Employment

A society which does not assure  a fair distribution of Money puts it’s economic growth in a extremely vulnerable situation.

Practically since I remember caring about politics I remember the unfair vision of our businessmen and politicians in what concerns the distribution of the capital generated by economic growth.

Let’s start with employment. In the last year, right in the apex of the sovereign debt crisis 30 top managers of Portuguese economic groups have achieved yearly incomes superior to 1 million euros.  How hard can the life of professional manager be to justify a salary up to 170 times  bigger of a minimum wage. The answer could be that the wealthiness generated by his activity is 170 times bigger than the value created by a simple worker but then again most of these companies do not retribute their gains to base workers and basically the economic growth of such company usually, reflects a growing number of workers with the same limited social rights and over again near minimum wages.  This approach though, is quite simple and one could easily categorise it as just another socialist critic to the capitalist system and it’s tendency to overrule democracy by lobbyism. The truth is the capitalism has created many problems but also has given us the overwhelming advantages of fast technological development which has simply eliminated many of the basic needs of human beings at little cost. In capitalist democracies unlike some capitalist dictatures, hunger for example seems to have become an almost rare site, because the amounts of  waste food, generated by modern agricultural technics and food processing are more than enough to feed the poor and less fortunate, at least for the moment.

- To cut with the theories a little bit, the other day a relative of mine was telling me about an old lady going to the food donation bank to get rice for her chicken, something which in the times of Salazar would be absolutely unthinkable, because real subnutrition was happening a bit everywhere in the country. This was the time when stilling a chicken would almost surely get a person into jail.

-Anyway the point I really wanted to make clear in this little article, to which I have such clear statement in the beginning as starting point for this discussion is, if you don’t increase the income of base workers as your own business is growing you are basically accumulating capital in less hands. If you don’t give people legal working contracts that can give them a little stability in life for sure they will not be able to plan life. Higher paid people will tend to spend more on superficial investment, like for example paying more 10000 for an apartment to have an ocean view. Base workers will not create expectations and will live a life of no expectations and then again spend on commodities that can ease their lack of future, like technology which value decays exponentially with time.  That’s pretty much what I saw happening in my country for the past 15 years. Work has become more and more precarious with top growing business giving the worst examples, multinationals were not demanded to make the diference and the local business just followed these patterns with the ambition to get big. People did not stabilize their lives and spent money unwisely, capital was either concentrating on banks or corporations which found a way to secure it outside borders and investing in other growing economies. The people which did manage, with outstanding effort,  to start buying a house or invested in small businesses lost the ability to pay their debts to banks, banks started collecting large amounts of real estate from faulty payers, a huge amount of imobiliary became suddenly available decreasing prices both for renting and buying real estate.  A domino effect of value decrease, reduced the value of stock market acting companies  and the rest you already know.

-Another view of the importance of legal contracting, is the way how precarious work can totally distort the effective value of a business and totally misdirect further investment.

In a global economy where companies can relocate themselves within months, it’s unwise to support investment in companies which do not give workers legal working contracts with a duration compatible with the investment agreed which local governments and authorities no matter how many new jobs can be created.

A company can stay in a country for 10 years contracting minimum stable jobs and make subcontracts with 10, 15 or 20 satellite smaller companies, giving by themselves thousands of workers precarious working conditions, impoverishing  the country and moving on to another country  with tragic social consequences.

In the past years we have assisted  a number of companies abandoning the country  after our government giving away millions of euros in facilitated financing, tax benefits all in the name of jobs which were never solid and gave few people the chance to start something of their own.

What was the global balance of this political ingenuity? State bankrupcy. But more than that we are now even more dependent of this economical make up to be able to maintain interest rates wich can allow us to simply survive as a country.

For this reason a country wich does not put effort in assuring that for every working hour there is a well defined value, a contract and a paycheck receipt, is a country which is selling it’s working force on sale squeezing money out of borders every day.

I would risk to say that it’s more vital in a country to assure legal contracting than to avoid tax evasion to a certain point.  

Luís Pontes