Efforts to update the Labor Code of the Dominican Republic have stagnated over the keeping of the hefty severance payments imposed by the Labor Code that dates back to 1992. Business groups say this high burden keeps wages low and discourages job creation in the formal sector. Today, the informal sector employs more people.
A coalition of Dominican business organizations, led by the National Business Council (Conep) has expressed strong opposition to the recent presentation of a labor reform bill to the National Congress. In a letter addressed to Labor Minister Luis Miguel De Camps, the group asserted that the proposed legislation was prematurely sent to Congress without addressing key concerns raised by the business sector.
The letter, signed by eight major business associations, including Copardom, AIRD, Asonahores, Adozona, ACIS, Anje, Codopyme, and ONEC, emphasized that the bill had not been adequately negotiated with business representatives. They argued that the draft legislation is incomplete and did not accurately reflect the consensus reached during previous tripartite consultations.
The business groups identified three primary issues with the bill:
- Inaccurate drafting: The coalition contended that the bill’s language was imprecise and inconsistent with the agreements reached during earlier discussions.
- Lack of consensus: The business groups stressed the importance of reaching a consensus on all outstanding issues to ensure a truly comprehensive overhaul of the labor code.
- Concerns over severance pay: The letter highlighted the business sector’s longstanding concerns about the current severance pay system, arguing that it creates uncertainty, reduces competitiveness, and is ineffective in protecting workers.
The business groups reiterated their position that they do not seek to eliminate severance pay altogether but rather advocate for a more modern and flexible system that better suits the needs of both employers and employees. They expressed disappointment that the government had not provided sufficient legal or technical justification for maintaining the current system, despite the business sector’s willingness to consider alternatives.
Likewise, over the weekend, Pablo Ulloa, the Dominican Republic’s Ombudsman, spoke up in favor of attacking the reasons behind the high informality. He also urged that a reform of the social security regime be made. He highlighted the alarming reality that more than 50% of the country’s workforce is engaged in informal employment. Speaking on the issue, Ulloa emphasized that this situation, as revealed by the Employment Quality Index (ICE_RD), reflects not just numbers, but personal stories of struggle, inequality, and hope.
“Fair wages (35% of quality employment) are just the beginning,” Ulloa stated in a post shared on his social media account this Sunday, 1 December 2024. “In the Dominican Republic, we must guarantee job stability, social security, and dignified contracts. Work should symbolize dignity, opportunity, and progress for everyone in society. Changing this is our duty.”
According to Ulloa, over two million people in the country currently work informally, meaning they lack social security, pensions, and basic benefits. “This is a reality that affects entire families,” he stressed, reiterating that formalizing employment is the only way to protect workers’ rights.
Ulloa underscored that quality employment should not be a privilege but a right for all citizens. He pointed out that a fair labor system must ensure decent wages, formal contracts, and other benefits, which, he said, account for 60% of what constitutes quality employment.
“Improving the quality of employment cannot wait,” he continued. “Fair hours, dignified contracts, and job stability are rights that all Dominicans should have. Every decent job transforms lives, strengthens communities, and builds the country we deserve. We cannot keep postponing this change.”
In his remarks, Ulloa called for a comprehensive reform of the country’s Labor Code, stressing that “reforming the Labor Code without including social security is like building a house without a foundation.”
Meanwhile, Diario Libre in an editorial proposes a three-tier level for the imposition of severance payments. A first small business level would be released from the severance payment obligations.
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Listin Diario
Diario Libre
Diario Libre
2 December 2024