About ten years ago, in 2010, it was common to point out the lack of competitiveness of Argentine income: the highest minimum wage in the region, a source of pride for some, was considered by others the main obstacle to our aspirations for full employment. But today it is impossible to sustain that reading, since, in the decade that followed, its value in dollars fell so much that it became, on the contrary, one of the lowest from this part of the world —and even so, the economically active population in the private sector is almost the same as it was then. The key to understanding why this did not have an impact on the propensity to employ lies in labor liabilities: the potential debt that employees signify for their employers in terms of possible compensation costs. Undoubtedly, it has a highly dissuasive effect on the creation of private employment, since its accumulation tends to drive the value of companies to zero.
In addition, it fosters conflict in the workplace, confronting employees and employers to obtain or deny, respectively, access to that capital, with equally fraudulent maneuvers on both sides. The paralysis of private employment, then, forces the State to come as the employer of last resort to prevent the population from starving. This increase in public spending, in a context of fiscal deficit, is financed with emissions, thus generating the inflationary inertia in which we have been immersed for years.
The solution to this problem is the “Argentina Backpack”, the insurance provided by the employer that guarantees the employee his compensation and returns the value of his company to the investor.
*By Teddy Karagozian, CEO of TN&Platex.
by Teddy Karagozian*
