The rise in wages, if by decree, has a devastating impact on small and medium-sized enterprises. In the State, it is adding more debt to the public debt, one of the largest in the world. So how can you increase wages?
In the short term, that is, immediately:
1st, through the drop in social security contributions by the employer, this margin being credited directly to the workers' payroll;
2 The PRR, when distributed by companies, must be conditional, that is, the condition must obey 2 principles:
a) Companies receiving community funds must present, in their business plan, a rate of return that is sufficient to periodically increase salaries above inflation and its monitoring must be systematic by the State;
b) The profit dividend policy must include shareholders/partners and workers.
These measures would increase productivity and produce additional tax base to compensate for the loss of income from social security contributions.
It is only by increasing productivity, that is, national wealth, that it is sustainable to raise living wages and destroy the wall of poverty.
Companies are the engine of the economy, but if they are subject to community support, they will have to distribute more fairly, profits from the labor factor of production. Improving the GINI index, that is, closing the gaps between the richest and the poorest, is essential for productivity, social mobility and the sustainability of the market economy.
The State has the role of Supervising and Monitoring economic agents, but it has to be more of an arbiter than a player. More state means less economic growth, more debt and more stagnation.
State salaries have been in decline for many years, with the loss of motivation of their employees.
Creating wealth by the private sector is a condition sinequanon to increase remunerations in the public service in a sustainable way, that is, without creating more public debt, not jeopardizing the sustainability of companies.
Increasingly taxing what has been in existence for 26 years strangles companies and makes society as a whole poorer. The cake is always the same, so the slices are smaller and smaller.
Getting out of this cycle of stagnation is essential and the creation of wealth should not have ideologies, but unite the Nation in this vital objective. For this, the various party agents should explain to people the urgency of what is at stake, as urgent as ecological measures with a view to maintaining the sustainability of the planet.
Author Armando Barata is an economist, specialist in tax matters
Note: article published under the protocol between the Sul Informação and the Algarve Delegation of the Order of Economists