In the second quarter of the year the real average income Household consumption in the country rose 2.8% compared to the same quarter last year, according to the latest figures from the INE (National Statistics Institute). The increase was greater in Montevideo (3.5%), compared to the rest of the country (2.3%).
The advance is given by the simultaneous increase of salary and the employment. Salary is the main income of households (although obviously not the only one). In real terms, the Average Wage Index (AWI) In the second quarter, it was 3.6% above the same period of the previous year.
Another important component of many households’ income is the retirement income, which by constitutional definition in the Uruguay are tied to the evolution of wages. As wages increase, so do retirement incomes. In addition, according to figures from the CINVE Social Security Observatorythe number of pensions paid by the BPS.
In turn, the employment rate The unemployment rate rose from 57.8% in the second quarter of 2023 to 58.5% in the second quarter of this year. This is a significant increase in employment, which implies between 20,000 and 30,000 more jobs accumulated in the last year. More employment with higher average real wages are the main basis for the improvement in income.
Another indicator included in the INE report is the median household income -the figure that divides the total in two-. While the average household income in the second quarter was 94,956 pesos per month, the median income was 73,474 pesos per month. The median income maintained its real value compared to a year ago; but the median per capita income rose 1.5% in real terms (it stood at 29,201 pesos in the April-June 2024 quarter).
Projections
The increase in average household income allows us to project – at least in the short term – a greater consumption dynamics. This is important for economic activity in general, and also because consumption is associated with many jobs and incomes of relatively low-skilled workers, generally members of households with lower incomes. leading indicators of economic activity They show that, starting from this second quarter that we are analyzing, the economy is showing greater dynamics after a rather lukewarm start to the year, which could be associated with the above.
Furthermore, this dynamic coincides with some data presented in the latest labor demand report from the consulting firm. Advice, corresponding to the month of June. There is a report increase in labor demand general, after several months of stability. And this increase in job openings and calls occurs almost exclusively in those positions that require less qualification or no qualification. Although we must wait for the next few months to see if these trends are confirmed, it would be an additional positive factor in the situation of households with lower incomes, where the highest levels of informality are also concentrated. Of course, it is also important that the dynamics of labor demand is reactivated in other categories.
Challenges
The latest data on real household income is the highest in several decades for a second quarter and almost equals the absolute highs, which occurred in 2017. This is why continuing to advance in real income becomes more demanding.
Even more so if one takes into account the dizzying technological revolution the global economy is going through, to which the Uruguayan economy is not alien. In recent weeks, talking with businessmen in trade and services, contrasting situations and rapid changes in the Business modelswhich make stability elusive.
In particular, the expansion of the online commerce (both for goods and services) as well as the first concrete steps in the application of Artificial intelligence, They can generate powerful opportunities for entrepreneurs, companies or institutions that incorporate them with speed, expertise and a sense of timing. But they also threaten those who intend to continue with pre-established business models. And the employment dynamics behind this are intense, in the creation or loss of jobs, with an obvious impact on the future evolution of employment and household income.
Source: Ambito
