Real salary and job quality fall | Caen sueldo real y calidad del empleo

Ernesto Estremadoiro Flores, El Deber:

The real salary reaches 2005 levels and the quality of employment in companies falls

El mercado laboral ofrece salarios bajo /Foto: Fuad Landívar
The labor market offers low salaries /Photo: Fuad Landívar

Real remuneration in private companies reaches, on average, Bs1,574 in 2023, similar to Bs1,553 18 years ago. Experts see that job insecurity is increasing

It’s noon and Miguel, 40, zigzags his car through the chaotic streets of Santa Cruz de la Sierra. He gets to the point that he flagged the app he uses for work. He greets, picks up the passenger and in a matter of seconds begins to tell part of his life. He says that he studied administration, that he has specialties, he also talks about the heartbreak of his divorce and finally how he came to ‘cabbie’. For years he worked as a warehouse manager in a company. But tired of not earning enough, he decided to try his luck. Now as a taxi driver he earns better and does not suffer the stress that an administrative position implies.

“You earn well, but you have to be constant. I live better, companies offer you the minimum and things are very expensive; the rent above all. I should earn more than Bs10,000, but companies only offer crying Bs6,000,” he says.

Since 2006, the Government of the then president, Juan Evo Morales, established as a State policy the increase in salaries of workers in the public and private sectors; these adjustments remain in force to date.

However, specialists maintain that the nominal increases did not help to improve the situation of workers. What’s more, they claim that of 100% of the workforce, only 30% access this benefit.

Data from the Bolivian Institute of Foreign Trade (IBCE), extracted from the National Institute of Statistics (INE) indicate that until June 2023 the nominal salary in the private sector reached Bs 5,001, but the real one was Bs1,574.

The nominal salary is the amount that an employee receives for performing his or her tasks during the workday. And it is what you see reflected in the company’s payroll (list).

While, the real salary refers to the basic needs and services that the worker can access with his salary.

From 2005 to 2023 – nominally – in the private sector it went from Bs2,333 to Bs5,001, that is, an increase of 114.36%.

However, the real salary, in this period of 18 years, barely rose 1.35%, going from Bs1,553 to Bs 1,574.

Official data show a similar evolution in real and nominal salaries in the public sector. For example, in 2005 the nominal salary of a civil servant was Bs1,397 and by 2023 this will increase to Bs 4,245.

However, the real salary in 2005 was about Bs937 and by 2023 it increased to Bs1,336, which is equivalent to 42.58%.

Increases that discourage employment

Rodolfo Eróstegui, economist and former vice minister of Labor, explained that since the 1980s, after hyperinflation and the promulgation of decree 21060, the governments of the so-called neoliberal period established salary increases to compensate for the loss of purchasing value due to inflation.

This policy even continued and deepened during the administration of the former president, Morales, achieving an improvement in salaries.

“We cannot hide that and that, regardless of whether the Government is left-wing, right-wing, whatever, there is an improvement. Maybe not the one that all employees would like, but there is one,” he noted.

He recalled that the national minimum wage in 2005 reached Bs440. While, in 2023 this parameter is at Bs2,362.

However, the improvement does not reach all workers because of the 100%, more than 80% do not depend on a salary, but on their effort to generate an income.

He explained that, in some cases, within the informal sector, some people, depending on the activity, may have higher incomes, but many times they are lower than the salary parameters set by the Government.

“Even many salaried workers, upon being laid off, decide to start a business or dedicate themselves to such a lucrative activity, such as smuggling,” explained the specialist.

In this context, he observed that in the last two years the increases “have not replaced the purchasing value of the salary,” that is, the real salary has been deteriorating.

However, prices, both housing, rent, the price of food, and many other basic elements that families consume every day, “have risen and that value has not been compensated.”

The labor researcher, Bruno Rojas, maintained that the most worrying thing is that the real salary is at the same levels as 2005 and that job insecurity, in the private sector, has increased.

For Rojas, there have been few advances in labor matters and he assures that since 1985 salaries have become more flexible. This situation worsened with the pandemic.

For example, he pointed out that job insecurity is now hidden with consulting contracts for temporary jobs and with lower incomes, even those established in the salary increase decrees.

“Today, public and private entities, that use this figure to the extreme. They are all hired as online consultants, by product. Today a consultant is no longer an expert, as he was before. Not today. Now a consultant is someone who collects the money collected at the toll, even an auxiliary nurse hired in a hospital, or in some private entity,” he noted.

Businessmen posture

For the Chamber of Industry, Commerce, Services and Tourism of Santa Cruz (Cainco), the salary increases that have been regulated since 2006 have had two problems: the first — according to data from the INE’s Continuous Employment Survey (ECE) — that They have increased informality because smaller companies have exited the market and independent workers receive less income in their new jobs. The second difficulty since the end of the economic boom (2014) is that it has caused adverse conditions for entrepreneurship.

“In this last case, studies by independent researchers indicate that an excessive increase in the minimum wage is counterproductive in the labor market,” the entity assures.

The institution noted that salary increases for the private sector represent “an additional cost that adds up to 43% above the basic salary, making a minimum wage of Bs2,364 actually become a monthly sum of Bs3,373. ”.

“This implies that a company to hire a worker should at least guarantee a similar income based on productivity. The structure of the labor market allows us to affirm that this is not the situation and that it actually causes more underemployment,” said Cainco.

Cainco maintained that the increases served to maintain purchasing power because they exceeded inflation, “but at a high cost in terms of underemployment.”

For Eróstegui, the only way to improve the quality of employment is to increase private investment, which will generate a high demand for workers.

“When one company invests and hires salaried workers, another company invests, hires salaried workers, then the demand for salaried workers grows and so does the salary,” he pointed out.

However, Cainco indicated that “the current regulations are totally counterproductive to formalization because it artificially increases formal labor costs and discourages the legality of companies and their workers.”

The version of two ministries was sought. In the first instance, the Ministry of Economy and Finance, which said that the salary issue is the responsibility of the Labor portfolio, but until the closing of the edition the version of that distribution could not be known.

Meanwhile, several professionals leave their careers, and like Miguel, they zigzag through adversity.

SHIELDING

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