Job Creation in Mozambique : Is Labor Law Reform the Answer?
This paper analyzes the potential economic impact of changes to the labor laws proposed in 2006. The economic logic behind these reforms is reviewed, and the conditions under which the reforms could be expected to have the maximum impact on employm...
| Main Authors: | , |
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| Format: | Other Poverty Study |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2006/11/16424256/mozambique-job-creation-mozambique-labor-law-reform-answer-mozambique-job-creation-mozambique-labor-law-reform-answer http://hdl.handle.net/10986/12807 |
| Summary: | This paper analyzes the potential
economic impact of changes to the labor laws proposed in
2006. The economic logic behind these reforms is reviewed,
and the conditions under which the reforms could be expected
to have the maximum impact on employment are isolated. Next,
the experiences of selected developing countries which have
undertaken similar reforms are reviewed, which showed the
importance of initial conditions and economic trends outside
of the labor market in ensuring a successful reform. Third,
the main provisions of the proposed reforms are explained.
The analysis concludes that given Mozambique s initial
conditions, including strong demand from private sector
employers for change, the scope of proposed reforms, and the
potential for continued economic growth, the reforms should
increase firms' profit margins, and as a result, a
positive employment effect is possible in the medium term.
The analysis also shows that although the reforms are deep
compared with the starting point, even if reforms are
enacted, Mozambique's labor market would still be
classified as rigid by international benchmarks. The report
concludes with a discussion of the possible social and
poverty effect. In the short run, there is a danger of
layoffs in some of the larger firms which had previously
reported being overstaffed. If this happens, the poverty
effect would certainly be negative in the short run. The
concluding section notes that other countries have avoided
these types of layoffs by introducing transition arrangements. |
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