WAGES ARE SLUMPING AND SO ARE PRIVATE EDUCATION AND HEALTHCARE

State education and health care services are suffering from a long and deep management crisis. The provinces, which are responsible for financing and managing state schools and public hospitals, allocate significant resources nevertheless the quality of these services is perceived as low by the population. Proof of this is that many middle-income families make the effort to pay for private schools and prepaid medical companies in order to have access to better quality in education and health care.

However, in recent years, the perception of quality in private schools and medicine has also been declining. Parents observe that their children have educational deficits, even when they attend private schools, long waits for non-emergency care appointments, and co-payments above the health plan fee. The degradation reaches the point of closure of private schools and deep crisis in private medical companies.  

What are the main factors explaining the extension of the deterioration in the quality of state social services to private services? To answer this question, it is useful to look at some key prices. According to INDEC data, between 2019 and 2023, corrected for inflation, it is observed that:

• Formal wages in the economy fell by 16%.
• Private school fees fell by 18%.
• Prepaid medicine fees fell by 23.  

These data show that the deterioration is generalized. Wages are falling and even more so are the fees to access privately managed social services. Given the impoverishment of the middle class –which is the one that has access to formal salaries– it is very difficult to sustain the income of schools and private medicine. This drop in the income of educational and medical services –which are labor-intensive– deteriorates the salaries of teachers and doctors impacting negatively on the quality of private services.

In the middle-income segment of the population, concern and bewilderment prevail. On the one hand, in the context of falling salaries, the effort needed to pay for private school and prepaid services is increasing. On the other, these efforts are not enough to access quality services. Lower salaries and poorer services combine to accelerate the deterioration in the quality of life.  

The main cause behind these poor results is the poor organization of the State. Macroeconomic disorder, fueled by chronic fiscal deficits, generates inflation and discourages investment and the creation of quality jobs. In addition to the financial deficit, the public sector also suffers from severe management deficits. State-run services are deficient in part because the three levels of government operate overlapped multiplying inefficiencies. A very illustrative example of the disorder is the demagogic attitude of the national government in increasing teachers’ salaries when they are paid by the provinces (in state education) and parents (in private education). The same is true when it announces freezes on private school and medical prepayment fees which, in a context of high inflation, aggravate the financing loss.

In order to get out of this long process of decadence, it is essential to address a comprehensive reorganization of the State. First, because it is the only way to achieve financial equilibrium to eliminate inflation. Second, because it is the only way to improve the quality of public management. With a better organization, the State will be able to produce more and better public education and health services. To this end, the national State must stop interfering in their financing and management –since, according to the National Constitution, these are responsibilities of the provinces and their municipalities– and it must concentrate on measuring the results of the provinces. Thus, citizens will be able to pressure their local governments with better tools for good services. At the same time, with better regulatory management by the State, private services will also improve their quality.