In the midst of the debate that opened in the country due to the productivity data presented by Dane in the minimum wage negotiations, Fedesarrollo invited the statistical authority to open the conversation to other points of view and don’t just stick to what the La-klem model says.
Luis Fernando Mejía, executive director of this economic research center, told Portafolio that his calculations place labor productivity in ranges lower than those of the Dane and warned that this is an economic discussion that requires taking into account the opinions of all possible experts. .
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Why are you concerned about the Dane data?
Here the central problem has to do with the high figures that the Dane has reported for the growth of labor productivity, which exceed 3% in the context of an economy that continues with a very low rate of economic growth, barely 1.6 % in the first three quarters of the year and with employment growth that has also been relatively small, just 0.7% in that same period.
What is then difficult to understand is how labor productivity can be growing at these rates, when the economy, I confirm, does not show important signs of acceleration.
How do you explain this growth?
Well, the only reason why productivity could be growing is if there is a very large drop in hours worked in 2024, which we are not seeing, especially in the segment of those employed around a minimum wage, but with a Product Gross Domestic Product that is growing at low rates and employment that is also growing at a similar rate, without there being large movements in the number of hours worked, it is difficult to understand such a high figure of growth in labor productivity.
Minimum wage negotiation – Mintrabajo – presentation of productivity data.
Dane says that the work day influenced…
We brought to the discussion table that Dane opened some estimates of labor productivity per hour that are lower than those they have published. Our calculation gives us a growth in labor productivity of 2.7%.
But when this growth in labor productivity is opened up to the different income ranges, we find that in people who earn less than the minimum wage, labor productivity fell by 1.2%.
Because?
Because in that income range the hours worked increased 2.8%, that is, the aggregate increase in labor productivity per hour is really due to the drop in the hours worked of workers who are above two minimum hours.
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That is why we ratify the importance of continuing to discuss these figures, models and estimates of labor productivity, there is no single productivity data, there are different estimation models and I believe that this should enrich the technical discussion of the figures that are brought to the table. salary and labor agreement.
Do you trust the La-klem model?
Before answering that question specifically, I would like to talk a little about what I believe is the technical discussion that we are having at this moment, because the director of Dane says that the productivity figure comes from a model and that is the figure that is has been using for three years and whose methodology has not changed.
What the Director of Dane does not mention is that productivity is precisely a variable that is not observable, so its estimate arises from an economic model, from a series of assumptions. They are precisely talking about the model they are using to estimate productivity growth, but the model is an approximation to reality, it is not infallible and therefore, it is controversial and can be improved.
Luis Fernando Mejía, director of Fedesarrollo
Private file
How is it different from other data?
It is not the same to publish how much economic growth is measured through the production of the sectors, a directly observable variable, or how much inflation is measured through the price of goods and services in the family basket, also directly observable.
Productivity is not an observable variable, that is why it is absolutely different from all other statistics and in fact, for that reason, it is worth noting who was traditionally in charge of bringing the figure of labor productivity and total factors to the table. The agreement was not the Dane, but National Planning, because this requires a series of economic models, of assumptions that are not written in stone and that must be discussed and therefore improved in the future.
Were variables left out?
Here we must say that there are different measures of productivity. In fact, Dane brings to the table at least three measures of productivity, which shows the point we are making. The productive measure is not unique, it is not observable and it is not written in stone. There are different ways to measure productivity growth.
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One through the model that Dane speaks about, which is the OECD model, which refers to total factor productivity. We have estimated a model that uses the BLS, this is the Bureau of Labor Statistics, which is the statistical agency that produces figures for the United States labor market, which gives us a lower figure.
Which one to pay attention to?
A very important point for this discussion is that the relevant labor productivity variable is not the growth of total labor productivity, that is, of all employed workers. This discussion of the minimum wage refers precisely to those people who are around a minimum wage.
When we estimate the growth of productivity per hour worked, of those who are below minimum wages, it gives us a drop of 1.2%. What this indicates is that there are different approaches, different models, and one cannot simply think that there is a single productivity figure that will be used to discuss the increase in the minimum wage.
Manufacturing production
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Should I change the model?
I would think it better to complement it, because there is a model that is the one used by Dane, but is that the best model available for the Colombian economy? It is a model that barely has three years of history in these minimum wage discussions.
There are other models that can complement it. So, since productivity arises precisely from economic models, the underlying point is that we want at the negotiation table to have different approaches to how productivity growth can be estimated, not measured, since there is no single or best one. productivity measure. There are different measurements, all subject to criticism and all controversial.
