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International Monetary Fund

important institutional and regulatory reforms to the labor market in recent years . Starting in 2005, restore the collective bargaining system and enhance unemployment insurance and the social security regime more generally (Annex 1). 10. Uruguay has a long-standing tradition of collective bargaining . Wage negotiations first started in 1943 (Law 10,449) through the creation of a tripartite wage negotiation mechanism reliant on wage councils whose main task was fixing minimum wages for each sector of activity. In 1993, this mechanism was suspended (except for some

International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper studies economic growth in Uruguay. Following the 2002 crisis, Uruguay had a remarkable economic recovery. The major growth acceleration in 2004–14 was explained by a combination of positive external factors, recovery from crisis, and emergence of new export sectors. With external factors no longer a support for growth, Uruguay needs to leverage its strengths to raise growth sustainably. Uruguay’s high level of institutional quality and social cohesion provides a stable container for growth. A comparison relative to its trading partners and high growth peers helps identify areas that Uruguay can further enhance to unleash its growth potential. These include, a strong, flexible, and equitable labor market, better education outcomes, higher private sector dynamism, and continued macro stability. Structural policy reforms on key constraints to the private sector will help realize the potential of the new export industries and set the stage for inclusive growth. A strong and credible macro policy framework is also essential for growth sustainability. Efforts to reduce debt, inflation, and dollarization and keep them at low levels will lay the foundations for structural reforms to flourish.
International Monetary Fund. Western Hemisphere Dept.

of usd) Source: IDB SIMS. 2. Concurrent with the economic upswing, the government implemented a labor reform . In 2005, the newly elected government reinstated the wage councils (which had been suspended since 1992). 2 The reform, more than tripled the share of workers protected by collective bargaining (from 28 percent in 2000 to over 97 percent in 2005) and strengthened the regulations on wage negotiations ( Mazzuchi, 2009 ). As a result, Uruguay now has the highest coverage of collective bargaining in the region with levels comparable to OECD

Mr. Antonio David, Frederic Lambert, and Mr. Frederik G Toscani
We analyze the performance of labor markets in Latin America since the late 1990s. Strong GDP growth during the commodity boom period led to important gains in employment and a fall in the unemployment rate as labor demand outpaced an increasing labor supply. We emphasize the role of informality in the dynamics of labor markets in Latin America. A re-examination of Okun’s law shows that informality dampens changes in unemployment accompanying output fluctuations. Moreover, we present some evidence that countries with higher redundancy costs and cumbersome dismissal regulations, exhibit “excess” informality over and above what would be expected based on their income and educational levels. Labor market reforms could thus contribute to reducing informality and increasing the responsiveness of labor markets to output growth. However, looking at selected case studies of reforms using the synthetic control method, we find mixed results in terms of labor market outcomes.