Construction companies warn that the salary increase raises the social burden to 41.7%

The salary increase will have an adverse effect on companies. The Santa Cruz Construction Chamber (Cadecocruz) reported that the percentages established by the Government for this year will make Social security costs will increase by 41.7%.

In a statement, the organization noted that “Bolivia’s construction companies are making extraordinary efforts to continue working, facing a very difficult and persistent economic and social situation in recent years.”

That is why he clarified that this situation “is aggravated by the salary increase determined by the Central Government for this year of 5.85% to the national minimum wage and 3% to the basic salary.”

What costs will increase?

The analysis by Cadecocruz and its Center for Economic Studies and Development shows that an increase of the minimum and basic salary multiplies exponentially and reaches 41.7%considering that the percentages of social obligations such as contributions to the Health Fund, Fund Manager, Pre-Natal and Post-Natal Subsidy, Provision of Bonus and Compensation, Seniority Bonus, among others, increase.

For the institution, this argument shows that any increase is unsustainable for the construction sector, which faces serious illiquidity problems generated by factors such as: the shortage of foreign currency, which in turn increased the prices of inputs and materials by 30%.

Added to this is “the debts accumulated by public entities for work progress sheets; the low public investment in infrastructure of the Central Government, Governorates and Mayor’s Offices and a budget execution that on average is around 50%.”

The organization added that the awarding of works to foreign companies, with the problems that this generates, such as non-compliance with contracts, economic losses for the State, damage to Bolivian construction companies and workers, “is another problem that threatens the sustainability of companies and that have caused the closure or bankruptcy of several.”

“Construction is not growing, on the contrary, The last two years the indicators reflect a downward trend which is expected to continue in 2024 and 2025, considering that there is already a premature electoral climate that affects all levels of public management and generates uncertainty in the private sphere,” says Cadecocruz.

The business entity noted that “the public sector, which faces difficulties in financing its heavy budget, will be affected by the increase in operating expenses.”

No conditions to increase

The entity observed that the country’s private sector was systematically marginalized from the negotiations between the Government and the Bolivian Workers’ Central (COB).

Therefore, according to Cadecocruz, “lDeterminations are not based on technical criteria and economic policies that balance the needs of workers, the reality of the country, the stability of companies and the maintenance of decent employment.”

“Builders are not in a position to assume the salary increase “That does not correspond to the reality of the country, and that we ratify, should be the result of a tripartite, technical analysis, separated from political calculations and by sectors,” the institution said.

Finally, the sector hopes that “our position is considered and adjustments are made in sectoral work tables, to avoid irreversible damage, such as greater unemployment, informality and the closure of companies.”

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