According to a recent report by the consulting firm LCG, for the third month in a row, workers experienced a loss of purchasing power. The loss presented by the public sector stands out (-2.6% m/m real). Along these lines, “the income gap with the unregistered private sector continues to widen, which once again had a real 1.5% m/m decrease in salary.
Secondly, They highlight that the registered private sector, which lost 1.9% in July m/m of its real salary, was partially compensated by the real increase in August of 1% m/m.
In July, the year-on-year change in wages experienced its first drop of 1.3% y/y in real terms after 8 months. The month of August, “far from presenting a recomposition, meant a deepening of the real fall in wages by 2.4% year on year, this was explained by the decrease of 1.1% y/y in real total wages of registered workers and the variation of -8.4% y/y in real terms suffered by non-registered private sector employees,” they stated.
If the comparison is compared to December 2021, the general level of wages presented a real drop of 3.6% in August. According to LCG, “the drop is explained by loss of purchasing power in all sectors led by a real 11.3% drop in the unregistered private sector, followed by a real 3.4% drop in the public sector. Registered workers in the private sector had a loss of purchasing power of “only” a real 1%.
In the event that the comparison is made against November 2017, the fall in purchasing power accumulates a cut of 24.4% in July. Those most affected: informal workers with a cumulative drop of 39%, 18.2 pp above registered workers (-20.7%).
What is expected for the coming months
The report warns that with a projected inflation floor of 100% as of December, “it is difficult to propose a scenario in which wages win the race against prices” despite the reopening of joint ventures. “We expect that in the annual average wages in the formal sector will fall around 1.5% in real terms, consistent with a greater deterioration towards the end of the year, orbiting values of -9% in real terms measured from December to December.”
For LCG, even with the recovery of activity, the high nominality and the delay in real wages means that it is not possible to achieve “recover levels similar to those of the last increase in activity in 2017”. He concludes that recovery will not begin until at least “next year” and warns that the dollar correction may have a harsh impact on wages.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
