He National Statistics Institute (INE) released today the data of the Average Wage Index (IMS)which record the wage evolution of all formal sectors of the economy, including state wages.
The index corresponding to February was located 10.7% above its level a year ago. In the same period the retail inflation was 7.6%from which it follows that the real salary increased 2.9% annually. In this way, it is close to pre-pandemic levels, when the real wage in Uruguay was at record levels.
Indeed, in that year 2019, real wages marked their highest levels in more than 40 years. However, at that time there was a decline in employment levels, which then fell sharply due to the arrival of the virus.
Once the pandemic was overcome, in the last two years employment has recovered due to the good performance of the agro-export sector, construction and the gradual recovery of the sectors of services. So currently – while salary is just 1.9% below 2019 levels– Employment is at similar levels or somewhat higher.
The recent increase in the real wage is due to the confluence of two factors: on the one hand the inflation has been giving way and in February fell to 7.6% per year. At the same time, the nominal wage increases have been improving since the last negotiations of the Salary Tips.
So today’s data shows that all sectors labor have had nominal increases above inflationparticularly the Restaurants and Hotels sector that had been evolving below the cost of living.
The impact will be seen in consumption and activity
The increase in real wages in recent months will surely will allow an improvement in consumption levels of individuals and families, enabling progress in the activity levels in commerce and services in general.
This factor is expected to support activity this year 2023, given that the drought has strongly affected the agricultural and agro-industrial sector, while the construction sector seems to be reaching maximum levels of activity, as the UPM works and its associated projects.
At the same time, concern about the sustainability of these salary levels: when measuring the Uruguayan salaries in dollars the increase in the last year exceeds the twenty% and it’s in levels all-time highs.
Although there are sectors that -probably- can sustain these salaries due to their good levels of productivity and competitiveness, others production or service sectorsthat compete abroad or in the local market, they may have difficulties in sustaining these salary levels in dollars and in those cases the risk of losing employment.
Source: Ambito
