According to a report elaborated by the Institute for Argentine Social Development (IDESA) since Argentina came out of the crisis in 2002, private employment experienced a strong growth; however, such growth was associated to real wages liquification that caused such great devaluation. This kind of employment creation became weaker up to the point that, nowadays, almost every formal job is being created in the public sector.

From IDESA they state that “unproductive and unnecessary public employment makes the problem more serious, as it raises fiscal deficit and deteriorates the quality of the State”.

The report states that, according to official data on registered employment for the second trimester of 2014, there has been a growth of 0,9%.

“This average is the result of a strong increase of public employment (5%) and the standstill of private employment (-0,1%). Therefore, over the first half of 2014, formal private employment standstill and growth based only on public employment, consolidates,” say the spokesmen of the Institute.

According to IDESA “from a situational perspective, the standstill of formal private employment seems to be associated to the halt of productive activity”.

Data from the Ministry of Economy for the first semester of each year shows that “between 2003 and 2008, registered private employment went from 3,6 to 5,8 million jobs. In other words, it grew 10% per year”.

Between 2008 and 2012, registered private employment grew from 5,8 to 6,3 million jobs, that is to say that the variation rate decrease to 2% per year.

But between 2012 and 2014, private employment remained on 6,3 million jobs, with a growth rate of only 0,3% per year.

According to the authors of the report, “official data shows that during the first five years after the crisis, 2 million formal jobs were created within the private sector; the following four years half a million formal jobs were generated and during the past two years there was hardly any variation in the amount of private jobs”.

“Private employment evolution is mainly linked to the real salary behaviour and the international prosperity. During the first phase, the liquification of real salary caused by the mega devaluation of 2002 and the strong increase of the foreign exchange terms were the driving force of the large employment growth”.

By the end of the past decade, the liquification of real salary disappears but exportation prices remained favourable, considers the report.

It highlighted that “from 2012 on, the capacity of private employment generation became conditioned by the high level of real wages and the international prices, which stopped increasing”.

In 2014, the real salary is falling due to the fact that inflation is higher than the nominal increases in wages.

“This reduces the adjustment in employment. It is the main difference between the current crisis and the one of the end of the convertibility period (2001). Under that regime, as the option of devaluation and liquification of wages through inflation was not available, the adjustment was done almost exclusively through employment destruction”, added sources from IDESA.

“In the current situation, inflation and devaluation lead to an adjustment that combines a reduced decrease of private employment with a fall of real salary”, stated IDESA.

Facing the private employment halt, “expanding unproductive public employment is not a remedy. On one hand, it deepens fiscal unbalance, promoting inflation and real wage deterioration. On the other hand, placing people in the public sector to satisfy personal favours or increase militancy, erodes the State”.

“This is not about ideology, it is about assuming that the lack of professionalism in public employment is the main factor that diminishes the possibilities of building a State that promotes growth with social inclusion”, it concludes.

At the moment, every tool that helps to make the labour market more dynamic, generating formality and real social inclusion are vital for Argentina.