LABOUR-ARGENTINA: Bad News Strikes Again, Despite Gov’t Efforts

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Jul 20 2000 (IPS) - Argentina’s Labour minister Alberto Flamarique, who earlier this year spearheaded the process to loosen labour standards, acknowledged that unemployment had risen from 13.8 percent last October to 15.4 percent in May.

The employment figures had been leaked earlier but were officially announced Thursday, just days before the launching of the National Employment Plan, which is to include subsidies for small businesses that hire new workers and financial assistance for the unemployed.

Unemployment and under-employment, which covers an additional 14 percent of the economically active population, are the number-one worry of 79 percent of the Argentinean respondents in a survey by Graciela Romer and Associates.

In the last 10 years, which coincide with the two terms of former president Carlos Menem (replaced last December by Fernando de la Rúa), prices were stabilised, the economy grew 50 percent and the economically active population expanded 30 percent. And unemployment shot up 146 percent.

Surprisingly, economic growth was accompanied by higher unemployment. But the De la Rúa government affirms that the figure will decline to the extent that conditions for production improve.

Economist Claudio Lozano, of the Association of State Workers, told IPS that a mere call for growth “does not resolve the problem of unemployment or of poverty” in this country, “because the (government’s) growth model reproduces patterns of concentration of wealth and social exclusion.”

To alter this pattern, the new government should abandon the monetary policy, implemented in 1991 by then Economy minister Domingo Cavallo, that ties the Argentinean peso to the US dollar, said Lozano. But the authorities are reticent to do so, fearing it would hurt public confidence.

However, the De la Rúa administration adjusted public accounts to reduce the fiscal deficit, considered the highest in a decade. Along with cuts in spending, subsidised work programmes for the unemployed dried up.

Just 6.8 percent of Argentina’s unemployed collect a government check, averaging 210 dollars per month. To obtain access to this six-month assistance one must have proof of loss of work, which is nearly impossible if payment was under the table, as is often the case.

De la Rúa also pushed through a tax hike as well as a labour reform package that legitimised de facto practices, reflecting the liberalisation of the labour market.

The labour liberalisation law, approved in April despite union protests, decentralises contract negotiations to allow agreements to be reached on an individual company basis rather than by economic sector. It also reduces the employer’s social security contributions and grants subsidies to companies that hire heads of family older than 45.

Argentina’s economic activity was hurt by the Russian crisis of 1998 and the devaluation of Brazil’s currency in early 1999, evident in a four percent drop last year, and is only expected to grow two percent this year, according to official forecasts.

Given this scenario, sociologist Artemio López, of the Equis consultancy, said unemployment would be much higher if not for the masses of discouraged people who no longer even bother to look for work because they are convinced they will come up empty-handed.

The National Institute of Statistics and Census conducts its ongoing survey of households asking those without work if they looked for a job the previous week. If they answer “no,” they are categorised as “inactive” – not as “unemployed.”

With the incorporation en masse of women into the labour market in recent years, the economically active portion of the population (over age 14) increased yearly, and more in May than in October – the two months in which the institute conducts its polls each year.

But this year the data – though not yet official – seem to indicate that economic activity has fallen. The primary reasons are the disappearance of jobs (mostly as layoffs in the construction sector) and the desperation of those who are no longer looking for work.

Labour minister Flamarique believes the drop in activity could be due to improved household incomes, which would reduce the need to search for work. But independent analysts are inclined to think there are fewer people who hold out hopes of finding jobs.

The fight against unemployment was a central campaign pledge of the Alianza, the coalition of centre-left parties that won the presidential elections last year with De la Rúa as its candidate. But unemployment has not improved since the Alianza took office.

De la Rúa commented that the causes of unemployment run deep and the May data show the continued problems of the “economic inheritance” from 1999, a year marked by recession.

So, while he waits for his adjustment measures to demonstrate their positive impacts on the economy and employment, the president has instructed his Labour minister to implement the new National Employment Plan as soon as possible.

The plan calls for new unemployment subsidy programmes and stimulus for small and medium-sized companies to hire additional personnel, as well as other measures to reactivate labour market demand.