“To raise wages without productivity is equivalent to cordially inviting insolvency” | “Aumentar salarios sin productividad equivale a invitar cordialmente a la insolvencia”

By Unitel:

Warns analyst Chávez

Analyst Gonzalo Chávez brought to the table the COB’s demand for a 20% wage increase and the government’s decision to raise the national minimum wage by that same percentage after lifting fuel subsidies

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[Photo: UNITEL] / Analyst Gonzalo Chávez.

In a text published on his social media accounts, analyst Gonzalo Chávez warned that “the social honeymoon is over,” referring to the announced mobilizations by some sectors over the wage increase after the Easter holiday.

In that context, he cautioned: “Raising wages without productivity is equivalent to cordially inviting insolvency.”

“The teachers’ union and the Bolivian Workers’ Center have put forward lists of demands with a maximalist elegance that would make any economic theory treatise blush… due to their absolute indifference to budget constraints,” he noted.

“In other words, wage poetry has decided to emancipate itself from fiscal prose,” he added.

Chávez placed on the table the COB’s request for a 20% increase and the government’s move to raise the national minimum wage by that percentage after lifting fuel subsidies.

“The COB, with an impeccably linear logic—and dangerously incomplete—demands a 20% increase anchored in 2025 inflation. The Executive, in a gesture of strategic generosity (or reckless boldness), had already set the tone by raising the minimum wage by the same percentage, as a balm against the adjustment in fuel prices.

In his view, “the result has been a kind of unintended pedagogy: if 20% is possible for one, it must be inevitable for all.”

“Thus, wage expectations have blossomed like an Andean spring on the eve of a financial winter—only without the corresponding thaw in public accounts. The government retreats with a mere breath,” he remarked.

He asserted that “the State’s negotiating strength, however, does not rest on Roman marble, but rather on a fairly malleable institutional clay.”

In that regard, he recalled “the short-lived existence of Supreme Decree 5503,” later withdrawn “with a speed that bordered on political courtesy.”

“The message was clear, though not exactly reassuring: in Bolivia, reforms last as long as union patience. Good grief! Moreover, the Paz government showed a rare talent for raising the dead—as in the case of the COB,” he stated.

Chávez emphasized that both the public and private sectors lack financial resources—in popular terms, “they are broke.”

“Here, reality—that rather unpopular entity at negotiation tables—presents its report: Public Sector: it is going through a fiscal fragility that allows no enthusiasm. The structural deficit is not a metaphor; it is a bill that does not balance, neither with optimism nor rhetoric,” he stated.

“Private Sector: it faces a recession where demand contracts and costs expand with admirable discipline. In this context, raising wages without productivity is equivalent to cordially inviting insolvency—with a toast included.”

By way of conclusion, Chávez indicated that “the resolution of this delicate wage ballet will ultimately depend on two scarce virtues: negotiating skill within the government and prudence among unions.”

The economist stated that “if both show up to the meeting, there is room for a reasonable balance. If not, persisting in maximalist demands in an environment of minimal resources will be like insisting on dancing a waltz on a floor already showing cracks—elegant in intention, but dangerously close to collapse.”

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