Due to high inflation, real wages were at their lowest level in the last 12 years

The salary is the main victim of rising inflation. Until the first half of the year, revenues and prices were even, but the prospects for the second half of the year are not good for your pockets, as evidenced by last week’s Indec. In July, the cost of living rose to 7.4% and they estimate it doubled the average salary increase: 3.5%.

Private statistics also show that the real salary of official employees in constant pesos has fallen to the lowest level in the last 12 years. According to Eco Goin July it reached an average of $ 121,561 and you have to go back to the same month of 2010 to find a similar record. That year, a worker in an addictive relationship earned $ 120,419. For informal ones, the drop is much greater.

“The situation is worrying because revenue contract for the 5th consecutive year”Says economist Ricardo Delgado, director of Analytica. Analysts predict that the inflationary flash will have repercussions in two directions. In income (projections indicate that formal wages would drop this year by 4% and by more than 10% among those who work illegally) and also in the quality of employment. Precarious work advances more than formal work.

An Econviews report indicates that formal employment continues to pick up and the private sector has added 112,455 new jobs since December. “But they are growing slower than the informal sector,” warns Andrés Borenstein, chief economist at that consulting firm.

There are 20.6 million jobs in Argentina. Of that total, 7.1 million are formal; 3.6 million state; 5.1 million illegal workers and 5.5 million self-employed and self-employed. Belén Rubio, of Abeceb, agrees job insecurity increases in parallel with the deterioration of income. According to the Indec, in the first quarter of the year the registered employees increased by 3.4% (356,000 jobs) and informal workers by 12.5% ​​(567,000).

“Six out of 10 jobs created in that period are precarious”, Emphasizes the specialist. He adds that this has to do with two reasons. On the one hand, for the reopening of many businesses after quarantine (“the informal ones were those who suffered from the pandemic”) and on the other, for the economic recovery: “People who did odd jobs went back to work ”, He summarizes.

The economy recovered 6% in the first half of the year, but projections indicate a decline of around 2%, due to general price increases and uncertainty. After the agreement with the IMF, the government calculated annual inflation close to 58%. Private individuals, today, project a 90% floor and recalculate upwards. Revenues, once again, lag behind.

“What happens with the salary recorded forward will depend on the possibility of reopening parity,” interprets Andrés Caprarulo, of Analytica. Prices are rising at an unexpected rate and that is why the unions are demanding further revisions and compensation. Just review the agreements signed in key sectors such as Commerce (59.5%), Construction (62%), Metallurgy (65%) and Banking (60%). Oil tankers reached the highest percentage (79%), well below the expected cost of living.

After all, and until last month, those improvements in the formal sectors were equal to the cost of living. This has changed and for this Borenstein summarizes the current context with a sentence: “We are good, but we are bad“. The lower purchasing power has an impact on the economy as a whole as consumption accounts for two thirds of the general activity.

A study by the consulting firm Scanntech, which measures self-service shops, shops and local businesses, indicates that “in July, consumption decreased by 6.7%, accelerating the fall of the previous month. So in the first seven months they leave a contraction of 2.2% ”. This is a periodic report that analyzes the sales of basic products, such as food, drinks, toiletries and cleaning.

Rising prices hit the pockets, especially in the lower-income sectors. “With the new nominality of the economy, it is very possible that wages will drop even further,” says Sebastián Menescaldi, of Eco Go. wage buying will be higher towards the end of the year. Eco Go plans for the end of the year an accumulated annual inflation of 95% and an average wage increase of 88%. This represents a net contraction of 7%.

Most unions negotiate the reopening of joint discussions. The government, for its part, has convened the UIA and the CGT to seek an agreement on wages and prices. What is under discussion is whether there will be compensation mechanisms through a percentage increase or a fixed sum. This is not a trivial matter. Analysts warn this the dynamics of updates are shortened and this encourages observations. “Salaries are costs of the economy,” says Caprarulo.

Rubio, from Abeceb, describes a much more risky scenario, with “an infinity of joint ventures, with ever shorter deadlines, negotiations every 3 and 6 months, agreements with trigger clauses and share increases. Always with wages lagging behind inflation. Menescaldi concludes: “It is a classic. We have many unions pushing to reopen joint ventures as soon as possible and employers, delaying the matter for as long as possible. The inevitable consequence is the loss of purchasing power ”, he concludes.

The indicators are by no means encouraging, especially for the second half of the year. In the first half of the year, the race between inflation and wages was even. According to Eco Go, the total wage bill increased by an average of 34.3% until June against accumulated inflation of 36%. But during that time the basic food basket increased by nearly 37% – a punishment for poverty.