Cuesta-Duarte Institute: Workers will not have real wage growth

Cuesta-Duarte Institute: Workers will not have real wage growth


workers

In the last few hours, the Cuesta Duarte Institute released a report from its team of economists referring to the balance of the two years of government that the President of the Republic, Luis Lacalle Pou, carried out before Parliament.

Regarding employment, the Cuesta-Duarte Institute indicates that “of the 48,500 jobs recovered on average in 2021, more than a third is explained by the ‘Jornales Solidarios’ program, which accounted for some 15,000 jobs in 2021. Although these are positive actions in what has to do with the generation of employment, it is impossible not to notice the intrinsic precariousness of these jobs”, because they present “lack of hours or underemployment and are insufficient in terms of from income”.

Therefore, “after the strong blow suffered by the labor market in 2020, an auspicious recovery was registered in the last months of last year. However, beyond successful speeches, the still fragile and precarious situation of the labor market is evident, as well as the need to think about longer-term policies that provide sustainable responses to the lack of employment and the need to improve its quality. ”.

With regard to salary income, the Institute questions that President Lacalle “failed to mention that in the two years that the government has been in office, the purchasing power of salaries has fallen across the board, reaching an average decrease of 3.1%. accumulated. In this way, the salary not only decreased its purchasing power in 2020 but also fell again in 2021, in the context of a growing economy.

Regarding the president’s announcement that in 2022 the process of recovering the purchasing power of wages would begin, the Cuesta-Duarte Institute assures that “although the general wage adjustments agreed for this year, both in the private sector and in the incorporate a percentage for recovery, since current inflation -and also that projected by experts- is well above that estimated by the government (which is what is included in salary adjustments), it is highly improbable that the recovery is going to begin effectively during this year”.

“If inflation continues to be above 7%, as it has been in practically the entire period of the current administration, the majority of private and public workers will have no growth in real wages this year, and the beginning of the recovery will be delayed. postponed to 2023”, is indicated in the report.

“Even if the government’s commitment is fulfilled that at the end of the five-year period it will return to the level of real wages in force at the beginning of the government period, the workers throughout the entire process will have had a loss of well-being that is not recovered,” assures the Cuesta-Duarte.

On the other hand, the report states that the drop in wages has had a strong impact on household income, which has seen its purchasing power decrease in the last two years, both directly and through its impact on passivities, which have also been reduced in real terms.

On the other hand, Lacalle Pou placed strong emphasis on reducing the fiscal deficit, but for Cuesta-Duarte However, “the fiscal result of 2021, with a deficit of 4.2% in terms of GDP, implied a new overcompliance with the government’s goals, of approximately 350 million dollars”.

During the year 2021, “there was a reduction in State spending, whose main source was the decrease in resources allocated to the remuneration of public officials, who lost purchasing power and whose real salary drop implied savings for the State of the order of 200 million dollars. The purchasing power of pensions and pensions was also reduced in real terms, even the most depressed, which contributed to lower expenditures by the State towards these items.

On the other hand, “savings are also explained by the verified cut in the items allocated to sensitive items from the social point of view, such as Education and Housing”.

Taxes

In the reference to the fact that the fiscal goals were achieved “without putting his hand in the people’s pocket”, the president “omitted the increase in VAT that was verified for those who make their payments with debit cards, the COVID tax on public officials and the increase in the payment of IRPF and IASS that implied the change of criteria in the adjustment of the bands”.

Regarding the announced modifications to the IRPF and the IASS, the Cuesta-Duarte Institute mentions that through the administrative channel of the BPC adjustment, both taxes were increased in real terms in January 2021 and January 2022. In addition, “less than 30% of retirees pay IASS and less than 40% of assets pay personal income tax, so this measure would not favor either 70% of retirees or 60% of lower-income workers.



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