Bolivia’s doble aguinaldo

7 Jan
I wrote this just before Christmas for the news briefing of the Bolivia Information Forum, about Evo Morales’ decision to double the annual Christmas bonus for state employees – and to enforce private businesses to pay it too. There is very little space in the briefing to discuss all the ramifications of the decision, be they political, social, and financial, as well as what it says about the trajectory of the Plurinational state today. I await late February and the deadline by which private businesses are legally bound to pay the double bonus. And I wonder what would happen if such a measure was taken in the UK!
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Double Aguinaldo: Private business on board, but some will struggle to pay
On 20 December, the Bolivian government issued a decree that brought into force the double bonus, or doble aguinaldo, a payment equivalent to one month’s salary to all salaried workers. This is in addition to the bonus, equivalent to one months’ salary, to employees each Christmas. The Supreme Decree 1802 states that the double payment this Christmas is intended to reflect the fact that economic growth is above 4.5%. The doble aguinaldo is to be paid each year for as long as growth remains above that point. In 2013 Bolivia expects to register growth of 6.5%, slowing to 5.7% in 2014.
Potosi, now a down at heel city in Bolivia but once the centre of the Latin American silver mining trade.

Cerro Rico at Potosi, now a down at heel city in Bolivia but once the centre of the Latin American silver mining trade.

Christmas bonus payments equivalent to one months’ salary are common in Latin America. Critics have suggested that the doble aguinaldo is a political tool that Evo Morales is using to buy votes in the run-up to the 2014 national elections. Bolivia has around 400,000 state employees on an average monthly salary of $500.
The decree also requires private enterprises to pay their employees the double bonus, leading to criticism that doing so would push up inflation and make them less competitive. Daniel Sánchez, the president of the Confederation of Private Business of Bolivia (CEPB), met with Labour Minister Daniel Santalla and Finance Minister Luis Arce to negotiate the terms of the payment. As a result, a memorandum of understanding was signed giving private businesses extra time, until 28 February, to pay the bonus to their employees. State employees meanwhile were to have received payment by 31 December.
Several municipalities have said that they will have trouble meeting the requirement, despite the decree stating that, where this is the case, the Treasury will transfer the necessary funding. Meanwhile, smaller businesses, non-governmental organisations and the Catholic Church in Bolivia have said that they will find it next to impossible to fund the double bonus.
Less has been made of the fact that some 70% of Bolivia’s urban and rural workforce are in informal employment, meaning that the vast majority of individuals will not receive any bonus. Pensioners were quick to take to the streets to protest against their not receiving the doble aguinaldo, though they managed to negotiate a 3% increase in their pensions from 2014 over and above inflation.
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