The economic management of Alberto Fernandez it is leaking on many sides and he himself admits that the situation is very difficult. But it has tailor-made explanations: the legacy of the previous government (especially in two aspects: the debt contracted with the IMF and the 54% inflation that occurred in 2019), the pandemic (which expanded spending) and the war in Ukraine, with the consequent alteration of the international economic balance. Except for the last point, which is still debatable to what extent it brought harm or comprehensive economic benefit to the country, these are elements to be considered in a global evaluation. But this 2023 is added to the long list of years of low or no growth, although projections already indicate that a drop could occur due to the external strangulation crisis due to what triggered the drought.
The numbers. The conservative calculation made at the beginning of the year was that the economy would have a 2% drop in economic activity. That was what Marina dal Poggetto and Sebastián Menescaldi, directors of the prestigious Eco Go consulting firm, projected for the whole year due to the combination of the lack of dollars and rising inflation. Today they are recalculating that estimate, which had been described as pessimistic by many who now forecast the advent of hyperinflationary storms. Meanwhile, for the Government there are indicators that show an alternative side, hidden under the inflationary vertigo and the sub-zero reserves that the Central Bank deals with daily. The unemployment rate in the last quarter of 2022 was 6.3%, one of the lowest in recent history.
for the economist Matias Surtdirector of the consultancy Invecq, worth clearing up the confusion of “formal” and “informal” indicators. “INDEC measures economic activity, it is not formal economic activity, it measures it comprehensively, with formal data and estimates of informality. And the clearest example is the labor market, where INDEC measures the unemployment rate (close to 6.5%) but if it only measured formal work, the unemployment rate would be much higher, almost a record, ”he explains. . “We believe that economic activity is contracting from a high point (in the third quarter of 2022) after a reactivation of public employment that pulls the numbers of the labor market, but that is of low quality and another segment linked to cooperatives of programs of jobs that are registered as employed” stands out.
A recent work by IDESA reinforces this statement with data, but look at the trend of the last decade: since 2012 the jobs that were created were of low productivity, which ensures salaries with a very close ceiling. Of the 2.8 million new jobs (as of December 31 of last year), 1.3 million were registered self-employed (only 65% of them are monotributistas, the rest are cooperative members, etc.), 740 thousand state employees and another 700,000 workers in the informal economy.
In addition, to show its income, IDESA calculates that sOnly 20% of monotributistas are registered with categories D or higher, which imply an average monthly billing with a floor of $200,000. Those who belong to the private and formal segment were an alarming minority: 100,000 (only 3% of the total number of jobs created), going from 6 to 6.1 million in total. An x-ray that belies the revitalizing power of the “present State” for the creation of quality jobs and better salaries. In his opinion, the explanation for this weak response from the private sector lies in the labor regulatory framework that inhibits hiring for small and medium-sized companies, which make up the bulk of employers, crystallized in the growing labor cost (not salary). . “These obstacles are the result of outdated labor laws and collective bargaining agreements that date back to the 1970s and 1980s and have never, except for salary scales, been updated. “Worker protection” remained, as the evidence shows, a mere declamation, since the obsolescence of labor regulations condemns more and more people to jobs outside of labor regulations ”, he underlines.
In down. Perhaps this trend also signals another drag on the labor market: falling wages. Although the most powerful unions can keep up with the accelerated rate of inflation, we have already seen that this percentage is no more than a third of the total economically active population. For the rest, a rise in the CPI that private consultants estimate at 120% year-on-year for May makes it increasingly difficult for them to match the rise in prices.
The economist from Di Tella University Martin Gonzalez Rozada It creates a monitoring board (the “Poverty Nowcast”) through which it follows this unequal struggle. The estimated poverty rate (42.4%) must be added a novelty that supports the previous data: 19% of formal workers live in poor households. In other words, a blank job is not ensuring a passport to escape poverty right now. Of course, if we look at the self-employed, this percentage increases to 40% and up to 45% in the case of the informal.
climate shock. Another negative impact is linked to the slowdown in economic activity that was triggered by the drought. In addition to having affected the exportable balances, the entire productive chain of the agricultural zone suffered the sharp drop in activity. In addition, it fell on the most dynamic area of the economy, something that was verified, for example, in the last population census: the star of growth were the medium-sized cities of the productive enclaves of the agricultural belt and the oil and gas basins. There is not much to explain to those who have lived from their work for years: employment ends up being located where productivity pays better wages and establishes a cushion of attractive working conditions.
The external bottleneck also affected imports and with it, the free availability of intermediate inputs that introduced another unexpected trap, which made production more expensive and slowed down. Added to this is the instability typical of electoral times and the devaluation expectations that the meager results of the “trip cap” of Sergio Massa and Alberto Fernández himself for China, Brazil and soon the United States, fail to drive away.
The swell is none other than an economy that shows signs of weakening beyond this situation, aggravated by the aforementioned factors. It is, apart from Venezuela, the worst performance of the decade. But even, going further back, in the last 50 years the region’s per capita income grew 110% against a meager 15% in the Argentine case, according to a projection made by Invecq and Maddison.
For example, in a recent study by the economist Marcos Cohen Arazi, of IERAL, points out that the current government started with a total of 533,000 micro and SMEs, according to AFIP data as of January 2020. It accumulates a loss of 12,000 companies of that size until January 2023, which implies 80 fewer companies per week in all this period.
rising inflation, Eternalized fiscal deficit (-4.2% of GDP by 2022 and numbers in the red from 2008 to date), fragmented labor market and economic stagnation make up an equation that clashes with the same reality that it was creating. This year it will only be possible to wait for the “Getting there plan” to fulfill its mission, but the pending task will remain for him to take the “hot potato” that the Fernández duo will leave on December 10.
by Tristán Rodríguez Loredo