Instead of calling for the discussion of the Fiscal Pact, the Government begins discussion of a Social Pact with workers and employers.

DOMINICAN REPUBLIC - In Brief 19 May 2021 by Magdalena Lizardo

---

Yesterday, the Government launched the call for the discussion of a Social Pact with the participation of representatives of the business and labor sectors. The agenda of the discussion is the revision of the Labor Code and the Social Security Law, the first with 30 years of validity and the second with 20 years. It is understood that they do not reflect the reality of the Dominican labor market. In a certain way, it is a distraction from the beginning of the discussion of the Fiscal Pact. The Government has not placed a proposal on the table of how it intends to ensure a path of sustainability in public finances. But above all, there is no clear signal as to whether or not the discussion will start this year. With the launch of the Social Pact discussion, the government is trying to create a space for political governance to discuss two issues that have the potential to create confrontations between different interest groups. One is the discussion on the adjustment of the minimum wage that must be carried out no later than next July, in a context where the accumulated annual inflation in April 2021 is 9.65% and unemployment has increased as a result of the pandemic. The other issue is the reform of Social Security Law 47-01, which is being analyzed in Congress and where there are strong demands for its modification as well as conflicting opinions. With the call to discuss the Social Pact, it seems that the government is trying to advance where it understands that it has a certain capacity for maneuver, without risking a high political cost.