– What is the economic explanation of the tire conflict?
– The difficulty of salaries to keep up with the inflation rate. When there is an acceleration in the rate of inflation, what we call economists increasethat is, achieving inflation so that purchasing power is not left behind implies this salaries move from adjustment to inflation levels of 50% as it was at the end of 2021, at 100%.
– Does the parity regime support 100% inflation?
– Today we have inflation around 80%. Salary adjustments ranged from 60% to 65%. But now there are demands of 90% and soon 100%. The tire deal, with a roughly 70% -75% adjustment, has a driver stating that increases cannot be less than inflation. But in all cases it is about catching up with the inflation behind us and that is what has been achieved up to aa guild with a difficult position like tires. Conclusion: when inflation is accelerating, wages are lagging behind.
– What is the government doing to stop the price spiral?
– Basically, dock the dollar. We are seeing that the Central Bank has stopped accelerating the devaluation rate in the last few days and the exchange rate is approaching 6% per month. We may suspect that the bank will try to delay the exchange rate further as the election approaches.
– In any case there is no ceiling on inflation, will there be more conflicts by the end of the year?
– It will depend on several things. From the perception of the hardest unions to ask for the impossible, from seeing what happens with the more traditional sectors of trade unionism where there is still not much conflict because the situation is uncertain for them and for the companies, and finally, from the competition between left-wing trade unions and Peronists. I’m afraid in the first half of next year there will be more conflicts because there will be companies that will not be able to improve.
Are legal actions inevitable?
– There will always be conflict with a salary of US $ 200. What’s more, the minimum wage at the free exchange rate is below that level. There will certainly be more problems if purchasing power is very low and it will be low if labor productivity is not improved.
– Is Argentina facing a period of low dollar wages?
– It is an economy that will have a high exchange rate for a few years. One day the dollar will merge and it won’t be $ 150. The higher exchange rate could improve the business. But it will take time to recover dollar wages. It is so.
– Do you mean that companies in this country will have cheap and skilled labor?
– Companies have a high labor cost because the salary is measured in official dollars. And if you add more restrictions, companies lose alternatives and leave the country. If this situation ultimately improves, the opportunity is enormous. Investors are convinced to stay in Argentina only if sustainable profitability is guaranteed for 3 or 4 years and not for 3 or 4 months or a particular measure for a sector.
– Why is the economy growing and black employment increasing?
– Because there are no opportunities for the majority in the formal labor market and people have to go to work. Note that informal urban employment employs around 8.1 million people out of 21 million jobs. But what upsets this phenomenon are two things. First, that GDP in the first half grew by 6.5% and employment almost the same. In other words, the growth of business and work goes hand in hand. But what we call the 1-1 elasticity of employment relative to GDP, it is strange that it persists over time. How come? Because you are saying that to grow by 1 point in Argentina you have to add 1 worker, that is, there is no improvement in productivity and efficiency. We live in a country where employment grows when the economy expands, stagnates or contracts. very rare And this is because illegal work is growing, self-employment is growing and that of the public sector is growing. But instead private wage work has stopped at 6 million since 2012. So output per worker formally employed falls. And if productivity declines, why should wages rise?
– What’s the second point?
– When informal employment grows strongly, the average income or salary that is added to the economy is less and less.
– Argentina hasn’t grown for a decade and yet has low unemployment. How come?
– Back, because it creates illegal jobs. And also because the inflation rate is high. Inflation plays the role of making workers more flexible and this inflation is making them more flexible. Labor costs for a company can be insane in a month, but not in two months, let alone six months. If the government puts the inflation rate to zero tomorrow, there will be many companies that will pay high wages. But when you see the history of Argentina in times of high inflation such as in the 1970s, the economy has always experienced low unemployment. Also in 1989. In convertibility, on the other hand, when prices stabilize, labor indicators fall apart and the problem of labor regulation emerges.
– What other characteristics of the labor market would you mention?
– The level of informal employment is higher than you think. A single tax payer who pays a contribution of $ 100 per month to get his or her Social Security or the domestic staff who appear under a very particular nickname of formality, they are indeed an army of informal workers hiding under the label of formal, which is not true. And not to mention many social mono-tax or mono-tax. Formal workers are limited to 300,000 self-employed workers, about 6 million private formal employees and 4 million public employees.
– In other words, nearly half of the 21 million jobs
– In reality less if we take into account how many productive jobs there are, for example by subtracting half of public employees. I insist: our productivity decreases and, ergo, wages cannot grow.
– Can you create formal works? Transfer the beneficiaries of the plan to official workers?
– It will depend on the macro and micro. The first thing to create jobs is to have an economy that is growing and sustainable. Secondly, on the micro level, there are many things to review. We have seen this with Cambiemos and also what happens now: it is very difficult for people to enter the market for official wages from a work program. A successful plan keeps 3 or 4% of people in the market and not 40% or 50% as it should be. How come? I think in Argentina it should be possible to hire and fire, that is a flexible bargaining mechanism. If there is no temporary work, the question that applies is: why should the company, faced with a resumption of its business, have to choose between betting on growth to last and risking hiring or not, assuming that the reactivation can last less?
– Isn’t flexible temporary work precarious?
– Maybe we’re talking about junk contracts and things like that. But there are countries in the world that have very strict labor regimes with very flexible temporary regimes. Holland for instance. These countries, many Europeans, are escaping unemployment because when the economy is good they take more people. Argentina has a temporary and permanent rigid scheme. Their education rates have significantly worsened and if we add that the level of experience in the formal market is declining, the situation should lead us to think more modern regulations.
– In 10 years, formal private wage work is the same. What difference was there in this subject between Cambiemos and the Frente de Todos?
– We changed made some changes but what they were not essential and they were few for what we need, as public employment has declined. The FdT was rude with the double pay and the ban on dismissal.
Source: Clarin
