Approach to Economic Goals in Colombia. From Inflation to Unemployment and Monetary Poverty.

Inflation, interest rate, exchange rate, GDP, fiscal deficit, current account deficit, foreign trade, public debt and unemployment are key economic indicators to know the country's economic performance. This macroeconomy is joined by monetary poverty and inequality, which are no less important than those in measuring the economic development and well being of the population.

However, the monitoring of these indicators is differentiated by the frequency of their reports. There are some that are known daily such as the exchange rate or the interest rate, others are monthly such as inflation and unemployment and there are quarterly ones such as the GDP, others are semiannual such as the fiscal deficit and debt according to official reports. in which they are presented. The furthest behind in appearing are those of monetary poverty and inequality.

In fact, in september the figures on poverty in Colombia were released by the official source. These results present data for the year 2.022, that is, they appear 9 months after the end of the year and also after more than a year after the figures for the year 2.021 have been reported. As can be seen, the periodicity of the provision of information lags far behind other official information such as inflation, unemployment and foreign trade and that of the Superfinanciera on the banking system, which are released the results within the month following the date or in the case of the financial system with a delay of two months.

In addition to the "monetary" poverty figures, which is what the previous paragraph refers to, the results for the year 2.022 (which are related to that) regarding the income of the Colombian population by social class came out until november 22 , two months after the previous ones and just one month away from closing the year 2.023.

The results of poverty and social classes are as follows. First, it should be noted that in these calculations, those whose income per person is considered poor (for example, in households where one or more work and others do not, the income is divided by the number of people in the household) less than 396.864 pesos. (which is known as the poverty line) vulnerable are those with incomes between 396.864 and 781.120 pesos per capita, the middle class with incomes between 781.120 and 4.206.033 pesos per person and the upper class those with per capita incomes higher than that limit.

In monetary poverty, the country registered 36.6% of the population in that condition (18.3 million inhabitants) and within which extreme poverty reached 13.8%, it is also called indigence. By social class, the complete results are: poor 36.6%, vulnerable 30.7%, middle class 29.9% and upper class 2.8%.

When adding the poor and vulnerable, there are 33.7 million, 67% of the Colombian population. Middle class 15 million and upper class 1.4 million.

When compared to the year 2.021, the poor decreased -1.3 million, the vulnerable increased by 0.8 million, the middle class increased by 1.1 million and the upper class increased by 0.1 million.

From the previous results, some observations are the following. Although monetary poverty has decreased from 39.7% to 36.6% in the last two years, it is still high and even more so when compared to other OECD countries that present results between 15% and 25%. Inequality is high with records of 0.556 in 2.022 and 0.563 in 2.021 in the Gini coefficient, while in those OECD countries it is around 0.35.

In social classes, the poor and vulnerable more than double the middle class, which makes it different from other countries by placing it in a lower range than countries in Europe and North America where the middle class is larger than the other classes. For its part, the upper class contains all income levels, whether close to or much higher than the per capita limit from which this classification starts, that is, it includes the highest income levels which at the top belong to the smallest amounts of inhabitants.

An approximate approach to the comparison of income per legal minimum wage and income by social class allows us to highlight that this salary for the year 2.022, which was 1 million pesos, is well above the per capita income of those classified as poor and the vulnerable, and even a part of the middle class, which demonstrates two things, the state of informality of work among the poor and vulnerable, which is why they work with incomes less than the legal minimum wage, and on the other hand, that the legal minimum wage level is high in Colombia since there is a large population with income from work below that level. That is another way of looking at what some experts and analysts have tried to explain about the high range of this minimum wage and that it is equivalent to something like 70% of the average wage.

On this issue, it is pertinent to note that the negotiation of the increase in the legal minimum wage every year in december has a very limited scope for workers since, as shown before, there is a large poor and vulnerable population with incomes below that level and at that whatever is agreed upon increase in this salary does not apply to them. This corresponds to the official calculation of work informality of 56% of workers who are not included in this negotiation. For this population, an increase in formal jobs due to a greater commitment from the private, industrial, commerce, agriculture, financial and construction sectors would take them out of informality and thus obtain greater income and connection to social security.

Also in this note, the frequency and periodicity of macroeconomic information was mentioned at the beginning, including social indicators such as poverty and inequality. It is necessary to give it greater frequency and opportunity to know the data of the latter since it is key for the certainty of the analysts and officials who make decisions within the management of public policy and so that together with the private sector in their activities, they dynamize and develop the country's economy.

Knowing with a greater frequency, perhaps quarterly or semi annually at first, those data that are currently lagging, would also allow, together with other indicators, to think about the possibility of establishing goals or ranges towards which the economy should move. Inflation, the fiscal rule and the debt anchor already have them. Unemployment, fiscal and current account deficits, GDP and monetary poverty (and inequality) require it since in addition to reducing inflation towards a goal, it is also required to do the same with unemployment and monetary poverty.