He weight of public services of energy, transport and water in relation to salaries is growing rapidly and By the middle of this year it could reach the highest levels recorded so far this centurydue to the related price correction carried out by La Libertad Avanza.
A quote from the consultant EcoGo shows that “the impact of a typical basket of public services in wages“on average it would reach 13.8% by mid-2024a figure that has not been seen since the peak of 2019 (12.2%) and, further back, in December 2001 (14.8%), always in the hypothesis of the next expected rate increases. It is currently 8.7%.
The situation occurs as a result of increases in the electricity tariffthat reflect a removal of subsidies for high-income families nationwide, e increases in public transport, also to reduce state aid to users and support the ongoing fiscal adjustment. But it is also motivated by strong liquefaction of salaries in the last months. And then there remain the adjustments on gas and water.
Salaries vs services, a story
The historical context and limits of this relationship between public services and wages have to do with the fall of convertibility “1 peso, 1 dollar”, starting in January 2002, when the economy’s prices were de-indexed, and in mid-2019, at which point Mauricio Macri almost completed a recomposition of relative prices after three years of gradual but steady adjustments. In this sense, the president Javier Milei scores a goal that Macri had targeted for his second half. “Do the same thing, but faster”the former president had promised.
According to a work by Interdisciplinary Institute of Political Economy (IIEP) of UBA and Conicet, the weight of electricity and gas energy services in the Buenos Aires Metropolitan Area (AMBA) in proportion to the average salary -Average taxable salary of stable workers, RIPTE in February indicates that it is 5.6% for a residential user with income high (L1 segmentation); 1.7% for those with an average income (N3); and 1.6% for a low-income person (N2).
However, taking the minimum income of each income segment ($2,088,881 for N1; $180,000 for N2; and $596,823 for N3), the average electricity and gas utility bill in the AMBA has a weight of 1.6%, 5.1% and 1.6%. respectively, says the work conducted by the technicians Alejandro Einstoss and Julián Rojo.
Regarding transport, the economist Rafael Skiadaressisconsulted by Clarionconstructed the time series of the weight of travel by bus in different cities of Latin America as a percentage of the minimum wage.
I found it This year in Buenos Aires a basket of 50 trips takes up 5% of the minimum wage, the same level as Mexico and above Quito, Ecuador (3.8%), the cheapest city. The roof is in Lima, Peru (17.1%). However, on average last year, Buenos Aires was the cheapest, as also happened in 2022 and, further back, between 2005 and 2015.
Buenos Aires has too the subsidy percentage corresponds to the highest total transport cost in the regionwith a peak of 90% in 2023, although all passengers in Latin American cities have benefited from state aid of around 50%, as an incentive not to use the car in urban areas.
Looking back, it’s worth noting that in 2019 the peak of bus travel as a percentage of minimum wage was 6.5%, and the recent historic high was between 2001 and 2022, at 18.8 %.
“There is some “desirable” level.“, asked Clarín. Skiadaressis replied: “In several World Bank projects, 10% (transport costs in relation to salaries) is set as a reasonable ceiling. Another example is the transportation voucher in Brazil, where it is a right of regular workers under which the monthly cost of transportation cannot exceed 6% of their salary. If it exceeds 6%, the difference is paid by the employer.”
While, Sebastiano Menescaldidirector of EcoGo, stated that “there is no ideal number; “The historical average from 1995 to today is 8.6%.”
Source: Clarin
