Economy & Trade, Headlines, Labour, Latin America & the Caribbean

ARGENTINA: Workers Salvage Factories and Jobs

Viviana Alonso

BUENOS AIRES, Jan 2 2004 (IPS) - The workers in a wool-washing factory on the southside of the Argentine capital could not have dreamed in late 2002 that a year later they would be working and bringing home a paycheck to celebrate the year-end holidays.

A year ago, like tens of thousands of people in South America's third-largest economy, they were fighting to keep their source of employment alive – a company that was falling apart, but which today is a debt-free cooperative that is reinvesting a portion of its profits and even has plans to start exporting.

And in the Buenos Aires neighbourhood of Palermo, Gabriela Farace and six other schoolteachers celebrated their first year-end holidays as owners of a day care centre where they worked as employees before they took over when it was on the verge of bankruptcy due to heavy debt and poor administration.

Around 130 metallurgical, textile, food industry, paper and ceramic factories have been revived by their workers in Argentina, which is slowly pulling out of a severe economic crisis that peaked with the collapse of the Fernando de la Rúa administration in December 2001.

The ''recuperated'' factories and businesses, which were falling into bankruptcy or had already been abandoned by their owners, now belong to some 10,000 workers, the members of cooperatives grouped in the National Movement of Recuperated Factories (MNFR).

The movement is led by a lawyer, Luis Caro, who is a delegate of the social pastoral of the Roman Catholic Church diocese of Avellaneda-Lanús, two populous industrial districts on the outskirts of Buenos Aires.

''Workers around the country are demonstrating that it is possible to recover thousands of jobs in the framework of a system built on solidarity, where mutual needs form the motor of a basic subsistence economy,'' Caro said in a conversation with IPS.

On Dec. 29, with support and legal advice from the MNFR, 58 workers in the Brukman textile factory finally met with success after eight months of struggling to get the Buenos Aires city government to expropriate the company's installations and hand them over to the workers' cooperative in ''gratuitous bailment'', which means the cooperative will use and take care of the installations without paying any charge.

The expropriation of the Brukman factory was the latest triumph of the movement of workers trying to hold on to their jobs and get companies back on their feet.

The movement began in August 2000, when the worsening of a recession that began in 1998 led to widespread closures and lay-offs in the industrial belt of the Greater Buenos Aires, a city of 12.6 million.

At that time, Caro, as a Catholic Church lay worker, was participating in the struggle of workers laid off by a metallurgical factory in Avellaneda that had fraudulently declared bankruptcy.

The workers occupied the factory and filed a lawsuit against the owners, demanding that shares from the company be used to guarantee payment of their back wages. The courts ended up expropriating the factory and allowing the former employees to run it.

That marked the birth of the movement's first cooperative, ''Union and Strength'', which produces and exports metal pipes.

After the December 2001 economic and financial debacle, unemployment soared to nearly 25 percent in this country of 37 million, and the poverty rate climbed to over 50 percent.

Since then, thousands of workers have organised to keep their factories running, backed by legal rulings and decisions by provincial legislatures or city councils.

A large number of companies filed for bankruptcy in 2002, and in many cases the proceedings were completed in 2003. According to Veraz, a private national credit-rating agency, the number of bankruptcies was 75 percent higher in 2003 than in 2002.

In the first 11 months of 2003, 2,680 companies went under in the city of Buenos Aires alone, compared to 1,299 in 2002, reported a credit risk rating agency, Fidelitas.

''Since 2000, groups of workers have been deciding not to leave the factories when they go bankrupt or when they are abandoned by their owners,'' said Caro.

Gregorio López is president of the Lavalan cooperative, ''where all workers, from the professionals to those who sweep the floors, earn the same salary, and where all decisions are adopted by the assembly, which is sovereign.''

The wool-washing factory was abandoned last year by the owners, who were no longer even paying the water bill, indispensable for the factory to function.

Before the owners left, López and the rest of the employees were working ''between 14 and 18 hours a day for less than 500 pesos (170 dollars) a month,'' López told IPS.

Today the 60 members work eight-hour days and earn three times as much. The cooperative is debt-free and plans to invest part of the profits in more modern machinery, with a view to exporting in the future.

The average monthly income of members of cooperatives running ''recuperated factories'' is 350 dollars, although ''in one factory, the workers earn around 1,000 dollars a month, and at the end of 2003 each of them received an extra 5,000 dollar bonus. And that's just two years after they began running the plant themselves,'' said López.

Farace and her fellow teachers have also had a positive experience. They were working in a poorly-administered day care centre in a building without upkeep, and the centre was about to be evicted because it wasn't keeping up on the rent.

They moved to another house and kept the centre going with support from the MNFR and the help of the parents, who donated cribs and toys, and painted and fixed up the new centre.

The Palerma Day Care Centre officially became a teachers' cooperative last February. ''We have no debts, the service has improved, and the number of children – from newborns to four-year-olds – has tripled,'' said Farace.

She said that she and her colleagues now work ''less hours and in better conditions than before,'' are paid regularly, and are able to provide more complete services.

But the workers fighting to keep factories and other businesses running have run into resistance, even from trade unions, said López. ''They were totally opposed to the cooperatives because they were losing members, and in some cases things escalated to verbal attacks and even blows.''

The movement has also had to fend off attacks from banks and law practices, which do not want to see cooperatives emerging ''because they earn a lot by liquidating companies that declare bankruptcy,'' said Caro.

However, the movement has awakened interest and support among public officials, lawmakers, professionals and academics.

University professors and students have approached the cooperatives, not only to offer support, but to gain a more in-depth understanding of this new form of organisation that has emerged in response to Argentina's severe economic crisis.

Javier Ona, an engineer who belongs to the MNFR's Technical Support Group, described the movement as ''forming part of the social capital of an Argentina that won't give up, and that forges, with its own skills and capacities, competitive companies out of the ashes.''

He pointed out that the very companies that went under or were loss-making when administered by their owners turned out to be viable when they began to be run by the workers.

''In these factories, workers have chosen to organise in cooperatives, but they have taken into account the bad experiences of traditional cooperatives,'' said Caro.

''All decisions are reached by assembly,'' he explained. ''It is virtually a form of direct democracy, and external management is not accepted.'' Both marketing and administration are handled by the employees themselves.

Outside financial assistance has not been accepted, because those offering the capital were interested in becoming associates or partners, he added.

After meeting with Caro and representatives of the cooperatives, left-leaning President Néstor Kirchner announced in early December that he would open a two million dollar credit line to help the recuperated factories improve their performance.

Under the new scheme, soft loans of up to 65,000 dollars will be made available to the cooperatives, requiring no guarantee, at an annual interest rate of seven percent.

In October, the Buenos Aires city council voted to support the process of recuperating factories, and exempted the cooperatives from paying taxes, while authorising them to use the brand names that identified the companies before they went under. It also arranged for the workers to pay off machinery and equipment at the prices they would fetch at auction.

''It is essential to eliminate the legal vacuum that surrounds these processes, since there are around 5,000 factories that are sitting idle and could be recuperated by the workers,'' said Caro.

''It is indispensable to modify the bankruptcy law so that a factory can continue being run by a workers' cooperative, credit can be extended to help the workers purchase machinery, the installations can be directly assigned to the employees, and their rights will be respected,'' he said.

The Kirchner administration has expressed an interest in amending the bankruptcy law, and the national people's defender (ombudsman), Eduardo Mondino, has even drafted a new version of the law.