The real salary rose 2.18% in January – usual behavior in the first month of the year – but fell 1.24% considering the last 12 months.
This Friday, the National Statistics Institute (INE) published the figures for the Average Salary Index (IMS) for last month. The INE technical bulletin indicated that although the purchasing power of salaries rebounded in January, the nominal increase of salaries in 12 months (6.81%) could not reach the inflation (8.15%) of the same period.
The last time the real wage grew in a moving year was on time in April of last yearwhen the Central Bank managed to control inflation until it reached 6.76%, within the target range set by the authorities of the economic team (3% to 7%).
In the last rolling year, wages in the private sector increased 6.56% and those in the public sector increased by 7.26%. However, when inflation is taken into account, the result is that the real wages of both decreased by 1.47% and 0.82%, respectively.
Looking back over the last six years, the real wage peak was in January 2019. Since then, the purchasing power of workers fell with fluctuations until the outbreak of covid-19, when the downward trend intensified. Today, the purchasing power of wages is about the same as it was six years ago.
Every January there are increases in the public sector and several of the adjustments scheduled in salary rounds of the private sector crystallize, so the real salary always shows a punctual increase that, in recent years, is relativized over the following months. However, as can be seen in the second graph, the peak registered in this January is lower than that of the same month of the previous yearbehavior that has been repeated since 2020.
Salary rounds and projections
In the last stretch of 2021, most of the negotiating tables agreed on salaries above the guideline of the executive power, in search of recovering the purchasing power that was lost during the unfavorable economic situation brought about by the pandemic. Therefore, the negotiated increases will surely begin to be reflected in IMS measurements this year.
Nevertheless, salary negotiations on the guideline can complicate the government’s inflationary goals, also pressured by the rise in international prices of raw materials that are transferred to the local market. Inflation in 2021 (7.96%), although it fell in relation to that of 2020 (9.41%), closed almost one percentage point above the ceiling of the target range set by the economic team (7%) and is currently even higher (8.15%). For 2022, the BCU projects that consumer prices will grow 5.8%, while private analysts estimate 7.1% and businessmen 8%.
In interview with The Observerthe Minister of Labor Pablo Mieres He stated that this year he will begin reverse the loss of purchasing power in the different sectors of private activity. “What one can estimate at the end of 2022 is that there will be a recovery in real wages, but not yet complete with respect to the loss that occurred in the bridging period (2020-2021).”
The data for January
The private sector of the IMS presented a monthly nominal variation of 2.84%“fundamentally product of the incidences of the sections: ‘manufacturing industry’ (0.84%), ‘wholesale and retail trade’ (0.59%) and ‘social and health services’ (0.47 %)”, according to the INE report.
In addition, the public sector of the IMS showed a nominal rise in January of 6.09% which is explained “by the incidents of the ‘Central Government’ (4.09%), ‘public companies’ (1.50%) and ‘departmental governments’ (0.50%)”, the document explained.
With these numbers —and considering the growth of the CPI in January (1.78%)— the purchasing power of private officials grew 1.03% last month, while that of public officials increased by 4.23%, which totaled a general variation of 2.18%.
