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The Central Bank alerts us that companies are thinking of reducing their provisions even more. This follows from the recent  Business perception report for August, where 42% of the firms assure that they will reduce their workforce in the next 6 months due to the crisis. He points out that a large part of those interviewed believe that their activity will not improve substantially in the short term, as a result of the fear of resurgence and the resurgence of violence.

Given that jobs will decrease, the question arises: are companies considering raising the rents of the equipment that remains available? This is not an altruistic idea, but a key aspect, because we must bear in mind that this practice will ultimately help the country's productivity. The 2018 OECD report already spoke of a decoupling of income with increases in productivity in the different countries. Productivity improvement should go hand in hand with improvements in workers' income, then the productivity puzzle generates a win-win.

It is an enormous challenge, especially due to the crisis we are facing, and for this reason, there are some voices that call for maintaining the status quo, but the world has changed, and market conditions are not going to be the same. Unfortunately, it is naive to hope that there is no unemployment, even though we are already exceeding 3 million. The companies are going to have to reduce certain allocations, but it is genuine that conditions are improved and a benefit is given to the workers who will remain active and who are assuming an additional responsibility. The case of airlines is the most obvious, with the reorganization of LATAM, Delta and Lufthansa.  

The call that must be made now is how the trade is valued and wages are raised. This is good for the country. According to comparative evidence, countries with smaller wage gaps and higher low wages have higher productivity.

Francisco Ortuzar

Orca Business Consulting Partner

Original Text on The Counter

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