Purchasing power: "a strict monetary measure is incapable of restoring quality of life" (Hedi Sraieb) | Tunisia News Gazette

Purchasing power: “a strict monetary measure is incapable of restoring quality of life” (Hedi Sraieb)

Faced with the salary-price chase, Hedi Sraieb, PhD in Development Economics thinks that the government does not have real room for maneuver to improve the purchasing power of citizens.

In an interview with TAP, he considered that only tripartite negotiations between the social partners on issues other than the single wage variable, such as living conditions, access to decent housing, education, culture, care, leisure quality …, could mark the beginning of a solution.

The latest statistics from the INS show a decline in poverty in Tunisia, causing great controversy. What is your analysis of these statistics?

Statistics are the preferred tool for economic calculation, which is often the basis for political decision-making. In other words, statistics are never truly neutral.

Regarding absolute or relative poverty, the definitions adopted by the INS are those of the main international institutions.

It measures poverty according to a monetary unit (less than $ 1 per day per household). Poverty is therefore primarily monetary in other words measured in purchasing power. Obviously, this approach can be challenged.

For, on closer examination, one can easily assert that being “poor in the city” is much more difficult than being “poor in the countryside”. One could thus multiply the angles of approach, while continuing to accept this monetary measure alone.

The poverty of a healthy, united family group is quite different from that of a family with a sick relative and an unemployed child. The major disadvantage of this strictly monetary measure is that it obscures other aspects of human existence.

In other words, a strict monetary measure is incapable of restoring the quality of life. This measure says nothing about access to education and care. It does not say anything about affective distress, itself resulting from “unworthy” material conditions.

Moreover, the controversy you are talking about stems from the process itself used by the INS. The institute proceeds by sampling, not by a monthly and exhaustive measure of the “needy” who benefit from the allowance (in the order of 250 TD on average).

The INS consistently measures the same number of poor over several semesters, around 15%. Absolute poverty would not have changed either.

The consumer survey carried out in 2015-2016 shows surprisingly no significant change compared to the one carried out in 2010. Once again, this seems to be due to the practical method implemented (questionnaire, panel).

What seems truly regrettable in the INS approach is that it does not seek to approach “precariousness”, the other term for poverty in the 21st century, by other methods and other background: access to decent housing, access to education, culture and quality recreation.

What do you think are the underlying reasons behind the deterioration in Tunisian purchasing power?

It is a phenomenon almost invisible, almost imperceptible, because it takes place over the long term. This is what economists call monetary illusion.

Indeed, the payroll leaves a steady progression. Year in, year out, everyone gets increases, either in direct salary or bonuses. But there; the real purchasing power does not increase or even regress due to the fact that prices on their side are also increasing, and in many cases more rapidly than wage increases.

As can be seen, the general price index reflects only very imperfectly the general trend of prices.

The illusion arises from the fact that one does not feel the de-indexation of wages in relation to prices. Thus, to take an example, it is easy to verify that the purchasing power of a customs officer, a police officer, a teacher has considerably diminished compared to what it was in the 1970s or 90s.

It is very regrettable that the UGTT did not seize this crucial issue of the definition and internal composition of the price index. But obviously citizens are not fooled; they regularly notice the discrepancy between the index published by INS and labels on products … When it is not the cost of housing, transport, Health and education.

A sort of game of dupes seems to have settled. It is an infernal circle with on the one hand trade unions demanding increases, arguing the need to catch up with inflation and on the other hand, companies adjusting their prices upwards to maintain the same margins due to the relative rise in costs.

What avenues (or policies) should be promoted to stop this deterioration?

Obviously, employees are, albeit to varying degrees, always losers. Their wages do not follow the real cost of living. With the commodification of new activities, such as health or education, households now face expenses that were essentially and previously reduced or even insignificant.

Education costs, just like care and medication costs, have soared … while they were reduced in previous decades.

All that has been talked about lately is the need for a “wage break”. In addition to the wage freeze in both the public and private sectors, the government is considering reducing the number of civil servants. The figure of 50,000 voluntary early retirement is put forward.

It is a question of a possible brake on the wage-price spiral that we have known for some time, which in a context of sluggish growth has contributed to aggravate the imbalances. Let us be clear that wages are not, as such, responsible for the public finance crisis.

In the absence of growth and therefore a mechanical increase in tax revenues, the public sector wage bill grew faster (from 11 billion dinars in 2010 to 14 billion dinars in 2016) than budgetary revenues … Probably in a similar way, in the private sector, even if there are no statistical data, where probably the wage bill has increased in value added, thus reducing the margins of enterprises. Hence also one of the possible reasons for the decline in private investment.

Faced with this wage-price chase, the government does not have real room for maneuver. It can try to pass in force and to face the refusal of the trade unions and to, thereby, fuel people’s anger.

This would be a daring bet, in a context where the slightest spark can turn into a social explosion. The government can also try a tripartite negotiation.

The recent change in the leadership of the UGTT could be conducive to an enlargement of the negotiation. By that I mean other issues than the single wage variable.

Are the social partners able to find an agreement around a wage moderation which would have as a counterpart job creation? I am aware that this type of compromise is difficult to find given the old traditions in the field of social and professional relations.

The two trade union and employers’ organisations only meet to discuss wage increases, rarely other things! Nothing is played at this stage. We are only in the first rounds of observation!

Source: TAP news Agency

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