ARGENTINA: Reforms Legitimate De Facto Labour Setbacks

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Apr 27 2000 (IPS) - Government-sponsored labour reforms aimed at making hiring and firing easier in order to make conditions in Argentina more attractive to investors, basically legitimate an already precarious employment scene, say analysts.

Despite a protest by some 15,000 workers, the bill made it through the Senate Wednesday and is slated for final passage by the lower house of Congress.

The bill will decentralise collective bargaining by favouring deals reached on a company-by-company basis over national-level agreements.

The reforms pave the way for the elimination of long-standing agreements between workers and employers, and expand the probationary period of new hires from one to three months.

They also reduce the social security contributions of employers who end up keeping a worker on past the probationary period, and grant a bonus to companies who take on heads of families who are over 45.

The political achievement, passage of the reforms that are strongly supported by the International Monetary Fund (IMF), will thus be chalked up by the government of Fernando de la Rúa, in office since December, after eluding the administrations of Raúl Alfonsín (1983-89) and Carlos Menem (1989-99).

Unemployment currently affects 13.8 percent of the economically active population in Argentina, a country of 37 million. Another 14.3 percent of the population is listed as under-employed, while 40 percent of workers are hired on the black market.

Hundreds of thousands of employees are estimated to have already signed agreements with their companies entailing setbacks for their labour rights.

In the past five years, companies and workers have signed 941 agreements rolling back previous gains, such as mandatory breaks, vacations or overtime pay. Many of the deals were backed by the same trade unionists who are now loudly protesting the reforms.

The teamsters, one of the unions that has put up the stiffest fight against the new bill, previously allowed the Metrovias company, which runs the Buenos Aires subway, to cut the minimum 12- hour interval between shifts for the engineers driving the trains, which carry 200 passengers at rush hour.

The carmakers union agreed to the elimination of fixed schedules and overtime pay, similar to a deal won by a chain of ice cream stores according to which employees work just two or three hours on days when the weather is cold, and up to 12 straight hours on warm days, with no overtime pay.

Unemployment in Argentina, which peaked at 18.6 percent in 1995, was cited as the most pressing concern by 79 percent of those recently surveyed by the polling firm Graciela Romer y Asociados.

While Menem successfully reined in inflation during his two terms of government, he had little luck with unemployment, which has soared by 146 percent since 1990.

Prominent former economy minister Domingo Cavallo recently stated that it was depressing to look for work today in Argentina. Thousands of workers, tired of being turned down and unable to afford the cost of bus tickets or gas for their cars, have given up on looking for work and are no longer counted among the ranks of the unemployed.

The new reforms aimed at attracting increased investment basically give legal status to changes that have already taken root in the labour market because workers have preferred to give up some of their hard-won rights rather than lose their jobs.

The first attempts to push through reforms making the labour market more flexible date back to the first year of the Alfonsin administration, when unemployment stood at a mere six percent. The initiative was soundly defeated at that time.

Menem also failed in his attempts, with opposition from legislators of his own Justice (Peronist) Party, and from the country’s largest union, the General Confederation of Labour (CGT), affiliated at that time with the ruling party.

The measures, seen by the IMF as essential to the revitalisation of Argentina’s economy after the 1998-99 recession, are opposed by a “rebellious” sector of the CGT, which has called a general strike for May 5th.

The “renegade” CGT leaders say they are not opposed to “modernisation” of the economy, pointing out that in fact they had already agreed to re-negotiate hundreds of collective bargaining agreements.

But they argue that the new law will diminish the influence of trade unions by allowing company-by-company negotiations at a time when wages are sliding.

The setback suffered by workers’ rights in the past few years in the context of soaring unemployment was mentioned by the United Nations Development Programme’s 1999 report, which warned that the number of workers hired without contracts had risen by nearly 40 percent in recent years.

The UNDP pointed out that Argentina, where the political weight of workers has long been channeled through powerful trade unions affiliated with the Justice Party, was facing the risk of moving closer and closer to an “Egyptian-style” system under which workers agree to sign a blank form in order to secure a job.

Precarious labour conditions are already the norm in Argentina. According to a report by the Society of Labour Studies commissioned by the government, which served as a basis for the labour reform bill, nearly half of all wage-earners work overtime with no extra pay. In the survey, 73 percent of respondents said they agreed to that situation in order to keep their jobs.

And 69 percent of those interviewed said they earned the same as those who preceded them in their jobs, while 29 percent earned 10 to 20 percent less than their predecessors.

The situation is compounded by the 250,000 undocumented immigrants – estimated by the labour ministry – from Bolivia, Paraguay, Chile and Peru, who are hired illegally at low wages, without benefits.

Labour police have uncovered sweat shops where undocumented textile workers suffer virtual slavery conditions, working for meals and for wages that are never paid.

Gustavo Caraballo, a labour laywer and former government official, said the reforms diminish the bargaining power of unions at a time when workers are already at a strong disadvantage in the labour market. He described the new law as “a true ‘counter- reform’.”

The De la Rúa administration, like its predecessor, sought support from the public by denouncing “corrupt” trade unions. The majority of Argentine trade union leaders live in posh houses, drive imported cars and invest in companies that hold public contracts.

But the low prestige of the union leadership, reflected in opinion polls, does not mean labour unions should be wiped out, said economist Claudio Lozano, who has ties to the unions representing public sector employees.