Salaries according to stages
The report, entitled “Wage dynamics in the productive sectors, from convertibility to Covid-19”, divides the 26 years of analysis into 6 stages. The stage of greatest growth in real wages occurs in the so-called “post-convertibility recovery”, between September 2002 and December 2011. The economic activity had an accumulated growth of 73.1% (6.1% annualized), with a real salary that had an improvement of 68.8% (5.8% annualized).
The worst moments for wages occurred in the stages of the greatest fall in GDP: at the end of convertibility, between December 2001 and September 2002, the accumulated fall of the EMAE was 2.1%, with a real wage that it collapsed 22.6% in a single year. In the same line, In the so-called “depression” stage, between March 2018 and April 2020, economic activity had an accumulated drop of 30.5%, and real wages a cumulative 11.9% collapse.
On the contrary, there were also moments of decline in economic activity and improvements in wages. In the second phase of convertibility, between January 1996 and December 2001, economic activity fell 2.1% and real wages improved 4.1%. And vice versa, there were also periods of growth in economic activity and a drop in real wages. In the stage called “initial post-pandemic recovery” between April 2020 and June 2021, the activity had an accumulated rise of 33.1%, with real wages falling 0.3%.
The work also speaks of a stage called “stagnation”, between December 2011 and March 2018, where economic activity grew 2.3%, and wages by 3%. However, there are differences according to governments. In the second government of Cristina Kirchner (2011-2015), the EMAE fell 0.6%, and wages expanded 5.1% in real terms. While, in the first two years of the government of Mauricio Macri, between December 2015 and March 2018, the EMAE grew 2.8%, while average wages contracted 2%.
Importance of the minimum wage
The official document, prepared by the CEP XXI, which reports to Minister Matías Kulfas, describes the years 2002-2011 as “one of the periods, first of recovery and then of the most important economic expansion in Argentine history”. In the case of the median remuneration, the increase was greater than the average, of 115%, “which means that the recomposition was more marked in formal workers with better incomes, with the consequent positive impact in terms of income inequality”.
Among the reasons, three stand out: the increases in the minimum wage and the fixed-sum increases made by the Government by decree, and the reopening of collective bargaining instances, closed during the 1990s. The increases in the minimum wage implied rises above the average wage, which “allowed to reduce the income gap within the salaried universe.”
Employment, wages and GDP
In the 26 years analyzed, the sectors that had the greatest increases in real wages were: oil and mining, electricity, gas and water, financial intermediation and fishing. Although these four branches “barely encompass” 5.2% of the country’s formal employment.
Also this week, the CEP XXI, headed by Daniel Schteingart, published another report entitled “Economic cycle, formal employment and productive structure.” Both papers state that the improvement in economic activity has a positive impact on job creation and salary dynamics. Between 2010 and 2020, GDP per capita fell 6.2% and formal private employment fell 2% in the period, in proportion to the total population.
An increase of 1% of the product is associated with a rise of 0.75% in the number of jobs, According to the document. He adds that the correlation is “weak” in the short term, but “strong” in the long term due to the “high costs” of creating formal employment. The reasons, according to the work: “The Argentine formal wage level has not been low during the period under study and the associated tax burden has been considerable; the costs of laying off workers imply future risks. Consequently, it is natural that employment does not automatically react to increases in the product of important magnitudes”.
Along the same lines, it also highlights the “asymmetric” relationship between employment and the economic cycle, for which “sensitivity is greater in recessions than in expansionary periods”. “This result is particularly relevant for an economy that spent 21 of the last 45 years in recession and points out the importance of macroeconomic stability as a necessary condition for sustained social improvements”, says the document text, prepared by researchers Martin Trombetta, Azul Menduiña and Agustín Duarte Baracat. This year, the GDP could grow again for two consecutive years, something that had not happened since the 2010-2011 period.
Source: Ambito
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