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April 25, 2017
Monday, March 20, 2017

Unemployment falls to 7.6 percent

INDEC statistics agency.
INDEC statistics agency.

A one-percentage point drop on last quarter buys government some breathing-room, but critics say the fall is due to a shrinking labour market — not because of real job growth

 

Unemployment fell to 7.6 percent in the fourth quarter of 2016, the INDEC national statistics bureau announced yesterday, a one-percentage point drop from the previous quarter.

The fall in the headline statistic — which may buy President Mauricio Macri’s administration some breathing-room — came as a response to the numbers of people looking for work falling, analysts warned.

Nonetheless, the Let’s Change government will welcome the news, which comes on the back of union unrest, a rise in poverty and a string of negative economic indicators over the past 12 months, with only months to go before crucial mid-term legislative elections. The drop in the unemployment rate will be a positive piece of economic news that ministers will be able to point to on the campaign trail.

The decrease in unemployment is the second consecutive fall in unemployment registered since the INDEC began re-publishing their quarterly economic indicators last August. The bureau was widely believed to have manipulated economic data during the previous administration of former president Cristina Fernández de Kirchner.

After taking office, the Let’s Change administration temporarily suspended the state run-statistics agency, as they redesigned its statistics-gathering measures after the years of disputed numbers between 2007-2015.

Despite the reported decrease in unemployment yesterday, representatives from INDEC — which is led by Jorge Todesca —stressed that weren’t any significant changes in the country’s labour market.

The results of the fourth quarter in 2016 don’t present any significant statistical changes in employment in comparison to the third quarter,” stated the INDEC Report — the unemployment rate in the third quarter was 8.6 percent, representing a 0.6 percentage point drop against the quarter succeeding it.
INDEC highlighted that the drop in unemployment was not based on the generation of new jobs but because fewer people are looking for jobs.
“The most significant number to come out of this report was the decrease in the percentage of the population actively participating in the labour market,” Andrés Asiain, head of the Centre of Economic and Social Studies of Scalabrini Ortíz (CESO) told the
Herald.
A 0.7 percent drop in the percentage of the population participating in the labour market was witnessed, falling to 45.3 percent in the fourth quarter from 46 percent in the second and third quarter of 2016. This is almost 10 percent less than the global average, as more than four million people in the country don’t seek
employment.
However, although Asiain recognised that the decrease in the number of people looking for jobs is normal for that time of year, noting how the summer months tend to be sluggish, the statistics for the end of 2016 were especially pronounced.
The government-run organisation estimates that 947,000 people in the country are unemployed, while 1.2 million have employment problems or are under-employed. The active workforce reached 12.4 million, with 72.2 percent fully employed and 10.3 percent under-employed. The INDEC’s Permanent Homes Survey (EPH), with data from 31 of the country’s biggest cities, also showed that there were 149,000 fewer people available to the job market in the fourth quarter than in the third.

Regional variations
CTA economist Claudio Lozano was also critical of the INDEC statistics, claiming that unemployment hadn’t really increased but that it just showed that there are 221,000 less people actively seeking employment now.
“This is far from the claims made by President Mauricio Macri, his finance minister Nicolás Dujovne and Labour Minister Jorge Triaca and the INDEC shows that 2016 finished without any jump in employment,” said Lozano.
The region with the worst unemployment figures was Mar del Plata, which despite having decreased by 1.5 percent from the third quarter, continued to be in the double digits with 10.6 percent unemployment. Bahía Blanca was the city with the second-highest unemployment in Argentina, registering 9.2 percent unemployment in the fourth quarter of 2016. On the other hand, on the other extreme, Viedma, the capital of Río Negro province, had the lowest unemployment in the country with 0.8 percent jobless.
Meanwhile the Buenos Aires Metropolitan area’s unemployment decreased from 10.5 percent to 8.5 percent, with Buenos Aires City also following the downward trend from 7.9 percent to 5.7 percent. However, the Buenos Aires City statistics agency gave conflicting figures, reporting that unemployment increased from 6.8 to eight percent. At the other end in Formosa and Resistencia, unemployment was 3.5 and 2.5 percent of the respective population, yet residents in those cities tend to be less active in seeking employment.
In Formosa, the level of activity is 29.9 percent while in Resistencia it is 37 percent.
According to the Labour Capital Growth (LCG) consultancy, the decrease in unemployment isn’t as positive as it first appears because it represents a shrinking labour market and not the generation of new employment with less people looking for work.

Union criticism
CGT umbrella labour union boss Héctor Daer questioned the latest unemployment statistics when announcing that the CGT’s upcoming strike, claiming that “in 2016, 52,000 jobs were lost in the industrial sector.” His colleague Carlos Acuña also was very critical of the government’s labour policy. “The government has been hitting hard the labour sectors, the most humble, those that need the most, and also the national industry, and small businesses — who now suffer from their policies,” said Acuña.
Despite the protests generated by the labour unions over layoffs, Todesca noted at the beginning of the month that the number of registered employees continues to expand. The INDEC director said the percentage of registered employees is 42 percent of the workforce with the informal the other 58 percent.
“There is an enormous structural problem that this government didn’t create, that has been growing, and will require more effort to resolve,” he said in a press conference at the beginning of the month.
According to the Labour Indicators Survey (EIL), a study organised by the Labour Ministry based on expectations from 3,000 private companies, there is an overall expectation that more jobs will be created this year than destroyed. The average hiring expectation rate — the difference between those who hire employees and those who don’t — for the first half of the year will be 14.3 percent while in the second half, the average hiring rate will increase by 20.9 percent.

Gov’t: economy is
rebounding
When Macri was sworn-in as president, he immediately signed a decree declaring a statistical emergency, and ordered his administration to reconstruct
INDEC.
The last unemployment figure given during former president Cristina Fernández de Kirchner’s administration in the third quarter of 2015 was 5.9 percent, having decreased from 6.3 percent in the second quarter of 2015. While many opposition lawmakers and FpV politicians believe some of the previous reports published by the INDEC statistics agency were accurate, the Let’s Change administration has completely eliminated them from the INDEC’s website and stated only figures before 2007 or after 2016 are valid.
Using only last year’s statistics, government ministers across the board have claimed that the recent economic indicators indicate that the economy is starting to get back on its feet.
“In relation to employment we are seeing that the path in the last six months is pointing to a recovery, we still haven’t recovered everything we’ve lost. But, for example, the construction sector, the area that fell the most, now has the most chances to recover,” said Triaca in Rosario, Santa Fe province last week.
He believed that it had the best chances of recovering due to the major investments that national and local governments were making in public works projects and also by stimulating private construction projects as they begin to offer more mortgages. Last week, the government announced that they would provide 30-year-mortgages of up to two million pesos to 60,000 families.
Dujovne also expressed the same enthusiasm for the recent employment statistics.
“We are starting to see a decrease in inflation, an improvement in real wages, an increase in employment that is being sustained — we want it to be much stronger, but you will start to see it,” the minister said.

UCA statisticS PAINT A
different picture
A report released at the beginning of the month by the UCA Observatory for Social Debt sheds a different light on the unemployment figures, indicating how the number of people in a precarious employment situation or working in temporary jobs had gradually increased, creating a systemic structural problem. Between 2010 and 2016, the number of people in temporary and unstable jobs increased from 9.2 percent to 18 percent of the economically active population, according to the UCA’s Observatory for Social Debt. And the latest statistics of INDEC also demonstrate an increase in under-employment. Those who work less than 35 hours per year and want to increase the hours they work, increased by 7.2 percent as against seven percent in the third quarter and 7.7 percent in the second quarter.
And poverty also increased from 29 to 32.9 percent of the population, causing 1.5 million more people to go under the poverty line, according to the UCA’s observatory for Social Debt.
“The increase is based on two factors, one is due to increasing prices based on the sharp devaluation that occurred at the beginning of 2016, and the other is the labour market,” Eduardo Donza told the Herald, an investigator for the UCA’s Observatory for Social Debt. The university organisation estimates that the number of people in full employment fell by 1.6 percent, including those working in temporary jobs. While those with full employment on average make 15,000 pesos per month, those with temporary jobs make 9,400 while the most marginal make 3,700.
“I was laid off a few weeks ago from a temporary job I had in the summer working in the kitchen of the Parque Norte aquatic park complex in Buenos Aires City, but when the summer season finished last Sunday, a group of us were left without a job,” 26-year-old Martin Salvador Orsollinit told the Herald. According to the United Nations Human Development Programme report published last year, Argentina has one of the highest youth unemployment rates in the region. One out of every five youths (19.4 percent) doesn’t have a job, followed by Uruguay with 19.2 percent and Colombia with 19.1 percent — the regional average is 13.7 percent. And the unemployment rate for youths between 15 and 29 years is triple the unemployment rate for workers between 30 and 64.
“My situation really isn’t a big problem, my former colleagues who live two hours away from the city are much more worried about getting a job, as there are many more jobs in City than the suburbs,” said Orsollini. Part-time workers aren’t the only ones suffering but also those with full-time jobs too.
Nicolás, 33, who works for a electronics products retail store, complained to the Herald how he had not received a raise in over a year, despite the 40-plus percent inflation witnessed in 2016.
“I earn around 10,000 pesos but our union says we should be earning at least 15,000 pesos, I can barely survive on that,” Nicolas told the Herald. The electronics retail vendor said he was afraid to complain because the company had recently fired several of his colleagues and closed several shops because sales had been falling.
According to the UCA unemployment study, monthly incomes decreased from 11,832 pesos to 10,897 pesos between 2010 and 2016, leading to those workers with unstable or temporary employment to earn 51.5 percent less then those with a full-time job.
“This a real serious problem in Argentina, this structural poverty, in which many people have precarious jobs and earn below the poverty line ... in the past few years those under the poverty line have bounced between a two or three percentage point band, but there really hasn’t been a fundamental change,” explained Donza. The UCA investigator said that in order for the government to really pull through, they needed to fix employment and poverty with a multi-dimensional approach taking into consideration many factors.
“We need to consider the quality and access to affordable housing, assistance to youths trying to finish high school, and giving them medical assistance — this is a structural poverty that has been here for many generations,” he said.

Historical context
After the 2001 economic crisis and up until 2008, there was a strong expansion in the labour market due to multiple factors. The recovery of investment, the increase in competitivity in the local market due to the major devaluation it underwent in 2001, policies implemented to boost the local consumer market and the expansion of regional economies allowed Argentina to experience over six years of strong economic growth. At the same time, the government implemented policies that tried to register workers working informally, in order to give them more legal protection. One example was a law passed during the CFK administration that recognised domestic employees and regularised their employment situation.
However, many economists argue that the after-effects of the 2008 global economic crisis led to a fall in commodity prices and showed the limits of a consumption model without significant investment. This ultimately led to a fall in job creation and a stagnating labour market. Between 2010 and 2016, the number of workers excluded from the country’s social security system increased from 47.7 percent to 51.3 percent. This situation especially affected those parts of society which are the most vulnerable, according to the UCA Observatory. It is the persistence of this informal sector in the country’s labour market — represented by owners of small companies, non-professional, and domestic workers — which has been one of the major weaknesses of the local labour market as it reduced productivity and tax collection.      
—Herald staff 
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