In recent days, various data have been released on the closure of the economy by 2023. Gross domestic product fell by 1.6%, unemployment fell from 6.3% to 5.7% and poverty rose from 39 .2% to 41.5%.
The unsuspecting reader will wonder why poverty has increased if unemployment has decreased?
There are three main explanations.
A first answer It has to do with the rising inflation rate: it went from 94.8% in 2022 to 211.4% in 2023, liquefying the wages of employed and self-employed workers regardless of whether they had a job.
A second, with the type of work carried out. Total urban employment in the fourth quarter of 2023 grew by 600,000 new workers compared to the same period in 2023. That’s not bad at all, but when you examine it, you find that of those 600,000 increases, 20% is explained by private work, 17% by public work and 63% by black workers, registered and unregistered self-employed workers.. Conclusion: one third of the employment generated in 2023 was quality, the rest was not.
Finally, a third answer offers a somewhat more elaborate explanation if one wants to articulate the reasons for low-quality job creation, rising poverty and persistently high inflation: Kirchnerism’s blindness to increased public spending regardless of whether the economy works or not. the aid is direct. This “priming the pump” economic policy idea caused demand to exceed supply and installed capacity and inflation to spiral out of control, distorting relative prices.
It is not difficult to observe low unemployment in times of high inflation. As Fiel’s chief economist, Juan Luis Bour, an expert in labor market issues, once said, “inflation has the role of making workers more flexible and this inflation is making them more flexible.” Argentina’s history in periods of high inflation such as the 1970s shows that the economy has always experienced low unemployment. Also in 1989. The cost of business labor is lower and profitability is higher, as the IMF underlined in its latest information report.
Kirchnerism doubled public spending in 20 years and yet was one of the few countries where poverty increased in the last decade. Some will say that fiscal disorder has generated inflation and therefore poverty. Others, that since there is more poverty it is necessary to spend more. The first seems more precise. But you have to be careful: In the increase in spending in recent years there has been a lot of liquefaction of pensioners and social benefits and, on the other hand, greater help to the middle sectors through wage increases and subsidies supported by Kirchnerism.
Source: Clarin
