LABOUR-ARGENTINA: Crisis Looms Among Work Force

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Feb 22 1995 (IPS) - Latest figures on unemployment in Argentina — now in double figures – make grim reading and threaten to spark a major crisis for the nation, economists say.

According to figures from the National Institute of Statistics and Census unemployment nearly doubled in the three years from 1991 to 1994 – jumping from 6.3 percent to 12.2 percent.

Additionally, 10.4 percent of the work force is under-employed, the Institute said.

Some 2.5 million workers are in need of government assistance.

The scarcity of jobs has particularly affected the nation’s youth as, in the past decade, unemployment has trebled among workers in the 15 to 19 age bracket. The knock-on effects of the Mexican financial crisis has made job prospects even tougher for Argintine youths.

“It is very possible that unemployment will reach 15 percent this year, as workers are being dismissed faster than other sectors can absorb them,” said economist Claudio Lozano.

The Mexican devaluation in December compounded the problem. It caused an estimated 3 billion dollars of capital flight and,in turn, provoked widespread illiquidity while increasing the cost of both public and private financing.

The current crisis has caused both government and private economists to revise the 5.5 percent increase in Gross Domestic Product predicted for 1995 down to two or three percent.

“If employment was increasing over the last four years, whene the Argentine economy had an average growth rate of eight percent, what can we expect this year – with growth three times smaller?” Lozano asked.

He explained that during the last few years, State reforms and privatisation have led to many public sector workers losing their jobs and many private businesses also closed when they were forced to compete warehouses full of imported goods.

Additionally, as in other countries, technological advances have meant a reduction in the numbers of staff needed to achieve the same level of production.

Lozano explained that the Government’s labour flexibilistion plan – an initiative to decrease the legal obligations of employers and thereby increase employment – is actually having the reverse effect. It has helped some companies to reduce severance payments and make it easier for them to reduce their workforce.

Since the economic conversion plan was introduced in March 1991, the percentage of young unemployed has increased from 9.5 percent to 30.5 percent of all jobless workers.

The scarcity of work has had a devastating effect on the young and has been linked to a large increase in teenage drinking, which has resulted in youths being hospitalised in a coma in the most severe cases.

This so called ‘Tequila effect’ is “preventing the young from even looking for a job” said Cordoban provincial leader Ruben Marti, “They are being driven to drink because they feel they have no future.”

Other civic leaders agreed that unless the ranks of the unemployed were reduced, social problems would get worse – and threaten the stability of the economy.