Although the relationship between employment and growth is not so clear in Argentina, a much greater increase in activity would be needed to incorporate a million people who are looking for work. Undoubtedly, the dynamics of the economy will be a challenge in the remainder of the year and, consequently, the impact it will have on the generation of formal employment. That will be a priority on the agenda of the current Economy Minister, Sergio Massa, and the ruling party’s presidential candidate.
Under normal conditions, GDP would have to grow at least 3.5% in a sustained manner for this to happen.
According to data from INDEC, in the first quarter of 2023 the gross domestic product (GDP) rose 0.7% compared to the fourth quarter of 2022, and 1.3% compared to the same quarter of that year. Unemployment, meanwhile, was 6.9%. However, the link between these two factors is not linear, economists warned PROFILE.
“The relationship between employment and GDP in Argentina is highly variable with the economic cycle,” Juan Luis Bour, director and chief economist of the Latin American Economic Research Foundation (FIEL) told this outlet.
The reason is that Argentina, “like any country with high levels of informality, does not behave in the same way as a country with high formality”, in which “when activity falls, employment also falls, and when it recovers, it also recovers.” employment is strong”, explained the specialist.
Bour clarified that the Argentine economy cannot be measured with the same parameters as others with greater elasticity between labor force and GDP. This happens largely due to the high participation of public employment in the total.
The growth of the latter is sustained, regardless of economic conditions. “Almost the same thing happens with the employment of informal workers and the self-employed, with the sole exception of the pandemic.”
According to the latest report from the UCA social debt observatory, at the end of 2022, “only 40.3% of the active economic population aged 18 and over managed to access full employment with rights.” The rest entered the job market through unstable underemployment (23%) or regular, but precarious jobs (28%).
Eduardo Donza, a researcher at the observatory and author of the study, assured PERFIL that the growth of the economy is not enough for the almost 60% who do not have access to full employment with rights to join the formal labor market.
“That is not enough, because the gross product increases in a sectoral way, and one can have a gross product that increases in sectors that do not generate much labor.”
For the researcher, “what there should be are specific policies that help those groups of workers who are not registered or have a very precarious job”, and these policies should be territorial, specific and focused “in support of a social economy or popular that involves 23% of employed workers”.
Although the level of unemployment fell, economists argue that this was not necessarily a reflection of economic growth. According to the director of FIEL, the rates of informality and the rigidity of labor legislation mean that, even with an economy in recession, “formal employment falls very little,” which is explained because, due to Argentine regulations, “it is expensive to fire and rehire when the economy recovers.”
In the case of informal workers, Bour indicated, income in times of crisis falls sharply, so that “the process of adjusting to a recession is experienced much more strongly by informal workers and the self-employed.” Even, he explained, “total employment can grow in recession, because the population tries to find income with informal jobs.”
For these reasons, the specialist explained, clear forecasts cannot be made in Argentina. “With more normal labor institutions, a sustained growth of 3.5 to 4% works ‘miracles,’” said the economist. “But that’s not what we have available today,” he summarized.
As Camilo Tiscornia, director of C&T Consultores Económicos, explained to PROFILE, what exists today is a greater number of people entering the job market, but this new workforce is less productive.
“There are more people working and obviously more is produced, but they contribute less and less,” the economist stressed. “The jobs that are being created are not very productive.” Tiscornia explained that “it is very likely that those who have some type of social assistance or are doing an activity with little productivity, or who are working few hours” are being counted as employed, which means that they are jobs that are not going to work. result in “improving the income and well-being of the population,” he concluded.