Within the framework of Salary Tipsin the coming months the tenth round of collective bargaining will take place, which, according to government authorities, will be the largest ever, since it will include some 195 groups.
The economist from Exante, Luciano Magnificentexplained in Radiomundo 1170 AMthat the salary accumulated, in general terms, three cumulative years of decline in terms of annual averages the private-public total. In the private sector, “the decline in the period as a whole was even greater”, since “The outbreak of the pandemic had a strong impact on the labor market“, said Magnificent.
The blow of the pandemic on the labor market led the Executive Power to choose to sign bridging agreements of a year in the wage negotiations corresponding to the second half of 2020, “which by design implied a drop in real wages,” explained the economist.
This type of agreement “did not grant workers an immediate adjustment upon signing the agreement, but rather the expected increase (3% nominal) only occurred in January 2021 (or in April if it was a sector in trouble)”, assuming an increase in nominal wages below inflation.
Once the bridge period has passed, in mid-2021 it would begin the ninth collective bargainingwhere the authorities separated the sectors that had to negotiate into two groups, on the one hand, “those most affected” by the pandemic, and on the other, those that were “less affected.”
According to Magnificent, “the “most affected” signed a new bridging period for one year, that kept a salary increase below inflationin pursuit of trying to maintain employment levels”, while the “less affected” sought to “start the recovery of real wages in that period”.
Salary recovery in terms of annual average was postponed, since although the Executive power advanced some revisions of the agreements, inflation was higher than projected prior to signing them.
Real wages are almost 2% below the first quarter of 2019
“Total real wages in the economy are almost 2% below the figures for the first quarter of 2019“, commented the economist, and this is due to “a decrease in private wages of 2.7% in that comparison, which contrasts with the null variation shown by the figures at the public sector level”.
In the comparison of the first quarter of 2023 compared to the first quarter of 2019, all sectors are below pre-pandemic levels, such as hotels and restaurants, retail trade, transportation, and the communications sector, where there are “decreases of between 4% and 5%“.
“At the other extreme, we have the sector of real estate activities, in which we are already at the salary levels of 2019”, and “in the areas of financial intermediation, social and health services, and private education, cumulative falls are less than 2%“, stressed the economist.
“It’s hard to know what the government will end up including in the official guidelines.” However, “what is undoubted is that the authorities face a set of dilemmas of economic policy for the elaboration of these guidelines”, since “wage guidelines will likely seek to meet the real wage recovery commitment“.
Magnificent, indicated that “the salary increases that are defined must take into account the potential impact on employment levels“, because although it is true that “in the last measurements the labor market tended to show a better performance than what we had been seeing during the first half of last year, this undoubtedly continues to be a focus of attention for the government”.
In turn, he said that it would be necessary to consider “what effects the salary adjustments that end up being agreed may have on inflation. For this it will be vital” to see what projected inflation ends up being used in the adjustment formulas that the guidelines for the next negotiations propose. “.
The dilemma is that if used ““low” inflation, there is a risk that the salary recovery in the average of the period will be postponed again“, but with a “high” base inflation“there is a risk of generating additional upward pressure on inflation levels“.
“Among the different objectives pursued by the economic policy it seems plausible that the inflation target be partially resigned and that wage recovery be prioritized”, slipped the economist and commented that “the most probable scenario that we are handling is that inflation remains between 6% and 7% in the next two years”, where bringing inflation to 4.5% will take time and cannot be done by force of monetary policy.
Source: Ambito
