What the market taketh
the market doesn’t giveth back.
Continuing with the main concern of this blog, I have now calculated (extrapolation included) the evolution of productivity and real wages for Argentina from shortly before the devaluation of 2001 until today (latest date available is Q3 2012).
Here’s the evolution of the ratio Productivity/Wages:
I also broke down the whole series in three periods, to provide a narrative for the topic:
Wages decrease initially, as an intended result of the devaluation. Productivity also decreases, although less, as employers react to the incentives of cheaper labor. On the bright side, this is a period of very strong job creation: 2.5 Million jobs created in 27 months. The US equivalent would be 770,000 monthly, three times the best month under the Obama administration.
After wages hit bottom, productivity and wage increases go hand in hand, which could make you think that the loss of ground of labor against capital in the distribution of income at the beginning of the decade was a singular, needed event to re-employ millions of people. However, that was not the case: productivity and wages went hand in hand until 2007.
In 2007, inflation starts getting out of hand. After that, it’s almost as bad as in a developed nation: productivity increases, but workers see little of it. On the plus side, getting 30% of the increase in productivity is better than the US’ zero.