LABOUR-ARGENTINA: Job Instability and Continued High Unemployment

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Dec 4 1997 (IPS) - Critics say recent laws that have made Argentina’s labour market more flexible have only reduced job stability and lowered the cost of labour, while doing little to nothing in pulling down unemployment.

Since the implementation of Argentina’s “convertibility plan”, which pegged the peso to the dollar and stabilised the economy in 1991, the unemployment rate shot up from six to a high of 18.4 percent last year. The drop to today’s 16.4 percent can be explained by the rise in the number of “contracted” employees.

“Eighty percent of the new jobs created over the past two years arose from contracts,” said the owner of a steelworks concern, in defence of that form of hiring.

The unions, meanwhile, do not mince words when referring to what they call “garbage contracts.”

The category of contracted workers is provided for by a clause in Argentina’s labour legislation, according to which employers can hire veterans of the 1982 Malvinas war, disabled persons, people over 40 or women for two years, with no costs beyond wages.

Labour lawyer Beatriz Fontana told IPS that many employers send her resumes of job applicants, asking for her advice as to which form of contracting they should be hired under in order to maximise the company’s competitiveness.

“If they are women, it doesn’t matter whether they are of child-bearing age or are the most qualified professionals, the recommendation is that they be hired for two years under that sort of contract, to avoid social benefits, medical care and severance pay costs,” she said.

The case is only one example of a new labour scene that has not only changed the lives of those left without jobs, but also of those who work but lack the stability enjoyed until only a few years ago.

It is becoming increasingly difficult for Argentinians to plan for the future. According to a survey by the Association of Labour Studies, 36 percent of those interviewed predicted that their job situation would become worse over the next year.

Nevertheless, the government and business sector in Argentina contend that the only way to create new jobs and make a dent in unemployment is through laws making the labour market even more flexible.

One of the conditions set by the International Monetary Fund when it extended new credit facilities to Argentina was the approval of a labour reform bill by July 1998.

But the political opposition is resisting further flexibilisation, which it argues has only contributed to greater job instability. The leaders of the centre-left Alliance, the main opposition party, told the business sector that they would not back any such initiatives in parliament, although they did agree to discuss changes in hiring regimes.

The unions, meanwhile, have agreed to negotiate, but under certain conditions.

The unions are divided. The (Peronist) General Labour Confederation is negotiating with the government. It says it will accept further cuts in severance pay, but is standing firm in its refusal to decentralise collective bargaining by giving priority to company unions over trade-based unions.

The leaders of the Confederation are calling for an elimination of the “garbage contracts.” But they have agreed to an unemployment fund to which employers would contribute on a monthly basis. Severance pay would come out of that fund, which would also replace unemployment insurance.

The Argentine Workers Central – where Fontana works as a researcher – argues on the other hand that flexibilisation has not provided results, and will not do so in the future, because the problem does not lie in Argentina’s labour legislation but rather in its economic model, which is based on exports of primary products and requires low labour costs.

Fontana’s research indicates that the loss of hard-won labour guarantees and the newly flexibilised job market have not alleviated unemployment as designed, but have only hurt job stability.

Since 1989, temporary hiring contracts have been authorised, severance pay and employers’ contributions to social security have been reduced, and the law on work-related accidents has been reformed to prevent heavy burdens for companies.

While the labour code was being altered, a number of unions agreed to negotiate prior agreements, and under pressure from employers and the threat of losing jobs, many sectors relinquished rights considered basic only a few years ago.

They allowed their vacations to be split up, agreed to an extension of the probationary period for employees to six months, accepted a longer than eight-hour working day without overtime, and agreed that the mandatory Christmas bonus could be paid in quotas.

Fontana added that a shift had also been seen in court rulings. Up to the 1980s, the burden of proof was on the employer, with an implicit understanding that the worker was to be protected, a tendency that has now taken an about-turn, she explained.

“The measures applied since 1987, and even the high unemployment rate which acts as a de facto element of flexibility in the labour market, have neither pulled down unemployment nor boosted business competitiveness,” she asserted.

“Labour legislation will not resolve the problem of unemployment, which is an economic policy matter, not a question of laws,” she added, arguing against further measures advocated by the government and business to make the labour market even more flexible.

In Fontana’s view, the government should instead foment active policies for developing an industrial sector that would require stable personnel, with on-going training and wage incentives.

“In Argentina, unemployment is not a consequence of the incorporation of technology, but of the destruction of jobs caused by the opening of the economy that forced a number of small and medium-sized businesses to close their doors,” she said.