Deterioration of the labor market due to the pandemic causes a drop in wages

In the second month of the year, the average salary fell below USD 400, although the unemployment rate remained at 5.7%.

According to figures from the National Institute of Statistics and Censuses (INEC), there was a decline in pay, mainly for women, which fell by 30%.

The deterioration of the labor market has been marked between January and February that 84.381 suitable jobs were lost, the underemployed added 62.000 and the average salary fell from USD 434 to USD 310; that is, below the Unified Basic Salary (SBU), which is USD 400.

It is the second time this year that the INEC offers monthly figures, but warned that the results due to a matter of periodicity and methodology used cannot be compared with those of other years.

The most affected pay this month was that of women, falling from USD 400 to USD 281, while that of men fell from USD 455 to USD 328.

The reduction in salaries has become a relief measure for companies that survive amid the pressure left by the pandemic, in a context of health crisis and slow economic reactivation that adjusts to modified working hours.

According to the Ministry of Labor, until December of last year, 1.924 cases of companies that took advantage of a reduction in working hours were registered in a scenario in which the budget for the payment of salaries was also modified.

Karolina Pazmiño, manager of Gente & Talento, a consultant and recruiter of human talent that operates in Guayaquil, commented that this trend was already coming from 2016, but that with the pandemic it was fixed.

The specialist said that the person who leaves is no longer replaced or at least someone else is being sought, but for a lower salary.

Ella Pazmiño indicated that a month in her office she receives between 50,000 and 70,000 resumes, many of these from candidates who apply for two or more jobs, as a strategy to find a possibility.

She explained that the budget for senior executive positions such as managers and heads, has fallen in recent months between 10% and 35%. But for the most basic positions such as analysts, assistants or coordinators, the decline worsens when it reaches 50%.

For Juan Manuel Domínguez, Director of Research at the Espae Business School, this symptom is expected in a country that, after a drop in its Gross Domestic Product (GDP) of 8.9% in 2020, experiences one of its most strong economic recessions.

He said there is pressure on business to reform. Hence, lowering wages or laying off employees are the most appropriate variables.

Meanwhile, the Ministry registers 821.902 settlement records from January 2020 to January 28 of this year.

Regarding unemployment, the rate in February was 5.7%, the same level as that registered in January. Meanwhile, the adequate employment rate fell from 34% to 33%, this time men being the most affected, going from 39% to 37%.

The employment rate was 95.4% for men and 92.7% for women.

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