Unemployment, private investment and relationship between them
Introduction
We all cry for decreasing unemployment and informality, some of us remember the national duty to efficiently serve families in poverty and many demand government actions to reactivate the economy, but it does not seem that we improve. The economy grows less and four important sectors for the creation of formal jobs decrease its level of production (agriculture, construction, trade and manufacturing without free zones), unemployment grows and necessary taxes entered into force, but which have aFirst impact that discourages production.
Developing
In addition to the objective facts, the surveys continue to indicate deterioration in the expectations of consumers and entrepreneurs. In the first quarter of 2019 regarding the same date of the previous year, the workforce grew in 214.252 people of which 159.172 were women, so that the labor participation rate was increased very strongly, 4.7 percentage points. The women’s participation rate increased 7.8. A good part of that increase in labor offer was unemployed, as the number of unemployed grew in that year in 47.197 workers, most of whom 32.124 were women again.
The unemployment rate grew in a percentage point, and that of women even more. In an economy with market freedom and competition, the production and generation of new jobs are not a direct result of government action, 84 of jobs are generated by the private sector. The government only contributes directly to employment and reactivation with public employment and infrastructure creation. Of course, to accelerate growth, public policies are of great importance that, as the legal and regulatory order, taxation and monetary norms.
They train workers and facilitate savings, investment and productivity growth. They are the framework within which private economic agents generate their expectations and make their decisions, but it is they who take them, trying to increase their satisfaction and well -being. It is also true that the efficiency in the operation of public services, and education and health services, as well as the provision of infrastructure, affect the growth of GDP, but especially in the medium and long term in the precarious fiscal conditions that still prevailAfter the Law on Strengthening Public Finance.
The government creation of employment that does not quickly increase productivity, would have a much more detrimental than beneficial result because the growth of public debt would be accelerated and we would be in danger of a strong financial crisis. That is why the approved fiscal rule (which is essential for the adjustment to public finances to have effect). Establishes that current spending should grow less with respect to GDP if public debt increases its weight in relation to the size of the economy. This limit is only for current spending and not for investment while debt is not greater than 60% of GDP.
In the current circumstances this limit will be exceeded in 2020, so in 2021 the growth limit of the fiscal rule will affect all public spending, including investment. This will further limit the government’s ability to directly stimulate production. Unfortunately, public investment is decreasing due to bureaucratic obstacles and excessive controls, the lack of adequate preparation of projects and efficiency in its execution, the absence of concession of public works due to ideological prejudices and fears of the last governments.
Last year public investment in new constructions in real terms decreased by 4%,. In its review of the macroeconomic program considers the BCCR that this year – after initially an increase had been projected – will decrease again, now in 5.9%. For worse, estimates that in 2020 again it will decrease, by 6.4%. On roads, roads and bridges, if there is an increase in construction this year, but less than estimated 6 months ago. In school constructions, other buildings, telecommunications, aqueducts and sewers. The BCCR provides great decreases this year and the incoming
It is essential that this is not given, for which a great focus effort of the government is required in the generation of infrastructure. This is the specific field in which in the shorter term the government can make to reactivate and generate employment, which would improve expectations and therefore the demand for entrepreneurs and consumers. In addition, it would give a higher base from which to apply the limitations of the fiscal rule to the investment of 2021 onwards, given the future limit to the total government expenditure, in the remainder of this year and the incoming.
conclusion
Efforts should be multiplied in reducing current spending and leaving more space for investment and preparing concession projects that allow us to accelerate infrastructure construction from 2021 onwards. Accelerate the execution of infrastructure projects, decentralize their execution obtaining the cooperation of local entities (education boards, communal organizations, municipalities, popular housing construction companies) and soon awarding concessions is the most important task for the prompt reactivation that thegovernment.
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