Salary Increase with Political Undertones | Incremento salarial con tinte político

Editorial, El Deber:

Once again, history repeats itself with the Government and the Bolivian Labor Confederation (COB) agreeing on a 5.85% increase to the national minimum wage and a 3% increase to the basic wage, in a negotiation that excluded the business sector, which had previously requested a salary freeze due to the country’s difficult economic situation.

There are evident inconsistencies in these increases from different economic perspectives. Firstly, when comparing this year’s increases with those of the previous year, an almost identical repetition is observed, despite the current accumulated inflation (2.12%) being lower than that of the previous year (3.12%). Therefore, if the loss of purchasing power has been lower this year according to official figures, it would not be justifiable to equalize, let alone surpass, the increases of the previous year.

However, the major inconsistencies have been pointed out by the sector excluded from the negotiations. Business owners have warned that the salary increase will affect the generation of formal jobs, increase national production costs, promote smuggling, and discourage investments. All of this occurs in a context where a very low national GDP growth is projected (less than 2%), according to forecasts from international organizations. Additionally, the country’s main employers have been affected by a shortage of dollars, which has increased their costs for importing inputs, especially capital goods.

Business owners describe the increase as aggressive and irresponsible, arguing that it is based on political rather than economic considerations. They point out that the impact is not limited to large employers, as is being made to believe by the government, but also affects thousands of small and medium-sized enterprises that, despite adversity, continue to invest in the country.

There is evidently a political background to this exclusive meeting between the Government and the COB. The presence of the COB seems to be strictly political, as it is a discredited institution that does not even represent the majority of the country’s workers. Its demand for a salary increase is often arbitrary and disconnected from reality, and in the end, it accepts much smaller increases, demonstrating its lack of seriousness.

It is worrying that President Luis Arce participates in this political game at such a delicate moment for the economy. Arce claims that, with the increase agreed upon with the COB, they are safeguarding not only public finances but also job creation and economic growth. However, this assertion lacks correlation with economic reality. An increase will only worsen public finances already affected by a recurrent fiscal deficit. Furthermore, the government’s model based on aggregate demand has lost strength, as domestic companies are less competitive and hiring fewer personnel. Although the president acknowledges that there are “adverse external and internal effects,” he does not specify what those effects are or what measures his government will take to counteract them.

In conclusion, the traditional negotiation between the Government and the COB does not result in measures to reactivate the economy, let alone. It seems more like an exercise to reaffirm political loyalties, especially at a time when the ruling party, the MAS, is divided. For the Arce Government, it seems more important to secure the support of the COB and prevent it from aligning with its adversary, Evo Morales. However, it is regrettable that this political strategy is carried out at the expense of true economic growth and the generation of quality jobs.

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