He Ministry of Labor and Social Security (MTSS) is preparing to present, in the coming weeks, the guidelines for the 10th Round of Wage Councilswith which the government intends to fulfill its promise to recover the real salary in Uruguay. What particularities does it present and what can be expected from salary negotiations?
During the second semester will take place the greater opening of negotiation tables carried out by the current government, with 195 activity groups and in a context in which the recovery of employment and real wages —in the midst of an evident slowdown in the economydriven by the drought history of the country— are projected as keys to an electoral platform that begins to take shape in the face of the 2024 elections.
In this sense, it is not minor, either, the fact that it will be the last instance of salary negotiation before the beginning of the electoral period; Although it will be the first call after the approval of the Law No. 18,566 which included modifications to the collective bargaining process based on recommendations from the International Labor Organization (ILO).
What are the challenges in this new round of Salary Councils?
He Development Studies Center (CED) made the 10th Round of Wage Councils the main topic of the 43rd issue of its macroeconomic bulletin. There, they establish and analyze certain challenges that the different actors will have to face when they sit down at the negotiating table.
The document is part of a wage bill growth scenario —with real employment and salary levels above pre-pandemic levels, although with some pending points—in parallel to a slowdown in the economydriven by the international economic context but also by the effects of a historic drought in the country.
In this context, the CED poses as the first challenge the internalization, both in the guidelines and in the agreements, of the lower expected growth, as well as the labor market heterogeneity at the sectoral level. In other words, the government must consider, on the one hand, the fact that the “space” for the recovery of employment is narrowing as the economy converges to levels of growth around its potential; in a context where not all sectors had the same levels of productive recovery after the Covid-19 pandemic.
In this way, it will be necessary to consider the heterogeneities at the sectoral level and establish salary increases that are aligned with productivity to avoid a source of tension and stiffness —as happened between 2015 and 2019, when real wages grew disproportionately to job creation.
On the other hand, the CED raises the possibility that the current occupancy level becomes a new equilibrium in the labor market that is difficult to reverse. In this sense, and while there are improvements in terms of formality and qualification of the employed, there is also a situation in which the creation of jobs becomes a difficulty —especially when the greatest demand for occupations occurs in highly qualified.
These “bottlenecks” must be monitored in the field of collective bargaining, “mainly when it comes to setting minimum wages by category (reports), establishing (additional) adjustment criteria for submerged wages and other elements that are not necessarily wages that are agreed between the parties ”, they point out from the CED.
Another challenge that the Center for Development Studies points to is completing the recovery of wages lost in the pandemic —approximately 4.5%, on average—, after the start of the efforts during the 9th Round of Wage Councils and the self-imposed deadline at the end of the current government term.
In the current context —as of April 2023—, only the health and education sectors recovered almost all of the real wages lost, while commerce and tourism-related services —such as hotels and restaurants— are the sectors that lag behind the most. . However, in July the corrective measures established by the difference between expected and actual inflation. In this way, those who agreed biannual corrective measures will have an increase between 4% and 5.5%; while with the annual correction the increase will be between 1% and 1.5%.
Finally, according to the CED, the 10th Round of Wage Councils is an opportunity to “discuss the relevance of some changes that may be incorporated in the future in the regulatory framework.”
One of the issues raised in this line is the differentiation of settings that were carried out since the sixth round of negotiations, based on subjective criteria or with limitations that did not make it possible to account for the sectoral heterogeneity in its entirety. In this way, the upcoming opening offers the opportunity to move towards a more decentralized tradingwith three levels: macro —where the minimum wage is determined at the country level—; sectorial —where the salary structure of the sector is determined according to different factors—; and company —Where the salary components are set for productivity or performance.
Likewise, work remains to be done on the non-indexation of adjustments for inflation —a path that began to be followed with the biannual corrections— and on the incorporation of salary adjustments linked to productivity.
The final objective would be, along with the recovery of real wages, to establish Mechanisms that underpin less rigidity in wage setting.
Source: Ambito
