Two other reforms that I announced at the CADE were also the object of fierce attacks: that of the labor market and the new model for government employment. The former was made out by my adversaries to be a clever way of allowing entrepreneurs to fire their workers, and the latter to be a plan to turn out half a million public employees into the streets. (In a video against us that managed, in less than a minute, to pile up, one on top of the other, plagiarism [it repeated images from Pink Floyd’s The Wall], distortion, and slander, the government pictured me, disfigured by fangs à la Dracula, as bringing on an apocalyptic shock, in which factories were closed, prices shot into the stratosphere, children were thrown out of schools, and workers out of their jobs, and the entire country blew up in a nuclear explosion.)
Like free education, job security is a false social victory, which, instead of protecting the good worker against arbitrary dismissal, has turned into a mechanism for protecting the inefficient worker, and an obstacle to the creation of jobs for those who need work — in Peru, at the end of 1989, seven out of every ten adults. Job security favored 11 percent of the economically active population. It was, then, a small minority that had job security and an income that ensured that the number of unemployed would remain constant. The laws protecting the worker meant that, after a trial period of three months, a worker turned into the owner of his job, from which it was practically impossible to remove him, since the “just cause” for his dismissal referred to in the Constitution had been reduced, by the laws in force at that time, to a “grave dereliction of duty,” something almost impossible to prove. The result was that companies functioned with a minimum of personnel and hesitated before expanding for fear of finding themselves later on with the dead weight of a payroll that was too large. In a country where unemployment and underemployment affected two-thirds of the population and where creating work for the immense majority was an extremely urgent necessity, it was imperative to give the principle of job security a genuinely social meaning.
Explaining that I would respect rights already won — the reforms would affect only those newly hired — I enumerated at CADE the principal measures needed to mitigate the negative effects of job security: lack of productivity would be included among the just causes for dismissal, the trial period for evaluating the worker’s ability would be extended, commercial enterprises would be offered a vast range of possibilities for hiring temporary workers that would allow them to adjust their work force to market variations, and to combat unemployment among young people, contracts for training and apprenticeship, part-time work, and contracts for rotating workers and early retirement would be drawn up. In addition, the worker would be allowed to set himself up as a private and autonomous business and negotiate with the employer for providing his services on a contract basis. Within this package of measures, the democratization of the right to strike was also included, which up to that time had been the monopoly of the highest levels of the union hierarchy, and which, in many cases, forced the rest of the workers to go out on strike through a sort of blackmail. Strikes would be decided on by secret, direct, and universal vote; strikes that affected vital public services and strikes in support of other unions or associations would be prohibited; the practice of taking hostages and occupying work sites, as an adjunct to union work stoppages, would be penalized.
(In March 1990, during our congress on “La revolución de la libertad”—“The Revolution of Freedom”—Sir Alan Walters, who had been one of Margaret Thatcher’s advisers, assured me that these measures would have a favorable effect on the creation of jobs. He reproached me, I admit, for not having been as radical with regard to the minimum wage, which we were going to maintain. “It appears to be an act of justice,” he said to me. “But it is one only for those who are working. The minimum wage is an injustice for those who have lost their job or enter the labor market and find all the doors shut. To benefit these latter, those most in need of social justice, the minimum wage is an injustice, an obstacle that blocks their path to employment. The countries where there are the most jobs are those in which the market is freest.”)
I explained, particularly on visits to factories, that an efficient worker is too expensive for businesses to let him go, and that our reforms would not affect rights already won, but would apply only to new workers, those millions of Peruvians who were unemployed or who had miserable jobs, whom we had the duty to help by quickly creating work for them. I can see why workers alienated by populist preaching were bound to be hostile, because they didn’t understand these reforms, or because they understood them and feared them. But the fact that the majority of the unemployed, in whose favor these reforms were conceived, should vote massively against these changes in particular says a great deal about the formidable dead weight of populist culture, which leads those who are most discriminated against and exploited to vote in favor of the system that keeps them in that condition.
As for the half million public employees, it is worth telling the entire story, because this subject, like that of free education, had a devastating effect in my disfavor among the humble sectors and because it shows how effective dirty tricks can be in politics. The news that, once I took office, I would throw 500,000 bureaucrats out into the streets appeared in that great orchestrator of out-and-out lies, La República,* as a statement that Enrique Ghersi, the “young Turk” of the Freedom Movement, had supposedly made in Chile, to a Chilean journalist.† In fact, Ghersi hadn’t said any such thing and he hastened to deny this piece of information, once he returned to Peru, in the press§ and on television. A while later, the Chilean journalist himself, Fernando Villegas, came to Lima and denied this cock-and-bull story,* in the daily papers and on TV. But by this point the concerted lies regarding the 500,000 employees, organized by a cabal consisting of La República, Hoy, La Crónica, and the state-run radio stations and TV channels, had become an incontrovertible truth. Even leaders of the Democratic Front, my allies, were convinced of it, since some of them, such as the PPC leader Ricardo Amiel and the populist Javier Alva Orlandini, confirmed the falsehood in their statements to the press instead of denying it — by criticizing Ghersi for the slanderous untruth they attributed to him!*
What is certain is that neither Ghersi nor anyone in the Front could have said any such thing, because there was no way of determining how many public employees were superfluous, since there was no way of even knowing how many of them there were. The Democratic Front had a committee, headed by Dr. María Reynafarje, trying to determine the number, and it had tracked down more than a million (excluding the members of the armed forces), but the evaluation was still going on. Naturally, this bureaucratic inflation had to be drastically reduced, so that the state would have only those functionaries it needed. But the transference from the public sector to the private of the tens or hundreds of thousands of excess bureaucrats was not going to be accomplished through untimely dismissals. We were aware of the problem, and my administration, not only for legal and ethical reasons, but also for practical ones, was not going to make the stupid mistake of beginning its term in office by making this problem many times worse. Our plan was to painlessly relocate unneeded bureaucrats. This process of decanting would go on gradually as, with the reforms, economic growth started, new business concerns came into being, and the ones that already existed began to work at full capacity. This process would be speeded up by the government, through incentives to bring about voluntary resignations or early retirements. Without trampling anyone’s rights underfoot, doing our best to encourage the market to carry out the relocation, a good part of the bureaucracy would pass over to the civil sector — a good part, although at this juncture the exact number could not be determined.