The director of Economic Policy of the Ministry of Economy and Finance (MEF), Marcela Bension, responded to the economist Javier de Haedo after the analyst questioned why the government with employment showed the variation between the 2021 and 2022 averages, but with the real salary showed an end-to-end variation between December 2021 and 2022.
Once the interview that El País did with Bensión was published, The economist dedicated a Twitter thread to the member of the economic team. The director of Economic Policy and the analyst also crossed over the government’s commitment to reduce andl Personal Income Tax (IRPF) and Social Security Assistance (IASS).
Also economic analysts, Gabriel Oddone and Marcos Soto, They shared on Twitter the details made by their colleague.
“I very much agree with what Javier says”Oddone said, regarding his “reading of the labor market figures” and the “tax cut.” “Hard to put it better,” he added.
“Far from binary logics and other interests. Clear, technical and concrete,” said Soto. “I share your analysis regarding IRPF/IASS modifications”.
Average or “end to end”
“It’s a shame I’m making that comment with you.It has a negative connotation that the government misrepresents figures or shows what is convenient for it,” Bension said regarding the analyzes that De Haedo carries out both on Twitter and in his columns in El País. “That does not help society, it is not a comment that helps to clarify what the economic situation is, but rather generates a feeling of doubt or opacity that is very negative”held.
“I’m going to explain, in case you don’t know, why we use average in one case and (variance) “end to end” in another case”, began. “We make employment projections on average because the population projections of the National Institute of Statistics (INE) —which are those used to quantify jobs—, They are published in June and would be an average for the year. That is the data that we take in each Accountability,” he said in the interview published this Sunday.
“And therefore, when we render accounts, we do so with respect to our projection“, he added.
Bension further noted that “In salary negotiations, salaries are negotiated “end to end”, not in averages. “Therefore, when we show the salary data, It is very important to show it with the same criteria with which salary guidelines are negotiated,” argument.
The director of Economic Policy of the portfolio stressed that “the most important thing is that jobs were created in 2022.” “40,000 jobs were created on average and now a stage of consolidation of the salary recovery is beginning, which is already being seen,” held.
“A comparison that is not adequate”
Javier de Haedo made “some notes” on his Twitter account regarding what Bensión said in the interview.
1. Here are some notes on the references made by the economist Bension in an interview in El País today and that allude to me.
— Javier de Haedo (@JavierdeHaedo) February 19, 2023
“I have not pointed out that the MEF misrepresents data, but rather that it makes a comparison that is not adequate when referring to the evolution of employment in terms of annual averages and that of real wages in terms from end to end of the year”, he indicated. “In 2022 employment grew between averages and fell between December and real wages fell between averages and rose between Decembers“, continued the analyst. Between December 2021 and 2022, the variation was 1.1%.
De Haedo recalled the “crossing of opinions” between the Minister of Labor, Pablo Mieres, and the PIT-CNT study center, the Cuesta Duarte Institute. From the ruling party it was maintained that the real wage increased in 2022while from opposite rows it is stated that it fell during the year.
A study by Cuesta Duarte indicated that the end-to-end variation as of December 2022 showed a positive variation while the comparison of annual averages resulted in a fall of 0.6% which is explained by the dynamics of wages and inflation throughout the year.
“I expressed that both were right”, assured the economist.
Regarding Bensión’s argument about salary negotiations, De Haedo noted that “We all know that salary negotiations are end to end”. “Not necessarily between Decembers, in the private sector. But This does not imply failing to also evaluate the salary evolution between averageswhich is relevant, for example, to know the wage bill,” he said.
The analyst said that “in 2022 no net jobs createdOn the contrary, there was a drop of around 10,000 throughout the year.” “The 40,000 reported by the MEF (increase between averages) correspond to the calendar year 2021“, he assured.
The commitment of the tax reduction
The member of the economic team was also consulted about the government’s commitment to lower personal income tax and IASS, given the questions made by some economists that the proceeds could go to a more vulnerable population. Only one in three workers pay personal income tax.
Bension pointed out that “the citizens ratified and elected a government” that had this “campaign commitment.” “I think it was Haedo’s own economist who mentioned why these resources are not allocated to early childhood. That is a very naive comment who doesn’t know how democracy works,” he claimed.
In any case, he also indicated that in 2021, the government increased “a lot of resources for early childhood”. “We increased transfers to vulnerable households by 30% with a special focus on early childhood,” she said in the interview.
“Besides, Although one in three pays personal income tax, the households in the first brackets of these taxpayers have salaries of around $39,000 to $45,000 liquid monthly, depending on whether they have children or not.. So, one cannot say that such a salary is a gold net that will benefit, “he continued.
For Bensión “this government gave much more to early childhood than was given in previous governments and we must also put in its fair measure, what type of taxpayers we are talking about in the lowest ranges of personal income tax.”
“It does not imply having to agree”
“Regarding the planned reduction in personal income tax and IASS, I have always started by highlighting its legitimacy, as it was an electoral proposal by the government. That does not imply that you have to agree with the proposal.” wrote the economist.
De Haedo gave two reasons why he does not agree with this policy.
“It implies allocating resources to those who receive higher incomes in society. When there are other sectors that I think need them much more,” he said.
“Early childhood is one of those sectorsWithout a doubt, and the resources allocated by this government are positive but insufficient. And the anticipated reduction in those taxes would be several times higher based on what is handled among government legislators,” he continued.
The other motive of the economist is that he considers that “Public finances do not admit a permanent fiscal deterioration like the one that will occur with that decision.”
Are “they had a remarkable performance until last September when they reached a total fiscal deficit of 2.5% of GDP.” “However, in the three months following there was an unexpected deterioration of 0.9% of GDP“he said in his Twitter thread.
“Despite this, I continue to trust that in this period of government lFiscal conduct will prevail over the traditional “electoral carnivals”“, he concluded.
