Dominican economist describes the relationship between wage increases and inflation as a “myth”

The former president of the Association of Professors of the Autonomous University of Santo Domingo (Faprouasd) and economist, Wagner Gomera Aquino, spoke about the 19% salary increase for the non-sectorized private sector, announced by the government.

indicated that the salary increase was necessary both for the current context of economic crisis that the Dominican Republic is experiencing as in the global scope in which their populations lost the purchasing power.

In addition, recalled that this is intended to offset a price increase that it has already been generated and that it is a phenomenon that occurs in all economies.

For what he qualified as a “myth” relate the increases to the phenomenon of existing inflation and that which would be generated as a consequence of a salary increase.

“It results in a myth that is not verified with the data, because when you see the data of the salary increases that have been made in the Dominican Republic, you do not see the inflation-salary increase relationship, it is the opposite, first there is the increase in salaries and then adjust prices,” explained Gomera.

Furthermore, he said cIn relation to the entire labor community that is not directly impacted by the increase, that receives it in some way, which forces an increase in “cascade”.

The increase will not necessarily be of the same proportion, but there must be a general increase in wages.

Regarding the public sector, the economist considered that “the government should start thinking about making a salary readjustment in this area because the purchasing power of all salaries in the economy has been lost.”

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The also consultant and professor of the UASD considered that the increase that will be carried out in two phases: 15% next April of this year and 4% in February 2024comes to improve the purchasing power of the Dominican population.

Regarding the doubts that there are about whether this would cause unemployment and would not impact the entire working population, Gomera Aquino stated: “It is not possible, because the objective is to increase the level of consumption.”

“The increase in wages cannot generate unemployment because it increases the consumption of the population, because higher consumption forces more sales by companies and causes the hiring of new workers,” added Gomera.

Does not reach the cost of the basket

Gomera expressed that this increase does not mean, in any way, the compensation of the “historic debt” that the Dominican Republic has with very low wages that are not enough to cover the cost of the basic family basket.

It also admits that this increase announced last Wednesday, March 8, nor would it cover the cost of the basic family basket.

However, he recalled that there are compensation programs, as well as social policies that could play an important role for the population.

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