Entrepreneurs warned of inflation caused by the government's salary increase.

The Confederation of Private Entrepreneurs of Bolivia (CEPB) expressed its rejection of the salary increase announced by the Government. The measure raises the national minimum wage by 10% and the basic salary by 5%. The announcement was made following an agreement between the Executive and the Bolivian Workers' Center (COB). For the entrepreneurs, this decision will generate serious economic consequences, and they point out that it was made without dialogue or consensus with the private sector. From the sector, they consider that the salary increase is the highest in the last eight years. They assert that it is imposed in an adverse context for the country's economy. Bolivia faces growing inflation, GDP decline, and a high fiscal deficit. Therefore, the CEPB warned about a possible chain reaction. According to their statement, this measure could cause uncontrolled inflation and economic stagnation. The concern extends to small and medium-sized enterprises, these productive units are considered the most vulnerable to rising costs. The CEPB indicated that many of them could close or reduce staff, which would have a direct impact on the generation of formal employment. The Government, according to the entrepreneurs, will be responsible for the consequences. Should entrepreneurs participate in the negotiations? From Santa Cruz, the Federation of Private Entrepreneurs (Fepsc) also criticized the measure. Its president, Óscar Mario Justiniano, described the increase as “arbitrary” and stated that it was adopted without consulting the productive sectors. He added that SMEs are being hit by the shortage of dollars and fuels, and he also warned about the growth of labor informality. The National Chamber of Industries (CNI) issued another statement of rejection in which it denounced that the salary increase could worsen the fiscal deficit. Currently, this deficit is around 10.9% of GDP. They also pointed out that the accumulated inflation by March reached 13.87%, and industrialists fear that the adjustment will further drive up prices. The president of the Chamber of Entrepreneurs of La Paz, Rolando Kempff, suggested allowing each company to negotiate the increase with its workers. He argued that the economic situation doesn't allow for generalized increases. In his opinion, imposing a single salary scale can generate unemployment, and he hopes that the private sector will be included in the regulation of the decree. What measures can be taken to mitigate the effects of the crisis? The CEPB proposed three measures to mitigate the effects of the increase: first, limit the adjustment only to the basic salary. Second, allow internal agreements between entrepreneurs and workers. Third, authorize the payment of the retroactive in installments until December. These measures aim to relieve the pressure on the liquidity of companies, but so far, the Government has not formally replied to the proposals. Entrepreneurs insist that the decision should be based on technical criteria. They recall that in the last 20 years, the minimum wage increased by 468%. They also denounce that the voice of the business sector was never considered in these decisions. This has led to a loss of competitiveness of formal companies. In turn, it has created an environment conducive to smuggling and evasion. The College of Economists of Bolivia also questioned the Government's approach. Its president, Jorge Akamine, asked that the increase be consistent with economic growth and pointed out that the increase only responds to accumulated inflation. He criticized that the adjustment is decided by decree without tripartite consultation, which contravenes recommendations from the International Labor Organization (ILO). Economist Fernando Romero indicated that the measure has political motivations and pointed out that in recent years, the salary increase exceeded inflation. This created a false state obligation to increase salaries every year. Romero warned that this practice is no longer sustainable, especially in a current economic contraction environment. From the Chamber of Construction of Santa Cruz, rejection was also expressed, the entity assured that the adjustment could halt investments nationwide. They estimate that some sectors will face increases of up to 41% in their costs. This will affect the viability of many infrastructure projects, and the guild demanded greater participation of the sector in decision-making. Create an organization that works with technical criteria? The Fepsc proposed the creation of a National Wage Council, this body would have representation from the Government, entrepreneurs, and workers. Its objective would be to define adjustments under technical criteria and also establish a fixed date for the annual increase. This way, unilateral decisions that harm the economy would be avoided. Despite the criticisms, the Government defended the agreement with the COB. The Minister of Economy, Marcelo Montenegro, stated that the aim is to recover purchasing power, but he avoided addressing the entrepreneurs' questions. He also did not mention whether the presented proposals will be evaluated, the measure has already been formalized through a supreme decree. For the entrepreneurs, this increase comes at the worst time, they denounce that the macroeconomic context doesn't allow for this type of decision. They insist that the country needs responsibility and a vision for the future, reiterating their willingness to dialogue to build a balanced labor framework. For now, the tension between the Government and the private sector remains latent.