Rappi doesn’t make salaries more flexible, inflation does

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Something remarkable happened in 2022: the economy grew (5.2%) and unemployment decreased (6.3%). but poverty increased (from 37.3% to 39.2%).

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It hasn’t happened since 1996.

In the 1990s, when there was no inflation and the economy ran on a dollarising (1:1) currency board scheme, if companies required fewer jobs in a recession, or if imported inflation rose and dollar costs of workers increased, the adjustment of the labor market took place through layoffs until equilibrium is reached in the balance sheets of the companies. Thus, with Carlos Menem, the unemployment rate reached 18%. The flexibilisation of the labor market in the 1990s was the fissure that allowed 1 to 1 to ‘breathe’. So much so that between 1996 and 1999 the economy grew at Chinese rates. But the cost was high unemployment and poverty.

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If the labor regime was what made the labor market more flexible in an economy tied to a fixed dollar during the Menem regime, today it is the acceleration and high inflation of an economy that has lost its anchor of the dollar, which makes workers more flexible. Coincidence: it also happens under a Peronist government.

Labor costs for a company may be high today, but with pricing and rebranding rising above wages, the equation for companies could prove beneficial. Economist and labor expert Juan Luis Bour notes that in times of high inflation, Argentina experienced low unemployment rates. Again in 1989. But when inflation falls and prices stabilize, the problems of employment emerge and the debate to reformulate labor legislation.

Kirchnerism currently supports a plan to further regulate platforms such as Rappi (it was approved in the provincial Senate) on the argument that it would benefit workers by expanding their rights and perhaps thereby reducing the number of unpaid workers. But the statistics show another thing: the salary in 2022 grew less than inflation (90.4% against 94.9%) and not to mention the people who find informal work: their income increased by 65.4%. It is not Rappi who makes employment more flexible but the acceleration of inflation.

Source: Clarin

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