Bolivia: Four new and controversial measures debated on May 1

RIO DE JANEIRO, BRAZIL – In the city of Oruro in Bolivia, President Luis Arce announced last weekend four surprising measures for Bolivian workers that have caused a stir in the Bolivian business and industrial sectors due to the new commitments made to their employees. In addition, it imposed a new increase in the base minimum wage.

One of the regulations (Supreme Decree 4708) states that “special leaves of absence with 100% of their remunerations, without charge to vacations, are generated in the following cases: death of parents, spouses or children” and workers will have the day off for birthdays, upon presentation of the birth certificate.

Another regulation (Decree 4709) orders that “the annual vacation will not be compensable in money,” and another regulation (Supreme Decree 4710) extends union rights: that the main leaders of the Bolivian Workers’ Central and other centrals “will be declared in commission with 100% of their salary while they perform their union functions”. In the private sector, “exceptionally, two leaders of the same company may be declared in commission”.

On the other hand, Supreme Decree 4711 determines that the salary increase in the private sector will be agreed upon between the employers and the workers based on 3%. While “the amount determined for the National Minimum Wage, in the public and private sectors, is BOB 2,250 (US$328), which represents an increase of 4% compared to the previous year”.

Regarding these four measures, Jean Pierre Antelo, president of the Federation of Private Businessmen of Santa Cruz, pointed out that the most affected by these measures is the Bolivian SME sector.

“The first thing we see is that the economic reality in which the sectors live is unknown. The effect will be very negative because the small and medium companies that have not yet recovered from the pandemic will have to take on more debt to comply with these measures. That means less money to reinvest,” Antelo explained.

The business leader added that the measures “do not encourage entrepreneurs to risk their capital to create new sources of formal jobs”.

The previous study published by the Chamber of Industry and Commerce of Santa Cruz (Cainco) indicates that there are more than 4 million people in Bolivia in the so-called self-employment. That is, they do not have health insurance or social benefits. Santa Cruz, the department that contributes the most to the national GDP, with 30%, agriculture and construction continue to be the sectors that drive the economy forward and generate the most jobs. The institution also stressed that these measures did not consider the business position and that they were made with political intentions.

In 2021, Bolivia’s unemployment rate was 5.2%, which was 3.2 percentage points lower than the 8.4% rate in 2020. The data provided by the National Institute of Statistics (INE) generate distrust in business representatives since, according to their calculations, most of these jobs are informal and temporary. The INE indicates that 25% of the Bolivian population (1.7 million people) is engaged in commerce, 14.9% (643,000 people) in manufacturing jobs, and 10.3% (447,000 people) in transportation and storage activities.

On the other hand, the increase in the minimum salary is BOB 86.56, which was considered insufficient for many working sectors, such as teachers. For a company with ten workers, the salary increase is BOB 18,384. If there are 100 employees, the increase is BOB 153,200.

Fernando Hurtado, president of Cainco, pointed out that the minimum wage increase should have been made based on real data of the national economy and segmented by sector: “The increase should have been made by sector taking into account which sectors have already recovered and are on the rise and which are still weak,” he said.

With information from Bloomberg Línea