Inflation: A deep-rooted evil for HR.
What feeling can be observed in the labor market?
Typically, job seekers comment on the few ads they find when they search, or on unattractive positions when choosing.
What the numbers tell us about it.
Based on this point and using information provided by INDEC, I will try to make an analysis of the situation regarding the labor market and its employability and underemployment, since I believe that part of the most pressing problem lies in this aspect.
To reach an interesting conclusion, we will take the first quarter of 2009 with the first quarter of 2010 as the points of comparison, which is the most updated information prepared by INDEC.
The first thing we rescued is that the first quarter of 2009, part of a highly complicated situation inherited from 2008, which with internal factors (crisis with the countryside) and international factors (collapse of the most important stock exchanges and banks in the world) presents characteristics that Although they have not become highly critical in our country, they have not allowed it to be favorable either.
Let's look at the table prepared based on the information presented by INDEC:
Source: National Institute of Statistics and Censuses.
| Activity Employment Unemployment Subocup. Dem.1 Subocup. No Dem.2 GDP | Inflation 3 | ||
| Trim. I 2009
Trim. I 2010 Interanual variation |
46.1 42.3 8.4 6.0 3.1
46.0 42.2 8.3 6.6 2.7 -0.22% -0.24% -1.19% 10.00% -12.90% |
992,962
1,217,381 22.60% |
19.90% |
Data Obtained from the page of the Indec.-
1 Claimant Underemployment: Percentage of the underemployed population (less than 35 hours per week due to involuntary reasons, but wants to work more).
2 Non-Claimant Underemployment: Percentage of the underemployed population, who wants to work more hours but is not actively looking for another job.
3 Private information
Let's start with a pertinent clarification. The data included in the previous table are those related to 31 large cities presented by the National Institute of Statistics and Censuses. For the interior, the values are significantly different, but they maintain the relationships that I will analyze next, so it will serve as an example anyway.
Looking at the table, and focusing on year-on-year variations, consider that activity and employment remain stable, taking into account that both items have almost the same ratios, or better said that their reduction does not even reach half a percentage point, with which they do not represents a substantive change.
Based on this stability, let us place our gaze above all on unemployment and underemployment, the results of which will be interesting to compare.
The phenomenon of underemployment is a central point in the problem of decent employment. Let us first define what INDEC calls underemployment.
The agency tells us that this concept represents the percentage of assets that in the study population works up to 35 hours per week for reasons beyond their control. In other words, she works less time than she considers necessary for different reasons.
On this basis, we must differentiate between the demanding and the non-demanding underemployment. The first refers to those who are not satisfied with their number of hours of work, are looking for another than the most compliant, while non-applicants are aware of their problem but do not actively try to solve it, that is, they are not looking for another job.
Taking into account that unemployment fell by 1.19% between both quarters compared, we can say that it is good news. Although unemployment has decreased, it is not an interesting reduction value if we again make it clear that the first quarter of 2009 is not a high point to compare with. In other words, this result does not seem to involve a great change in the unemployment trend.
If we add to this analysis the fact that the claimant underemployment increased by 10%, we have a few points to note there.
• The population looking for work, and which participates as a supply of labor in the labor market, has increased significantly. Those looking for work are not only the unemployed, but also the underemployed job seekers. Here it is worth adding, that there is also a percentage (for which we do not have reliable information) that although he has a full-time job, he is not satisfied with his work situation or with his remuneration, an issue that pushes him to increase demand of employment without being contained in any of the aforementioned points. Although there are no concrete data, we believe that this group, which having a full-time job is looking for a better one, is also increasing. Factors such as inflation strongly influence this type of index values.
• Underemployed employees looking to work longer hours are not being able to solve their problem. In other words, there are more individuals who are in this social band. Constantly looking for a job without success, generates mixed emotions and discourages the worker.
• Non-demanding underemployment has decreased significantly, but due to the variation that we have just analyzed in demanding underemployment, it is possible that a large part of this reduction has migrated from one category to the other, which means that it ends up not being a large good news. It is possible (making it clear that this statement is only a hypothesis) that the percentage reduction in non-demanding underemployment originates from an increase in economic need that is driving this social group to now concretely seek a better remuneration in the short term.
The focus of my article does not try to be statistical or economic, but rather tries to carry out a situation analysis on the labor market and its oversupply and low demand for positions that may interest applicants.
It is important to emphasize that it is not only a matter of finding a job or reducing unemployment rates, but with this job it must be possible to support a family, with this job it must be viable to develop personally and professionally, and that the worker will necessarily have than being useful to the employer.
Factors such as the high rate of staff turnover in companies, make it clear to us that some of the issues mentioned in the previous paragraph should become a focus of attention with which to interact.
Another very important factor that clearly emerges from Table 1 is the one that leads us to link the growth of the gross domestic product with the average inflation rate of the period that elapses between the two quarters analyzed.
The high rate, 19.90% inflationary staggering until March 2010, imposes a very simple deduction on the supposed growth of GDP. It is presented as 22.60%. Now let's make a very simple account together:
Starting from the GDP of the first quarter of 2009, $ 992,962 million, taking into account the annual inflation of 19.90%, the GDP of the first quarter of 2010 should be of $ 1,190,561 million to keep involved a stable product trade or similar to that of the first period compared. This leads us to visualize the figure presented by INDEC, $ 1,217,381 million, which exceeds the figure that would keep trade in products and services quantitatively similar. From this fact we could say that in reality the growth of activity in general is reduced to 2.70% compared to the first quarter of 2009. Result originated in the difference in rates.
Conclusions:
Amid the whirlwind of prices, an Argentine businessman with surplus money is likely to prefer investing in raw materials, or non-human resources that enable their production rather than labor. Why? The raw material that it possesses, or the stock that it has, is overvalued with the only passage of time due to the increase in their relative value.
On the contrary, the company's workforce represents a constant increase in expenditures and wages. In an election year and with union permission for increases in wages, this does not become an incentive for the hiring of new personnel, but rather diverts the entrepreneurial interest towards other resources that can provide financial relief to organizations. All this without forgetting the measures that to overlap the constant need for resources, the state can take in relation to employer contributions.
On the other hand, the climate increasingly corroded institutionally speaking, discourages investment and a clear medium-term projection within the macroeconomy. A not less measure is that according to official sources, companies are working with 65% of use of their productive capacity, if this is true, it is hardly necessary to incorporate more people.
It could be said that the entrepreneur constantly seeks to make the resources he has more efficient rather than incorporate new ones. This situation fosters a climate of labor demand for workers that far from achieving the desired objective, operates in reverse, making work systems in organizations more complex and disorganized. Far from redistributing the workload (operating this effect as a natural reducer of unemployment) the trend is towards more work for fewer workers. Incorporating HR today is a challenge and a great business decision.
Without going any further, we can assess the situation in the meat sector in Argentina, which through the meat processing plants constantly expels workers towards the search sector. Refrigeration plants are opened and closed in line with the political decisions made, with which job stability becomes an unattainable dream for these workers.
These and many other ideas can be explored in the labor theme, however something is clear, there are fewer individuals who are trying to improve their employment situation, on the contrary they seem to have increased, and on the other hand those who must select them are discouraged and fearful waiting for what the future electoral context will bring.
Of course we refer to the basic jobs as operators, clerks, salesmen…, executive and high command positions require a more specific analysis.
We must work together and as a team to move through the rest of 2010 in the best possible way, containing with high professionalism the unmet demand for basic positions.
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