Inflation, wages and emergency measures

Lawyer. Employment advisor of companies and chambers of business. Academic Counselor for Libertad y Progreso.

EL CRONISTA: The effects on wages of this galloping inflation that we are suffering will force the Executive to adopt emergency measures at a time when we are on the verge of social chaos. No doubt pay rises under collective bargaining agreements and minimum wages cannot keep up with inflation because they are not effective tools for overcoming the crisis.

In fact, collective bargaining agreements have become museum pieces, left behind by a rampant inflation, where they set wages by the hour, by the day or on a monthly basis but nowadays salaries in all industries are variable pay tied to performance or results.

There is nothing that can be done under activity-wide collective bargaining agreements to effectively avert this real catastrophe for the income that working people collect, whether as employees or freelancers. By the way, according to Article 14 bis of the National Constitution, “work in its various forms shall enjoy the protection of laws…”, and the fulfillment of this fundamental duty must be ensured by the three powers of the State.

Today this protection is undoubtedly inadequate, with fatal errors, such as the policy of welfare programs that perpetuate poverty, marginalization and exclusion, without any hopes for the future, and promote the loss of the fundamental culture of paid work. Like a plague, mistakes in the present economic policy destroy income through inflation, and sadly we need to accept that making the same mistakes will not change results.

The 2022 inflation forecast is currently estimated at 80% minimum, and there are many experts who believe it will exceed 100%. The payment chain is gradually disrupted, with rapidly increasing costs and prices, thus breaking the financial process that ensures a minimum balance between income and expenses.

Income is already lagging behind, primarily wages, which are not enough for subsistence. More than 60% of the 6.2 million employees who are duly registered at ANSES (Social Security National Administration) cannot purchase the market basket calculated by INDEC (National Bureau of Statistics and Census). It is worth mentioning that the number of workers has not changed in the last twelve years, so if there are more employed persons, they are working off the books.

Measures should be taken at different levels. First, the payment of social security employees’ and employers’ contributions could be suspended or deferred so as to give priority to the payment of workers’ wages.

In addition, employers may be exempt from paying social security contributions on first-time hires and/or on those who increase their payroll by a real percentage as compared to a reference date to be determined, as long as workers continue to work at the company for a minimum period of time as established in the law once this benefit expires.

Second, and undoubtedly this is one of the most effective plans that the Government could implement: the so-called payroll tax structural reform, combining regularization and actual payment. This measure should identify tax evaders who work off the books or use fraudulent maneuvers to avoid compliance with labor laws, and offer a moratorium for verified cases. This process of regularization helps increase tax collection and has a positive impact to mitigate the fiscal deficit.

Third, the National State, the provinces and the municipalities should set an example in the process of employee regularization. The habit of hiring self-employed workers and renewing fixed-term contracts over and over again should definitely come to an end. Civil servants should pay social security contributions like any other employee at the private sector.

There are provinces where civil servants account for less than 30% of the public administration staff, and municipalities where only 10% of their staff duly meet legal requirements. Strictly speaking, the Number One Tax Evader is the State at all three levels of jurisdiction: national, provincial and municipal.

Fourth, measures should focus on analyzing and giving reasonable protection to the whole gig economy, with legal mechanisms to replace employment with other solutions that protect these new fields in the world of work triggered by apps and technological advancement.

This includes Uber, Cabify, PedidosYa, Glovo, and others, as well as a whole new group of startups that are not only associated with IT and robotics, but also AI, automation, metaverse and the like.

Strictly speaking, these businesses have gone paperless and are now fully digital, decentralized, distributed, and universal. Please note that when customers of a service buy something online or manage their savings or bank account through online banking, the help or assistance that an employee used to provide under an employment relationship with the company is now replaced by algorithms and automated systems that guide users through the app, and this self-service is done by users free of charge.

Fifth, a campaign should be conducted at all levels to promote digital and computer literacy, in addition to traditional literacy, which is what actually provides job opportunities. In fact, a variety of academic institutions are now offering comprehensive computer training courses in four quarters with attractive job opportunities for young people who have not finished school.

Sixth, it is imperative to transform all welfare programs into training systems with job opportunities with a view to building bridges between unemployment and reentry into a competitive labor market that requires skilled personnel with knowledge of new technologies.

Right now emergency measures are as important as decisive actions that need to be taken, and the countdown leaves no room for additional error or failure.