7 years without growth in salaried private jobs - IDESA

Report Nº: 81106/06/2019

7 years without growth in salaried private jobs

Since 2012 the labor market’s performance was worse than the economy’s. This is reflected in an almost null growth of salaried jobs in private firms. To reverse the situation, in addition to economic growth, a thorough revision of labor market regulations is needed. The federal Secretary of Labor periodically publishes information on registered employment. That […]

The federal Secretary of Labor periodically publishes information on registered employment. That is, jobs contributing to the social security system. This segment of the labor market is composed of private salaried jobs, public employment (national, provincial and municipal), housemaid services, and self-employment (autónomos, monotributistas and social monotributistas). In total, they sum up 12.1 million workers, of which half are salaried workers in private companies.

The latest data available corresponds to March 2019 and shows a sharp reduction in 268 thousand jobs compared to the same month of the previous year. The main explanation is the destruction of salaried employment in companies (-161 thousand). The reductions in monotributistas (-41 thousand) and social monotributistas (-65 thousand) also affect, many of the latter dismissed administratively for being former beneficiaries of welfare programs. Increases in informal employment offset part of this formal jobs destruction.

A more interesting perspective emerges when looking at these numbers since 2012, which is when the publication of the data begins and coincides with the economic stagnation associated with the end of the global commodity boom. According to this source, between 2012 and 2019, registered employees increased by more than 1 million. The composition of this increase was as follows:

  • Public employment grew by 530 thousand new employees.
  • Housemaid services and self-employment grew by 508 thousand workers.
  • Private salaried employment in companies grew by just 50 thousand workers.

These data show that workers who contribute to social security expanded significantly. However, they did it through public employment, maid services, and self-employment. On the contrary, salaried occupations in private companies which comply with labor market legislation remained practically static.

The reasons that since seven years ago private companies do not increase salaried employment are multiple. The first is undoubtedly the stagnation of economic activity since with no significant expansion of the level of production hardly could be high growth in the demand for workers by companies. But equally important are the distortions in labor market legislation and social security regulations. There were improvements in favor of lowering the salaried labor cost with the implementation of a non-taxable minimum to the employer contributions. There were also partial advances tending to simplify and reduce the labor judicialization. However, labor regulations are still very bureaucratic and expensive to comply with.

Deep reflection deserves the fact that in the last seven years only non-salaried jobs had been created which are outside the Labor Law and collective bargaining agreements. Although the adverse macroeconomic context and technological change induce companies to shrink their workforce in salaried relationships, it is clear that the obsolescence of regulations spurs the bias against salaried jobs. A very illustrative and suggestive testimony is the process that took place in Spain since 2012. In reaction to a deep fiscal and economic crisis, changes in the rules made the costs of dismissal more predictable, and also an option clause was given to the employers to get out of sectoral collective agreements to negotiate at the firm level with their own workers. This formula is profusely used in Germany as well, to adapt wages and working conditions to the productivity and possibilities of firms, especially SMEs. In Spain, as of 2012, 2 million salaried jobs were created with contributions to the social security system.

Beside the urgencies imposed by the crisis, critical structural issues such as modernization of old labor regulations must not be neglected. Establishing, as in Germany and Spain, the possibility for employers to opt out of the archaic sectorial collective agreements is a way to facilitate SMEs the creation of more salaried jobs. Not modernizing labor regulations will mean that, even once the crisis is overcome, the scarcity of good quality salaried jobs will persist.


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