Social and Labor Policies: Development and Decision-Making

Development of Social and Labor Policies

Introduction: This document analyzes the political and institutional issues affecting the development of social and labor policies (SLP). The development of SLP follows the same process as any other economic policy. In this process, the State, as a political decision-maker (policy-maker), must continually set priorities and choose between different, often conflicting, alternatives. Throughout the process of economic and social action, many actors are concerned with or affected by these policies. This process may vary with the ideology or the type of government. However, whatever the form of government and decision-making mechanism, policy-making always has a few stages and some key actors.

Overview of the Process of Economic Policies

Areas for Action: The process involves various actors, both inside and outside government. There are three main areas:

1. Generation of Options: All actors involved in the policy development process express their preferences. A hierarchy of objectives is established and transmitted to the authorities. The most important role of civil society is expressing their preferences and the level of objectives through the ballot box.
2. Decision: This is the central core of the process. It is formed by the government (the three branches: legislative, executive, and judicial), public entities (central bank, public agencies, public enterprises), and the bureaucracy/public administration (in charge of technical and administrative aspects). The latter provides and analyzes information and implements the measures taken.
3. Projection of Influences: Various entities seek to influence policy-makers to make decisions best suited to their interests. These include pressure groups, political parties, and international organizations. They also have the objective of providing expertise through individual or group counseling and international economic organizations. Example: Economic and Social Councils.

Areas: Considerations:

• Decisions are heavily influenced by public opinion, leading to new targets, revisions, or the rejection of existing ones. This is manifested through political parties, parliament, pressure groups, campaigns, and the media.
• Constitutional provisions relating to the content and scope of economic policy, such as the constitutionality of a legislative provision limiting public debt, play a significant role. Example: Stability Pact (maximum public deficit of 3% of GDP).
• The process can be prolonged by inaction or inertia regarding the measures. Measures that are justified in one context may be ineffective or inappropriate if the situation changes.

Agents Involved in the Process of Economic Policy Development

Scope of Decision: Parliament:

Members of Congress, National Legislative Assembly, House of Commons, or bicameral systems hold legislative power. This branch has the central role in making decisions regarding the budget. Currently, it exercises more control over measures proposed by the government. This shift is due to the complexity of economic problems requiring technical treatment, the need for speed and continuity of policies, and the political importance of countries, leading to proposals and criticisms.

Scope of Decision: Political Parties:

Political parties exert influence in both the legislative and executive branches. They increasingly influence the activities of parliamentarians, especially the ruling party, who act and vote according to decisions made within the party. Ideology identifies key policy objectives (Right: price stability; Left: full employment). However, this traditional division is currently being questioned.

Scope of Decision: Government:

The President, ministers, and secretaries of state form the executive branch. Their role in the process, especially in the initiative, design, and implementation of measures, depends on their interconnection with the bureaucracy (Public Administration) and the influences of the party or parties that hold power.

Scope of Decision: Judicial Branch:

Generally, the judicial branch plays a relevant role in the decision-making process of economic and financial policies of the public sector (Court of Accounts). It also controls the proper functioning of the market (National Commission of Competition).