SUSANA KIDYBA - ECONOMIST WITH DEEP EXPERTISE IN NATIONAL STATISTICS

Statistics are essential to know where a country stands on many fronts, where it is going, and to help policy-makers put solutions in motion. We might dare say that they are, no less, the roadmap any statesman needs to know the next steps to take.  

Susana Kidyba is a well-reputed economist specialized in national statistics who will shed light on their importance and - therefore - subliminally help us grasp what their insane and perverse destruction or distortion meant. 

Susana Kidyba

Economist graduated from the University of Buenos Aires

Researcher in the PICNA program at University of Buenos Aires

Professor of National Accounts at the School of Economics, University of Buenos Aires

Coordinator of the Master’s degree in Statistical Generation and Analysis at UNTREF

“In the new share economy in fact everyone pays taxes. Every party is under the radar of the tax agency. ”

First things first, let’s begin by explaining the importance of statistics

Statistics are important because they allow pinpointing the problems or characteristics of a country, whether structural or short-term. They are essential to know the socio-demographic conditions, that is, all things related to population and households. Economic statistics are also important to measure how a country’s production and employment are doing. And, of course, these statistics should be used in the design of economic and social policies. 

Going into deeper detail, what are the different layers of statistics?

Statistics have basically three sources or triggers of data which will later become some economic or social indicator. The origin may be a household census or survey which offers a picture of the characteristics of the population - in the case of Argentina, we have a quarterly employment survey, which measures the population’s socio-economic conditions, that is to say, unemployment and employment rates, poverty rates, etc. The target of economic statistics are the economic actors, the companies, the banks, the stakeholders in the production or the economy of a country through an economic census or an economic survey measuring either volumes or prices of the economy. And what has been lately used worldwide and in Argentina as well, the administrative records, which is information emerging basically from the government administration such as tax records, social security, and the Central Bank’s records. 

Is the methodology used in Argentina the one used in the rest of the world?

In fact it has to be the same as the one used in the rest of the world because methodologies are based on international guidelines, which rule any statistic to be performed. Every statistic goes by international guidelines, the employment statistics by ILO guidelines, the financial statistics by the IMF ones, the economic statistics by the United Nations Statistics Division ones. Virtually all the international agencies suggest the methodologies to be used, otherwise countries would not be comparable. Measurements demand homogeneity. Of course, each country does adapt the survey to its own characteristics, but the methodology and the way to calculate indicators are based on international agreement. 

Has the methodology changed over time?  

The methodology changes as the object to be measured changes. For example, a price indicator will always be a price indicator, but the analysis may change because in the past, for instance, sales were measured exclusively based on brick-and-mortar store sales and now we face online sales, therefore the analysis has to change so that price indexes factor in this component. 

What are some of the major variables measured?

There are some indicators measured that every country measures or should measure: prices (retail and wholesale), the labor market (employment and unemployment), and the GDP (Gross Domestic Income on the side of supply, demand, and income) such indicators are built on different surveys (basic statistics) and a theoretical framework that must be explicit. Every time an indicator is presented, there should be a methodology explaining the assumptions on which it was built. Also, each indicator has a different level of use of basic statistics and cabinet estimates. For example in Argentina, employment and unemployment rates emerge from a permanent household survey and all the data collected is made known, in the case of the Consumer Price Index (CPI) the indicator is built based on the price survey carried out periodically and there is a cabinet job that is basically the incidence or the relative price of each product whose price is measured. In the case of the GDP, all basic statistics are used and it is very important the cabinet work as its estimate is based on the basic macroeconomic balances. 

How is the number of formal and informal workers reached?

Well, in Argentina we have one of the most developed administrative records, the social security, which includes the universe of formal workers. In this case we are not speaking of a survey, we are speaking of records. But of course, we also have all the other side, that of informal workers, which is obviously never re;orted in a company’s survey. In that case, we try to estimate the number of informal jobs by matching the information of both sources - that of households and that of companies - and by standardizing the variables. 

In some companies, in all likelihood small- and mid-sized ones, there are workers issuing invoices as if they were self-employed even when they are in-house on a full-time basis and, they are totally uncovered, with not even a bare minimum of social protection. 

“In the agricultural sector, informal employment is not so much in cereal production - highly technified - as in stockbreeding, fruits, and legumes ”

That’s right. Juggling some numbers, in Argentina there are roughly 20 M jobs, out of which some 15 M are wage-earners, and 5 M are not. Now, out of those 15 M, 10 M are formal workers and 5 M are informal workers. And, in turn, out of those 10 M formal workers, 3.5 M are in the public service, and out of the 5 M informal workers, 1.6 M are domestic helpers. Taking into account that just about half of the self-employed workers do not pay taxes, we can see 35% of jobs are unrecorded. Nevertheless, this has to be analyzed very carefully as these figures should not be transferred to other variables. Thirty-five percent  informal employment does not imply that the economy is 35% informal because all in all the productivity of such informal employment is lower that the productivity of the formal one. 

Of course the informal economy is not only informal employment, but also unreported sales and income on tax returns or companies paying part of the wages in an unreported fashion. 

That’s just it, some businesses pay part of the wages under the table in order to pay less in employment taxes or severance pay, but which proves an obstacle when the worker tries to get formal loans.  

Yes, that is what in the jargon is called grey salary.  

Does the agricultural industry show much informal employment as it has once been accused of?

The agricultural sector shows some informal workers, but even in that case we have to go deeper because the sector is very diverse in terms of productivity (production and number of people employed), because the output of cereals and oilseeds is the prevailing one in production, but in job terms is not the most important as at present they use little labor because they are highly technified or they simply outsource land-related tasks. I can say that informal employment in the agro-industry is related to other activities such as fruit and legumes, agricultural services, stockbreeding, but not in the case of cereal production. 

What about the construction sector?

Well, the construction industry shows a lot of informality, but then again it is not the large companies engaged in public works, but small companies. 

But of course the informal economy, as you said before, is not limited to employment …

Far from it. There are many companies that constantly report negative results, but we can make use of several statistical techniques to detect it, which are cabinet statistics techniques. 

What role does money-laundering play?

Even when I do not know much about money-laundering, I can say that it is the inverse process to underreporting or not reporting, it is money you want to get into the economic circuit and, as in the case of, for instance, the hotel industry, you might report high occupancy when there is not in order to funnel illegal money into the formal economic circuit. 

Business people complain that labor costs are very high. Is this so or is it an unwarranted complaint?

They are indeed very high, at around 29%. But there is also a conceptual mistake. When a formal worker agrees on a wage with the company he is going to work at, he has what it is known as a gross salary. On that salary, by law, the worker will have deductions known as worker’s contributions. Part of that salary will go to the pension system, part to the social security, part to the National Institute of Social Services for Retirees and Pensioners. The employer also has to make contributions on the worker’s salary: the worker’s pension system, family allowances, social security, worker’s compensation. That is, with a gross salary of 100, the employer has to pay $130 and the employee receives $80 approximately. 

Is there any way of lowering these labor costs to make the labor market more dynamic, to give it a boost?

“Argentina uses the statistical methodology suggested by international agencies”

It is hard because the money from labor costs have very clear allocations that would be very difficult to replace, the most important of such allocations is pensions. 

In Brazil there was a drastic labor reform through which, for example, an employee may have an in-house job every day but not be on the payroll, and he / she invoices for their services, how viable might that system be in Argentina?

 Well, in fact it exists in Argentina.  

But it is illegal.  

In fact it exists in the public service. 

Well, as far as I know, businesses have always complained about the fact that labor laws use different yardsticks for the public sector and the private one, and that the state does not do what it preaches. 

Perhaps when workers are dismissed and they sue the company, and they can prove that they met all the requisites of a wage-earner, they may win the lawsuit. 

As I am not a lawyer, I would not be able to tell you if it’s legal or illegal, but I know it exists, and I have not heard of any company that has been penalized because of this.

What about severance pay, which has always been an awkward issue in Argentina? 

“Uber and Airbnb are minor players next to the streaming services providers like Netflix and Spotify ”

At present, a sort of fund is being discussed just as in the case of Brazil, which would be made up of monthly contributions - in addition to the existing ones - so that when a worker is dismissed, he/she will receive the money they have in that fund, but the debate has just begun so aspects like the rate the employer should pay and so on and so forth are not defined yet. Severance pay is set by law and it will never ever disappear. This fund would be a different way of financing it, that’s about it. In Argentina, the worker has been highly protected in the event of a dismissal for a long time. 

Finally, what happens with the advent of the new virtual businesses, but particularly with all these companies of share economy such as Uber, and Airbnb, which do not seem to be so “recordable” so to speak as in traditional businesses - even online ones such as Amazon? Does the money or part of it fall through the cracks?

Ok, let’s take Uber as an example. In principle, to consider what a company produces as domestic production, such company has to be in the national territory. If Uber has an office in Argentina, as the manager of all the cars giving rides, it is on the radar of the tax bureau otherwise it would not be able to operate. Now, Uber earns a commission on the money charged by the drivers. And in turn, the drivers, which I believe are self-employed have to invoice for their services. So everyone is legally registered. In the case of Airbnb, which I believe does not have an office in Argentina, does not operate in our country, but it does organize the rent of a temporary lodging in Argentina. That lodging belongs to someone living here (Argentina resident) who collects money for renting out his/her property, and the commission the company charges the owner of the property is the production for another country, which means an export of a service for the owner of the property and an import of the service of Airbnb.

Another new phenomenon is the tax that will be paid on streaming services such as Netflix and Spotify. 

It is new, but it is also captured. And in this case, it is important in terms of the amount of money collected. In the case of Uber and Airbnb, we are speaking of minor cases in terms of all the services and goods related to technology which are gaining more and more space. And again, when you use Netflix, you are importing a service and that is recorded on the balance of payments. You are paying for that service and such payment is recorded in the exchange records just as when you buy a book from Amazon. 

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