Daily Archives: December 4, 2014

The debate on the second Christmas bonus

This week, newspaper El Mundo reported that seven people out of every ten in Bolivia work in the informal sector… thus, the demagogue ruling ochlocracy has forced the legal sector to pay a second Christmas bonus… in the last nine years, the size of the public service has increased exponentially, including a large portion of the so-called advisors and temps, … a nice way to pay for their “loyalty”and again with OUR taxes!

So it si fair to say that out of the three people who work under the formal sector, two belong to the public sector. Thus, the second Christmas bonus could be nothing more than a cheap way to pay their acolytes and to also damage and destroy Bolivian private sector.

The latter has exponential problems trying to cope with this demagogue, last year many business went bankrupt because they could not meet this irrational demand. This year is no different, there will be many business going bankrupt. It is unbelievable that all business are forced to pay this second bonus, as if all of them had the same return, as if they all would be having extraordinary profits to cope with this demagogue…

So, it is important to read the following Editorial from Pagina Siete:

The debate on the second Christmas bonus

Pagina Siete logoOne of the most controversial decisions of the current government is having approved a supreme decree that all businesses and economic activities are ordered to pay two year-end bonuses, instead of one as established by labor law.

Critics of the decision stated that it had an obvious electoral feature, noting that President Evo Morales sought-candidate to win votes with “borrowed money”.

However, the same measure was applauded in other sectors because it helps redistribute wealth. In addition, the employees get more resources, spend and this also contributes to the expansion of the economy.

Consider this positive feature in more detail: narrow the gap between those who earn more and earning less something suitable, which can generate a more just society and thus less prone to conflict and instability. But, to have embraced in a  “blindly” manner, without qualification, it can become a problem more than a favorable one. With “blind” we mean that all Bolivian formal entities (because informal, which employ 80% of the Bolivian labor, are exempt from making such expenditure) must pay double bonus regardless of whether involved in sectors that have utilities, which have high debt, which generate much employment, and so on. Neither addresses the differences between business sectors: it is different to ask double bonus be paid to a college or a medical center, whose budget allocates large amounts of resources to wage payments, than to do with an oil company or a financial institution, for example whose spending is much smaller item or have many higher profits. Then that “blindness” of approach makes it difficult to defend as The decree must be worded in a more nuanced and thoughtful way, although it required more effort and did not meet the first objective of the measure: the demagoguery.

Recently, three sectors have complained of this action: the work of the Catholic Church aimed at social work and entrepreneurship of small and medium entrepreneurs. In some cases, payment of double bonus, as happened last year, involved the bankruptcy of some companies. Now there are fears of a similar occurrence. Although some reasonable aspects, by the way has been executed, this is an authoritarian measure, which assumes a government that has no limits in their actions and refuses to revise or adjust. But it must be modified for the sake of the health of the national economy.

Upon payment of the second bonus in a “blind” manner, without shades have been taken, it may become a problem rather than an achievement.