El Deber, Juan Carlos Salinas Cortez writes about an upcoming conflict, salary increase levels for 2012:

The first graph shows the consumer price index (CPI) for the last two years, the monthly variation; and the second shows the cumulative variation:

The COB calls for no less than 20% improvement or a basic salary of Bs 6,000. The Government speaks of an increase above the CPI, a 6.9% in 2011.

A new front of conflict opens and puts to the test the ‘bargaining waist’ [negotiation capacity] of the Government, which will have to find the formula to meet the demand of the Central Obrera Boliviana (COB – main worker’s union of Bolivia), which requires no less than 20 per cent of wage improvement or Bs 6,000 which could cover the basic needs basket of goods and services. From the Executive side, there are signals that the wage increase will be higher than inflation in 2011, which closed at 6.90%.

Once the index of prices to the consumer (CPI and IPC in Spanish) – the thermometer that measures inflation–closed in 2011 at 6.90% (by 2010 was 7.18 per cent); from the COB point of view, this will not be the indicator to negotiate the increase in the wages.

January 16, Secretary of employment and unemployment of the COB, he pointed out that it will be in the wage Assembly, which shall not be less than the 20%, although he commented that this will be agreed officially in the game.

According to ANF [Fides news agency], the Executive Secretary of the COB, Ramiro Condori, indicated that the salary replacement shall be in accordance with the cost of the basic-need’s products that were increased last year because of the frustrated ‘gasolinazo’. [Dec 2010 government rose the price of gasoline and diesel drastically and later, due to violent protests, nullified it]

CONDORI rejected the intention of the Government to approve an increase of 7%, which is why the Union leadership will assess demand a higher salary to reach the Bs6,000, in line with the cost of the family’s basket [of goods and services].

In this regard, the former President of the Santa Cruz Economists Association,Teófilo Caballero indicated that the wage improvement may not exceed 12% since the market has already Bs 26 billion in circulation and a higher increase may push up inflation in 2012.

On the subject, according to ABI [government’s news agency], the Vice President, Álvaro García Linera reiterated that wages in this year will increase above the recorded inflation rates in 2011. “We ratify the Government’s position on the issue of wages, wages will rise above the rate of inflation in 2011,” commented García Linera.

This view was shared by the Vice-President of the Confederation of Private Entrepreneurs of Bolivia (CEPB), Ronald Nostas, who noted that sanity [real and possible increases, in Bolivia we have seen most governments agreeing to salary increases after strikes and violent protests, such increases have forced many private companies to either go out of business or enter the informal market as they can not absorb those increases which undermine more their competitiveness, while smuggling of imported goods flow the market place] must take precedence in this type of orders and expect to participate in the negotiations for the wage improvement.

In its monthly report, the National Institute of Statistics (INE) said that the CPI in December was 0.49 per cent higher than November, which was 0.32%.

The more inflationary service was transport, with 1.42%; the price of tomatoes, with 0.06%; rental of housing, 0.04 per cent and the cost of lunch with 0.03%.

Data that are not real, Carlos Schlink / Economist

In the first instance, it should be clarified that inflation shown by the Government is not the real in relation to what happened with the national management economy from 2008, since it should not be forgotten that this year the weight of inflation has changed by reducing its impact on the food sector, a group which absorbed 70 per cent of the resources of the Bolivian population.

Another aspect to consider is that if inflation is measured with the old weight, it would arrive at 18%, which is why the Government would be in deep trouble to cover this index with a wage increase. [in other words, current government said inflation was 6.9% while in reality is 18%]

If one takes into account the cost of food, the request of the COB of a basic basket of Bs 6,000 or a salary increase of 20% is not an exaggeration, although, we will have to ask the Minister of economy of where will the resources come from to meet this demand. A third point to consider is that since 2008 the purchasing power of the Bolivian people has lost about 35% of their purchasing capacity. This means that if before you used Bs 65 to buy something, today you would buy it with Bs 100. It is a reality that is not reflected with these data, which are not real.

http://www.eldeber.com.bo/2012/2012-01-06/vernotaeconomia.php?id=120105221854