The wage policy is destroying dignified employment | La política salarialista está destruyendo el empleo digno

Ronald Nostas, El Deber:

A few days ago, the Bolivian Labor Federation (COB), which represents less than 10% of the country’s workers, presented the government with a list of 152 demands that include measures in the political, legal, and economic spheres, most of which are outside its responsibility and competence.

Of all these demands, the most promoted is the proposal for an 8% increase in the national minimum wage and a 7% increase in the basic salary, although it also demands the approval of modifications to the Pension Law to increase contributions to the solidarity fund and to mandate retirement at the age of 65; this last demand despite the opposition of the health and education sectors, two of its most important affiliates.

The presentation of the demands has mobilized several ministries that promptly instructed the formation of tables and working commissions, where public officials discuss the various points of the document with COB delegates who lack legitimacy, experience, and authority in the legal and technical issues of the demands, but are shielded by the political commitment that assures them a successful management.

Once again, the private sector, which will bear the brunt of the wage increase, has been excluded from the debate on this measure. In response to the request of some business leaders to establish a tripartite dialogue, the government has stated that the format of all negotiations is bipartite and that this mechanism will continue. The Executive Secretary of the labor entity was more emphatic, stating that “Tripartism for wage increases is ruled out, completely rejected, so there is nothing more to discuss.” Both have made it clear that ILO Agreement 131 and Law 2120, which mandate exhaustive consultation with employers to define any increase in the minimum wage, have no value in the face of the political decision taken by the leaders of the Labor Federation and the Government.

Beyond this protocol that is repeated every year, it is evident that, in the field of employment, the decision to maintain the wage-based and exclusionary management model is reaffirmed, which for decades has been leading to the collapse of the Bolivian labor system and generating serious consequences for the productive sector and the business community in general.

This model, which focuses on maintaining a low percentage of open unemployment, increasing the number of oppressive labor laws, and raising wages, is naturalizing the tragic reality experienced by the more than four million informal workers who are excluded from agreements, the thousands of workers who lose their jobs, and the hundreds of thousands who enter the informal sector each year, thanks to the effects of the list of demands.

It is increasingly evident that excessive wage increases, in addition to increasingly suffocating regulations against the private sector, have a direct consequence on the sustained and progressive decline in the quality of employment, explaining, for example, that currently companies can only fill around 35% of the annual job openings and that informality, which already exceeds 80%, is increasing.

In this regard, a study by CEDLA reveals that in 2001, 22% of the employed population had very precarious jobs; in 2019, this percentage rose to 62%. The same institution points out that in 2006, 54% of youth employment was salaried, while in 2021 this figure dropped to 46%. These are also results of the government’s lack of direction on labor issues and the irresponsible interference of the Labor Federation in the decisions that support it.

The increasing pressure on the private sector, expressed in laws, decrees, and resolutions that prevent personnel reductions even in extreme situations, that generate permanent harassment of entrepreneurs, or that increase the wage and non-wage burden, not only discourages stable hiring, but also enables the normalization of alternative mechanisms such as consulting, temporary work, or service outsourcing, and recreates an anachronistic and perverse model that promotes artificial conflict between workers and employers.

On the other hand, the percentage increases agreed upon between the COB and the government lack technical and economic support, as in recent years they have far exceeded the inflation parameter, affect only the formal sector, reach 20% of workers, and do not contribute to improving living conditions.

The persistence of this bipartite model has devastating social and economic consequences and is another example of the need for a profound and urgent transformation in wage policy that, aggravated by the economic crisis and the transformation of the labor world, is leading the country to an unsustainable situation of injustice, precariousness, and poverty.

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