National



The burden of the sales tax has doubled in the last two decades

The Argentinean Sales Tax is a factor of decadence. But it has political appeal because the population is not aware of its burden and is very easy to collect it since most of its revenues are raised in advance through a complex system of withholds executed by the same tax payers. The Court’s pronouncements against the Sales Tax and the expiration of the Financial Transactions Tax are a good opportunity to create a unique VAT that absorbs the Sales Tax.

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IN GERMANY, 9 OUT OF 10 PUPILS DO APPRENTICESHIP

Employment-oriented secondary education explains much of the high employment rate and low unemployment among Germany’s young. Half of them go through vocational studies and, among them, almost all do work practices in companies. In the context of possible collaboration with Germany, even more important that promoting new investments, is to make German companies based in Argentina to contribute to the widespread growth of the vocational education. 

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For every 1% growth in female employment household income increases 14%

The main sources of progress and prosperity are the increases in productivity that underpin improvements in wages and massive generation of quality employment leading to families having more income generating members. Therefore, it is essential that labor and welfare institutions are very sensitive to incentives that favor responsible motherhood and labor market inclusion.

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2 out of 3 people don´t have access to a good quality job

May 1st is the perfect opportunity to redeem work and assume, with self-criticism, that beyond declamations, most people of working age are still deprived of the opportunity to access quality employment.  This is the result of persevering during decades of labor regulations that discourage job creation. Given the magnitude of the failure, a change of paradigm is needed in the design of labor market institution rather than repeating old recipes. 

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$2 out of $3 of the increase in fiscal pressure goes to the central gov’t

Given requests by legislators, motivated by the aggravation of the insecurity, the Cabinet’s Chief of the central government made clear that management of police and justice is a provincial responsibility. This assertion is partially correct, since a great part of the problem relies on the centralization of public funds. In any case, self-criticism among the provincial administrations is also required since they are also responsible for the lack of federalism and mediocrity in the management of their responsibilities.

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In the north of the country only 1 out of 5 are proper jobs

The government presented a draft bill seeking to incentivize formal employment. In the draft lies the recognition that economic growth and tighter controls alone are not enough to reduce informality. Reforms to labor institutions with special emphasis on small enterprises can help to solve the problem. In any case, Congress should enhance its design since, as it is conceived, will repeat frustrations. 

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For every $100 billion increase in gov`t spending poverty decreased only 1%

The economic authorities desisted from publishing poverty statistics. The distortion of official statistics is of extreme lack of responsibility and diverts attention from the central issue. The controversy over the severity of poverty reduces the debate over the regressive consequences associated with the waste of public spending. In order to reduce poverty is vital to stop the manipulation of statistics and to reexamine how the state is managed.

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Middle class falls 10 points in income distribution

Although there has been a significant improvement in income distribution since the crisis of 2002 the dissatisfaction among the population is growing. While the middle class suffers an unprecedented growth in the fiscal pressure, no correspondence is perceived in improvements of the government services or the living conditions of the most disadvantaged in spite of a strong increase in public expenditure. This inconsistency will not be solved by creating further welfare programs in order to benefit the poor or reducing the income tax to gratify the middle class. What it is urgently required is a profound change in the quality of state management. 

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Every 1% increase in economic growth, employment increases 0,2%

The drop in unemployment rate that was reported by the INDEC occurred because many people stopped looking for a job. This is the result of the loss of capacity to create new jobs due to the low economic growth and the poor quality of labor institutions. The problems is not solved by inducing employers and unions to set their wages below the inflation level or using public funds to subsidize inactivity- such as the Asignación Universal por Hijo and the Progresar- but by improving the design of labor market institutions. 

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Reviving the “Model” requires reducing real wages

The "model" implemented from 2003 relied on twin surpluses (fiscal and foreign). Since both were generated by the reduction of real wage, as a consequence of the strong currency devaluation, once real wages were restored to the pre-crisis level the economy stagnated. To reestablish the "model", it is necessary not only to devaluate but also to ensure that the wage increases are less than the devaluation of the dollar and inflation. Promoting public policies seeking a rise in productivity and competitiveness appears to be a more promising alternative in order to achieve growth without deteriorating real salaries.   

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