Saturday, December 4

The Monetary Board was supposed to comment on the minimum wage for 2022, but it did not. Why?

According to resolution JM-98-2021 of November 17, 2021, the JM responded to the request made by the National Salary Commission (CNS) to issue observations on the proposals received to establish or not a new minimum wage for 2022.

However, this collegiate entity decided to communicate to the Ministry of Labor and Social Welfare (Mintrab) that since the setting of new minimum wages for 2022 has not been projected, according to the CNS opinion, it has no observations in this regard.

The Labor Code establishes that the CNS must send the JM and the Guatemalan Social Security Institute (IGSS) the opinion issued on the proposals presented by the employer, labor and government sectors.

The employers asked the joint organizations that the current minimum wage of Q2 thousand 825.10 for non-agricultural activities remain in force; Q2 thousand 742.37 for agricultural activities and Q2 thousand 581.77 for exports and maquilas, plus the Q250 of incentive bonus in each one.

The government sector, represented by the Deputy Minister of Labor Administration, María Isabel Salazar, set its position before the CNS in October indicating that by 2022, at least the inflation index should be taken into account.

While the labor sector proposed to set the base remuneration at Q150 per day, which would reach Q4 thousand 562.5 plus the bonus of Q250.

Given this, Vice Minister Salazar indicated that the Mintrab received the JM’s response in this regard and said that when it meets with Minister Rafael Rodríguez, it will hand over the document to analyze it.

The official said that the JM did not go into a very deep analysis, but instead made a detailed summary of each position expressed by the sectors and stated that, since there is no direct position in the salary commissions, there is no pronouncement.

Also read: The regional minimum wage would be based on the following indicators and factors

After receiving both observation reports, Rodríguez will meet with the President in the first 15 days of December, to specify the position of the government sector.

And the IGSS?

In the case of the IGSS, it responded last week and according to Vice Minister Salazar, after analyzing the positions of the three sectors, that institution considers an increase, although he did not mention a percentage or amount.

However, social security responded to Prensa Libre that it issued its analysis based on the objective variables of the labor market and the behavior of economic indicators, adding that it is “an impartial position that raises the need to maintain the objective of economic development with a balance between the supply and demand of goods and services, as proposed by the government measures for economic recovery and the projects to promote small and medium-sized enterprises ”.

The key formula

Previously, the CNS requested the Bank of Guatemala (Banguat), as a technical support entity, to estimate with updated data for 2022 the results of applying the formula that the commission established since 2012 to calculate the minimum wage. As a result, the possibility of an increase that would oscillate between 4.26% and 7.26% was reflected.

Asked whether this calculation would form part of its observations, the Banguat responded through the Communications department that these results are not included in resolution JM-98-2021 that this instance sent to the Mintrab.

It was added that the aforementioned results are part of the specific request made by the CNS to Banguat, considering that in previous years, these calculations have been provided by the Ministry of Economy and by the National Competitiveness Program (Pronacom), since it can be applied by any public or private institution.

The formula considers the medium-term inflation target established by the JM and a productivity factor that takes into account the difference between the growth of the real Gross Domestic Product (GDP) estimated by the Banguat and the population growth, calculated by the National Institute of Statistics (INE).

The figures refer to the year prior to the minimum wage to be established, a result that is multiplied by a half (½), which corresponds to the contribution of the “labor productivity” factor to the growth of GDP per capita, explains the office from Banguat.

  • Then, the medium-term inflation target established by the JM (4% +/- 1 percentage point), the estimated growth of real GDP for 2021 (4% – 6%), as well as the estimated growth of the population by 2021 (1.49%). With these data it is obtained that the increase in the minimum wage for 2022 would oscillate between 4.26% and 7.26%, but “it is worth reiterating that said calculation is only a technical reference and not a recommendation of the Monetary Board, nor of the Bank of Guatemala”. stressed.

Franky Pozuelos, delegate of the labor sector in the CNS, recalled that the position of the sector was to raise the daily minimum wage to Q150 and that both the JM and the IGSS have independence to express their opinion, but at the discretion of the sector there should be a substantial increase that allows the worker to return the ability to cover the expenses of their family consumption, since the products of the basic basket and services have had constant increases in the last two years.

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In addition, families must now cover other expenses derived from the pandemic, such as more cleaning and biosecurity products, internet service for students to receive classes and others.

“Along with that, policies to verify prices, controls or subsidies should be established to avoid further increases,” he said.

Jorge Lewis, delegate from the employers’ sector, did not respond to the request for an opinion on JM’s position.

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