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LABOUR-ARGENTINA: Informal Economy Just Won’t Shrink

Marcela Valente

BUENOS AIRES, Jun 12 2007 (IPS) - The Argentine economy has been growing steadily for over four years, and unemployment has fallen 14 percent in that period. However, experts say that nearly half of all jobs are precarious and/or of poor quality.

Argentina’s gross domestic product (GDP) has increased by an average of nine percent a year since 2003, while unemployment had dropped to 9.8 percent by the first quarter of this year, according to the National Institute of Statistics and Censuses (INDEC).

Unemployment had soared to 24 percent after the late 2001 collapse of the economy which triggered the worst crisis in Argentine history.

But the increase in the number of jobs over the past four years has not been accompanied by an improvement in the quality of employment.

The proportion of workers who are not “registered” for taxation and social security purposes still stands at 44 percent – just six percentage points below the proportion seen at the start of the economic, social and political crisis that toppled president Fernando de la Rúa in December 2001.

“The fight against unemployment does not in and of itself lead to a drop in precarious employment,” Noemí Giosa Zuazúa, with the Interdisciplinary Centre for the Study of Public Policies, told IPS.


Who are these unregistered workers lacking social security coverage and labour benefits? Many work in industries like construction, textiles or leather, in formerly public enterprises that have been privatised, or even as public employees. There are also waiters and waitresses, domestic employees, pollsters, delivery persons and customer service employees.

Employment became increasingly precarious after free-market structural adjustment reforms, including measures that “flexibilised” the labour market, began to be implemented in this country and the rest of Latin America in the 1980s, say analysts.

There are so many unregistered employees and workers in Argentina that the first Coordinadora de Trabajadores Precarizados (roughly “coordinating group of precarious workers”) was formed early this year to enable them to share their experiences and design resistance strategies in the face of employers who they say submit them to inadequate, and even exploitative, working conditions.

Giosa Zuazúa said the relatively new and deeply-rooted precariousness of labour and employment conditions is the result of the transformation and breakdown of the global production chain.

Large companies now contract out services to smaller firms that employ people without providing social security coverage or employment benefits like paid vacations and year-end bonuses.

“In other countries, after outsourcing became widespread, regulations were established to ensure that large firms showed solidarity with or took responsibility for the outsourced workers by subsidising them to some extent,” she said. “But in Argentina there are no such norms or rules yet.”

To combat the phenomenon of unregistered employment, the authorities implemented in 2003 the National Plan for Employment Regularisation, which has already carried out 400,000 inspections around the country. But the very slight fall in the proportion of unregistered workers, from 47 to 44 percent in four years, has led analysts to conclude that the controls are insufficient.

Giosa Zuazúa said the government strategy ignores the changes in the production chain in labour-intensive sectors like textiles and footwear, where transnational corporations outsource production to sweatshops in which workers, mainly undocumented immigrants, are employed in slavery-like conditions.

A less drastic situation, but one that also contributes to increasing the number of unregistered workers, is found in the large privatised utilities that subcontract other firms to provide, for example, repair crews who work in unstable jobs without legal benefits, she added.

“It is no longer sufficient to merely inspect a company; what is needed are regulations for outsourcing and subcontracting,” she argued.

Ernesto Kritz with the Society for Labour Studies also said that although unemployment has dropped, a large proportion of workers continue to operate in the informal economy.

In the think tank’s latest report, released this month, Kritz says Argentina has reached “the end of the cycle of high unemployment” which began in the mid-1990s, during the “neoliberal” government of Carlos Menem (1989-1999).

However, he noted that in comparison with 1994, when the unemployment level was similar to today’s, the proportion of workers in the informal economy is 13 percent higher now. That clearly shows that the quality of employment has worsened, which in turn translates into more negative social indicators, he said.

Artemio López, with the Equis polling firm, had already pointed last year to the worrying persistence of precarious labour in a context of high economic growth and declining unemployment.

The expert said that although the proportion of unregistered employees had dropped somewhat, the gap between informal and formal sector worker had never been so large.

According to INDEC statistics, workers with precarious jobs earn on average 37 percent of what is earned by registered workers with job stability, social security, paid vacations and the right to severance pay.

These figures show that the distance between the formal and informal labour markets is much greater than in 2003, when precarious workers earned 49 percent of what formal economy employees earned.

As a result, 40 percent of informal sector workers are poor – nearly six times the proportion of poor registered employees.

López called for specific policies to reduce this “hard core of precarious workers” and improve the distribution of income.

However, the Labour Ministry’s response to the phenomenon has been to merely increase the number of inspections.

 
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