LABOUR-ARGENTINA: Unions Join Forces against Economic Adjustment

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Aug 30 2001 (IPS) - Argentina’s two main labour unions, which had gone their separate ways a year and a half ago, were united Wednesday in a massive protest to demand changes in the nation’s economic course, while the government continues its attempts to recover foreign creditor and investor confidence.

The two factions of the General Workers Confederation (CGT) drew tens of thousands of workers to the historic Plaza de Mayo, in front of the presidential palace, where the labour movement’s leaders lambasted the Fernando de la Rúa administration’s “draconian” fiscal adjustment measures, and the crowds shouted “Enough!”

The massive demonstration comes two weeks after the last of three protests staged by the movement of unemployed workers, a sector that could now converge with labour unions in demanding changes.

Shortly before Wednesday’s rally got underway, De la Rúa tried once again to justify the cuts in state employee salaries and in pensions he ordered in July, saying they “are needed to cure the economy” and to attract foreign investment to Argentina.

The two main unions have not organised a joint protest since 1996, when they were still part of the same organisation. In early 2000, a labour reform bill in the Argentine Congress, which proposed the liberalisation of employment contracts and reduced union influence in labour negotiations, drove the final stake between the two CGT factions.

The main arm of the movement remained willing to engage in dialogue with the government, while the other took a more rebellious stance.

At the Wednesday rally, the maximum leaders of the two union groups embraced and did not rule out the possibility of meeting formally to discuss ways to force the government to change its economic path in order to put an end to more than three years of recession and unemployment hovering around 16 percent.

Rodolfo Daer, leader of the CGT’s “dialogists”, considered the official wing of the union, demanded that the government put an end to its “policy of impoverishing the Argentinean people” and that it seek a restructuring of Argentina’s foreign debt.

“The debt should be paid off by the ones who have benefited from this economic policy,” said Daer.

For his part, Hugo Moyano, head of the “rebel” CGT, warned that the nation’s population of 36 million would not accept more economic adjustments, and said it is a government lie that the economic model being implemented will pull the country out of crisis.

The labour leader charged that Argentina’s currency board is a straightjacket for the economy and must be changed. The “convertibility” regimen established by a 1991 law pegs the Argentine peso at par to the dollar.

This system, which brought an end to a long period of hyperinflation, is now seen as an obstacle for the competitiveness of Argentine exports, even more so than the recession itself, but the government refuses to allow a devaluation of the peso for fear of a run on bank deposits.

Argentina has entered its fourth year of a shrinking gross domestic product (GDP).

The two labour leaders agree on the need to unify their protests. Moyano even proposed organising actions with a third union group, the radical Congress of Argentinean Workers (CTA), and with the movement of unemployed workers, whose protest method of choice is to block roads and highways.

With sights on the Oct 14 legislative elections, Moyano called on voters to send an overwhelming message to the government in rejection of its economic model in order to open the way for politicians and unionists “to rebuild the country.”

The protest Wednesday coincided with the Economy minister Domingo Cavallo’s trip to Washington to meet with the managing director of the International Monetary Fund (IMF), Horst Köhler. The minister was to provide reassurances that Argentina will uphold the prescribed fiscal austerity measures at least until the end of the year.

Cavallo’s meeting with the IMF is a follow-up to the 12-day negotiating efforts of Argentina’s vice-minister of Economy, Daniel Marx, in Washington for firming up an eight billion dollar loan from the multilateral financial institution that is expected to be approved by its board in September.

Of that sum, five billion dollars are to go towards building up the cash reserves lost during the nation’s financial crisis.

The negotiations with the IMF had seemed on the verge of failure, feeding fears of a debt default, but an agreement was finally reached in over-time talks in the US capital.

De la Rúa and Cavallo are celebrating the IMF deal, just like they did previous aid packages intended to boost confidence in the financial markets, but the positive effects of those financial injections dissipated within a few weeks.

This time around, the government launched a “zero-deficit” policy even before entering into new bailout talks. The measures require the state to deduct service on the foreign debt – which totals 130 billion dollars – from its monthly tax revenues, with the remaining funds going toward other public expenditures.

In July, this approach meant a 13-percent cut in public employee salaries and pensions. An even larger reduction is expected for this month because tax revenues are reported to have fallen another 11 percent.