JOB GENERATION HAS IMPROVED IN THE FIRST QUARTER

INDEC published the labor indicators corresponding to the 1st quarter of 2018. The unemployment rate stood at 9.1% of the work force, similar to the one observed in the same period of the previous year, which stood at 9.2%. However, the proportion of people who work or seek to work increased from 45.5% to 46.7% of the urban population and the occupation level did so from 41.3% to 42.4% in the same period. That is, there was an increase in employment that did not translate into a decrease in unemployment because more people joined the labor force.

Another relevant aspect is the change in the composition of employment. Particularly important is to distinguish the evolution of registered, unregistered and self-employed workers employed given that, in general, they are associated with very different levels in the quality of employment.

The report published by the INDEC allows analyzing trends in changes in the morphology of occupation conditions. According to this source, in the interannual change of employment, it is observed that:

• Up to the 3^th quarter of 2017, total employment was growing at a rate of 137 thousand new workers, of which 84% were self-employed.
• In the 4^th quarter of 2017, total employment increased by 433 thousand new workers, half of whom were wage-earners and the other half self-employed.
• In the first quarter of 2018, total employment continued to grow at a rate of 421 thousand new workers, of which all were wage-earners employees.

These data, although approximate and far from being precise, suggest that in the first 3 months of the year there was a quantitative and qualitative improvement in employment. Until the middle of last year the occupation rose moderately with a preponderance of self-employment. At the end of 2017, the increase in employment was higher and less dependent on self-employment. This improvement seems to be accentuated in the first months of 2018 when the occupation level grew by the hand of salaried employment. Although not all of this increase is registered employment, since half corresponds to an increase in unregistered (informal) salaried employment, they are hints – since it is not depending on self-employment– of an incipient process of recovery of the capacity of companies and small firms to generate employment.

Unfortunately, it is foreseeable that these trends will revert in the second quarter. The turbulences in the exchange and financial market have an immediate and very negative impact on the labor market. The exorbitant jump in interest rates generates paralysis in many companies, especially in the smaller ones, putting at risk the capacity to create jobs. This is worsened by the uncertainty generated by the instability in the decision making process for the execution of investment projects.

The double inconsistency of fiscal gradualism with external indebtedness to avoid the social costs of adjustment is made more explicit. On the one hand, it does not solve the financial imbalance. In the first 5 months of the year, up to May 2018, there was a significant reduction in the primary fiscal deficit that went from U$S 3.1 billion to U$S 1.8 billion. But this was offset by an equivalent increase in interest payments that went up from U$S 2.7 billion to U$S 4.0 billion in the same period. On the other, it does not minimize social costs. The reversion of the incipient labor improvement is evidence that maintaining fiscal imbalances is socially very expensive.

The fiscal balance is the necessary condition to have levels of interest rates and exchange rates that favor investment and the creation of jobs. If the ordering is made with a strategic sense, it is possible to focus the cut on expenses that do not contribute to a better distribution of income. They are subsidies to public services in favor of medium and high income families, the waste and bureaucracy that underlies most of the national programs with which the national ministries intend to co-manage services of the provinces and municipalities and the social security rules that allow the duplication of benefits.