Daily Archives: January 16, 2013

The salary increase

Alberto Bonadona’s article in Pagina Siete:

The salary increase

Alberto BonadonaThe request for a salary of more than Bs8,000 by the trade unions is more a pose than a conviction. The Government will conclude the annual routine with the usual struggle and will award an increase around five per cent, which exceeds the rise of the CPI [consumer price index] of 4.5 on something during the last administration.

Everything that can happen collaterally to the negotiations, marches, blockades and even crucifixions, will be part of a sample of the ability to mobilize certain sectors but will not reach anywhere near the mentioned figure. It will be to justify the combativity which serves the purpose of capturing the leadership or be extended in its exercise.

The discussion occurs around two indicators, one official, the CPI, and another by the trade union, of a food basket that this year is more than Bs8,000. The first, in reality, has already sanctioned the wage increase of some sectors such as teachers and health workers who will receive a somewhat higher increase over the CPI.

The rest of public employees (those who work in municipalities, governorates and public enterprises) will receive an increase closer to the percentage indicated by the CPI with the possible exclusion of those who work in the central Government who do not receive this type of increases.

The second indicator is a figure that may have back-up prices and some little complicated arithmetic but is unrealistic, particularly because domestic production can not give that kind of increases.

The results of these determinations, in fact, do not reach compulsively to the private sector. They will reach agreements among parties, employers and workers, all that can be reached at each center.

What the Government dictates can be a point of reference but fails to be a mandate, generally.

If you wish to generate a profound transformation in the remuneration to the labor sector, I believe that the elements to be considered should be completely different. For example, the evolution of the wage bill of all formal employees can scan in recent years in the context of the formation of the GDP and the creation of value added.

According to figures from INE [national stats institute], employee benefits to employees have declined noticeably, particularly against taxes that grow without ceasing.

Moreover, ways to encourage the growth of production while generating greater equity should be studied.

Bolivia is among the most unequal countries in the world. It is to grow production together with the improvement of equity. This is not arranged with increases in wages and salaries of 5%, but with changes in incentives to produce more and better, accompanied by measures that deliver better opportunities of income to workers.

It is not just a matter of market, with this, in the mines and construction workers, they have increased their income in recent years and they have done significantly.

It’s by modifying production processes and create new forms of labor participation in the results.

It is at the same time, to create the proper incentives for producers to innovate, expand their operations and to improve wage levels that will result in a larger internal market.

Alberto Bonadona Cossío is an economist.

http://www.paginasiete.bo/2013-01-12/Opinion/Destacados/16Opi00112-01-13-P720130112SAB.aspx

Good analysis, however, as history repeats itself, we will experience road/street blockades, unnecessary turmoil that only worsens our competitiveness and image to the world.