Salary Council, waiting for salary proposals, without losing sight of the economic environment and campaign offer

There is no clarity on whether or not the technical conditions exist so that the basic salary of Ecuador registers an increase by 2022. The National Council of Work and Salaries has already started the meetings to define the amount for next year, in a situation of slight economic recovery that has not yet reached pre-pandemic levels, but without losing sight of the Government’s offer to increase the basic salary to $ 500 in four years.

Édgar Sarango, representative of the workers in the Council, confirmed that no proposal has yet been discussed regarding the salary increase within the group. But that the proposal or criterion of the Confederation of Workers of Ecuador (CTE) is that it ise must look for a salary increase mechanism to reach the $ 500 in four years that President Guillermo Lasso had declared.

He commented that the employment situation in the country is critical; however, he said that What had been proposed in the labor segment of the Opportunities Law does not lead to an improvement in the situation, “on the contrary, it would be legalizing precariousness in the country,” he said.

Meanwhile, Rodrigo Gómez de la Torre, representative of the employers, commented that although most citizens are struck by the amount of the salary and the debate tends to focus on this figure, the most important thing in the current situation must be the generation of new jobs. This item was greatly affected by the pandemic. He said that it should be considered that it is very difficult for an entrepreneur to hire workers due to the high cost it represents in terms of production costs.

The first meeting took place on November 9 and there were three presentations by technicians from INEC, the Central Bank of Ecuador and the Ministry of Finance on the economic situation of the country, inflation and the increase in hiring. The main data exhibited at this meeting was that by 2022 there would be una inflation of 1.28%; that the calculated growth is 2.85% and that unemployment stands at 4.9%. It was also mentioned that there has been a recovery in employment in at least 275,000 places.

The next meeting would be called next week, before November 20. In this, the salary proposals would already be delivered based on a formula established in Ministerial Agreement 185 of the Ministry of Labor. Only in the absence of an agreement, the ministry should define the salary based on inflation.

According Jaime Carrera, executive secretary of the Fiscal Policy Observatory (OPF), to set the new salary, the country’s environment must be analyzed, but also comply with the technical formula that was established in the Lenín Moreno government for setting salaries. and that it has to do with the weighting of inflation, labor productivity, elasticity of employment against wages, the latest inflation index, employment and informal employment.

On the offer Lasso made during the campaign that the basic salary would be increased to $ 500 in four years, Carrera believes that this would be feasible, always depending on the development of the economy. This year there could be a measured rise, considering that there has been an increase in inflation and economic growth.

On the other hand, in 2023 there could already be a higher salary compensation if, for example, the labor reform, the arrival of greater investments and an adequate governance framework take place. He recalled that in 2021 there was no increase and the salary was kept at $ 400, especially because the economy did not grow and rather had a huge fall.

For Carrera, a wage increase could even activate demand in the economy. In any case, he also reflected on whether it should be measured if this will affect production costs, so he vowed that both employers and workers reach agreements. (I)