AN EXERCISE IN WORLDMAKING 2009 - ISS

10 Understanding Informality In A Colombian Context 119
has been to fortify citizen rights regardless of economic or political tendencies,
which have grown over the years, rather intermingled. This is
why the Constitutional court is often controversial but is used in practice
to reinforce the social contract on the part of executives and citizens
alike.
Despite the existence of such institutions, imminent pressures of selfimposed
neoliberal measures quickly opened the economy to international
markets, largely conditioning subsequent labor reforms. This was
done in two steps, first by signing free trade agreements with important
regional players including Chile, Mexico and Venezuela, and second by
opening the capital account through exchange rate policies and direct
foreign investment (Florez, 2002: 6). Expanding trade and creating formal
linkages with other countries propelled the integration of Colombia
in the international economy, placing its need for competitiveness as a
central marker in labor reforms. In concrete terms this has meant that
flexibility has been achieved “by facilitating temporary contracts, facilitating
firing of workers with more than 10 years of experience in the firm
but introducing a higher ‘indemnization’ instead” (Florez, 2002: 4). While
firing workers has become easier in order to reallocate workers in productive
and competitive industries, the price of hiring workers on the
other hand has increased significantly since 1993, due to the creation of
Law 100 that extends a general system of social security in health based
on employment and income status including public and private salaried
employees, low income or self-employed individuals (Florez, 2002: 5).
The concrete results are two-fold; on one hand employers who used
to contribute 12.5 percent to insure their employees now must disburse
25.5 percent, meaning that the value of hiring formal workers has significantly
increased, presenting a liability to employers and changing the nature
of employer-employee relationships (Florez, 2002: 6). The second
result is that self-employed individuals who want to register to enjoy
these social security benefits must spend 25.5 percent of their personal
income as a contribution to these funds, again reducing the incentive of
personal enterprise owners to legally register below this framework.
While these social security schemes were intended to expand access to
health benefits regardless of wealth or employment status, they have
nonetheless created disincentives towards formal employment relation:
labor can be easily retrenched, incentives to hire workers on a formal
basis are reduced, and the incentive of small business owners to register