the small business sector, which represents the largest number of companies. He warned that the same situations that have affected the apparel industry would go on to affect other industries. He said the sector had been cushioned because of a mechanism that allowed them to liquidate severance payments on an annual basis, but this is no longer allowed. He explained that severance payments escalate into the fifth year of a hired worker, which could lead industries to close down operations as they approach their fifth year given the escalating costs. Capellan said that 25,000 more jobs could be lost if the Labor Code is not modified.
Capellan warned that the closure of more free zone industries would have a strong impact on the cost of shipping, as major ships that travel here move to serve other countries, for instance in Africa. Capellan said that residents of Santo Domingo have been cushioned from understanding the real situation in the provinces, where the dynamism of the commerce sector in the capital is not felt.
Capellan forecast better times are ahead but called for adjustments now so that the companies do not leave.
The business leaders warned that the social benefits add up to 65% in the DR, compared to 37-30% in competing Central America. A recent study by human resources company Adecco Dominicana indicated that the social benefits are the highest in the Dominican Republic. The business organizations have identified specifics within the law that need to be changed regarding severance benefits, penalties for taking a labor case to court, working hour constraints, among others.
Vicens said that times have changed. When the 1992 legislation was passed, there was no social security system in place in the country and the Dominican Republic was practically isolated from international trade. Today, the DR has a broad based social security system and is probably the most open economy in the region, with FTAs with Central America, the Caribbean, the United States and Europe.
Capellan says that small business is hurting even more than big business due to the provisions in the Labor Code. He concluded that the present labor code "works against work".
Business representatives said they are also working on other major areas that affect competitiveness, such as expensive and not reliable power and transport monopolies, among others.
More... (http://www.dr1.com/index.html#7)
Consultant Roberto Despradel stressed that the DR needs to look towards ways of making the most of its free trade agreements. The DR is only the sixth country in the world to have FTAs with Europe and the United States, he explained. This provides us with the opportunity to make internal changes in order to maximize this circumstance and reverse the present trends. He said that so far, the country stats show that the DR has a real problem with the current account of the balance of payments. Despradel indicated that the DR now is showing a 10% deficit of the Gross Domestic Product in the current account, a situation that had not occurred since 1980.
The sectors that showed growth in 2008 were services that do not generate foreign exchange, such as commerce, warehousing and telecommunications. "Because this is a country that does not export," he said. "The message is clear: "We have a competitiveness problem."
Marisol Vicens of Copardom said that formal jobs are being lost and more and more people are now employed in the informal sector. Roberto Capellan of Adozona stressed that the effects are being felt across the board, and are especially hurting the small business sector, which represents the largest number of companies. He warned that the same situations that have affected the apparel industry would go on to affect other industries. He said the sector had been cushioned because of a mechanism that allowed them to liquidate severance payments on an annual basis, but this is no longer allowed. He explained that severance payments escalate into the fifth year of a hired worker, which could lead industries to close down operations as they approach their fifth year given the escalating costs. Capellan said that 25,000 more jobs could be lost if the Labor Code is not modified.
Capellan warned that the closure of more free zone industries would have a strong impact on the cost of shipping, as major ships that travel here move to serve other countries, for instance in Africa. Capellan said that residents of Santo Domingo have been cushioned from understanding the real situation in the provinces, where the dynamism of the commerce sector in the capital is not felt.
Capellan forecast better times are ahead but called for adjustments now so that the companies do not leave.
The business leaders warned that the social benefits add up to 65% in the DR, compared to 37-30% in competing Central America. A recent study by human resources company Adecco Dominicana indicated that the social benefits are the highest in the Dominican Republic. The business organizations have identified specifics within the law that need to be changed regarding severance benefits, penalties for taking a labor case to court, working hour constraints, among others.
Vicens said that times have changed. When the 1992 legislation was passed, there was no social security system in place in the country and the Dominican Republic was practically isolated from international trade. Today, the DR has a broad based social security system and is probably the most open economy in the region, with FTAs with Central America, the Caribbean, the United States and Europe.
Capellan says that small business is hurting even more than big business due to the provisions in the Labor Code. He concluded that the present labor code "works against work".
Business representatives said they are also working on other major areas that affect competitiveness, such as expensive and not reliable power and transport monopolies, among others.
More... (http://www.dr1.com/index.html#7)