Buenos Aires Times

Tensions high as government lines up second push for pension reform

Casa Rosada secures backing from governors and will return package to Lower House on Monday, days after shocking violent clashes.

Sunday 17 December, 2017
Cambiemos Lower House lawmakers including Mario Negri, Luciano Laspina and Nicolás Massot deliver a statement to the press yesterday about their meeting with governors concerning the controversial pension reform.
Cambiemos Lower House lawmakers including Mario Negri, Luciano Laspina and Nicolás Massot deliver a statement to the press yesterday about their meeting with governors concerning the controversial pension reform. Foto:Télam.

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The government is gearing up for the second round of its bid to pass a sweeping pension reform package, having secured support and terms to present it to the Lower House on Monday.

The move comes after President Mauricio Macri’s administration was dealt a significant political blow on Thursday when its attempts to pass the controversial bill ran into trouble in the Lower House.

Outside the National Congress building, on the streets of the nation’s capital, a massive demonstration was strongly repressed by security forces, with government-aligned lawmakers ultimately feeling the pressure and calling off the session.

The government, which on Thursday night considered dishing out the reform by means of a presidential decree, will now rally the troops for another special session on Monday.

After a meeting that lasted more than three hours, the national government confirmed yesterday that it had reached a deal with a group of Peronist governors to send the package to the Lower House on Monday at 2pm.

According to reports in local outlets, the government will now offer a one-off payment to retirees and recipients of the Universal Child Allowance (Asignación Universal por Hijo, AUH) earning less than 10,000 pesos set for March. The payment will reportedly be around some 750 pesos for retirees with contributions, 300 pesos for those without them, and 400 pesos for AUH recipients.

The controversial new formula for calculating increases in disbursements will remain unchanged, while the total cost of the so-called “compensation” is estimated at four billion pesos. 

About 70 percent of pensioners and all AUH recipients will be reached by the payment, some eight million citizens. 

LEGISLATIVE BATTLES

The bill in its originally form had first been cleared for debate on Tuesday following scandalous scenes at a meeting of the chamber’s Pension and Budget Committees, but Cambiemos’ (Let’s Change) bid to sanction the reform as law in a special session the very next day ultimately proved unsuccessful. 

Different representatives of the Mauricio Macri administration had expressed their confidence about having the numbers both to reach quorum and vote the bill into law, and initially that goal seemed to have been secured on the floor when Lower House Speaker Emilio Monzó declared at 2pm: “With 130 congressmen (present), the session can begin.”

The announcement immediately sparked the outrage of opposition legislators, however, who had been careful not to take their seats, leading them to flock to the speaker’s table to demand that the session be suspended as – according to House protocol – the time limit to reach quorum had been exceeded. 

Monzó refused to do so at first, but with the turmoil between security forces and demonstrators outside only worsening by the second, Civic Coalition leader and government ally Elisa Carrió called on the former to lift the session. Monzó eventually agreed. “As we reject violence, I request that this scandalous session be lifted,” Carrió stated, adding however that “we will win this vote, whether it be this week or next week, but we will win.” 

The congresswoman, who had originally expressed her concern over pensioners receiving less money next year as result of the reform, finished her statement by addressing those potentially affected by the bill. “There will be compensations for pensioners,” she said, implying that pensioners would receive a one-off compensation for the money they would lose out on as result of the reform, something the government finally got around to yesterday. 

STREET BATTLES

Outside the National Congress building, temperatures were high. As stones were hurled one way and tear gas, water cannons and rubber bullets flew the other.

At one point, Victory Front (FpV) lawmakers and leftist legislators even clashed with security forces.

The protests had drawn together the entire organised labour movement, social and human rights organisations and sectors of almost every opposition party, with the government deploying police and border guard forces to form a fenced perimeter around Congress to prevent demonstrators from entering.

“I was sprayed with tear gas along with two other comrades, Mayra Mendoza and Darío Martínez, who both ended up in the congressional medical unit”, said FpV lawmaker Agustín Rossi.

The congressman warned the Macri administration about the legislative problems it would face in passing the controversial reform package: “It’s a poor law … if the government has a fiscal problem, they shouldn’t resolve it by putting their hands in pensioners’ pockets.”

As scenes of police clashing with protestors were stilling playing on the TV news channels, Cabinet Chief Marcos Peña gave a press conference in which he denounced sectors of the opposition for implementing a “deliberate action to block the functioning of the Chamber of Deputies.”“There was an action of violence. Yesterday and today they crossed a line, first on the streets and then on the floor, they became picket leaders, violence has never been resorted to as it was today.”

Former presidential candidate and Renewal Front leader Sergio Massa disagreed, attributing the protests to the problems that the reform would cause. “It is clear that this is not a pension reform, it is simply a cut of pension funds, of the Universal Child Allowance, family allowances and the pensions of Malvinas veterans,” he declared.

THE REFORM

Sanctioned by the Senate on November 30, the pension reform bill proposes a new method of adjustment for pensions, whereby 70 percent of quarterly hikes would be calculated based on inflation and the remaining 30 percent would correspond to variations in wages.

This new method – which would replace the previous formula of biannual hikes tied 50 percent to wages and 50 percent to tax revenue – would affect the incomes of as much as 17 million Argentines, including not only pensioners but also recipients of welfare schemes such as the Universal Child Allowance.

The government regards the highly divisive reform as a must, not only to make the country’s pension system more sustainable, but also as part of a general plan to reduce its galloping budget deficit, which is currently propped up only by the issuance of foreign debt. Social security payments, which includes pensions and welfare, comprises half of all state spending in Argentina.

President Mauricio Macri and his administration argue that the economic growth the country will experience in coming years will bring about higher wages and lower inflation, meaning that pensioners and recipients of welfare will still outpace inflation with the new method of quarterly adjustment ,while the state’s coffers would save approximately 100 billion pesos, or US$5.8 billion. 
For reference, that’s 1.07 percent of the GDP reported by the INDEC national statistics bureau for 2016, a year in which the primary budget deficit clocked in at 4.6 percent of GDP.

On the other side, leftist, union and several Peronist leaders – including former president and now senator for Buenos Aires province, Cristina Fernández de Kirchner – have all criticised the reform for slashing pensioners’ adjustments in 2018. Whereas under the previous method, a 10,000-peso pension would have moved up to about 11,200 pesos in March, the government’s reform in its first instance would imply an increase up to approximately 10,600.

Bypassing the politics in search of a more neutral standpoint, many economists and pension law experts have criticised the proposal for not tackling the crux of the issue: sustainability. The new method of adjustment would not imply significant savings for the government beyond 2018, and while government spending is reduced in certain areas, such as energy subsidies, it has increased in others, such as debt repayment. The result is a stagnant budget deficit that is marginally reduced at best by such cuts.

The opposition has also emphasised that the majority of pensioners cannot afford to lose any money as result of the reform. The average pension currently clocks in at approximately 10,000 pesos per month, when the cost of a basic basket of goods and services is 17,523 pesos, according to the Buenos Aires City Ombudsman of the Elderly (Defensoría de la Tercera Edad de la Ciudad). The new method of adjustment would invariably imply fewer pesos in the pockets of the elderly come 2018. 

The new law, however, would also establish an additional guarantee for pensions, whereby the lowest monthly income cannot drop below 82 percent of the minimum wage for workers who have completed 30 years of formal employment.

Another change introduced by the reform is the option for men to work until they are 70 and women up to the age of 65, with the age of voluntary retirement previously set at 65 and 60, respectively.

The drive to bring down the budget deficit has clashed in recent weeks with a genuine concern over the precarious living conditions of a majority of Argentine pensioners. Stained by a degree of ever-present political opportunism, the debate around the reform has been marked by violent spats both verbal and physical, street pickets and marches on Congress. But with support guaranteed in principle from legislators aligned with Peronist governors, the government has not faced the need to incorporate amendments demanded by the opposition.

Even Elisa Carrió and her Coalición Cívica party, part of the ruling Cambiemos coalition, had needed convincing from Cabinet Chief Marcos Peña prior to declaring their support of the bill, highlighting its controversy. During Tuesday’s committee hearings, ANSES Director Emilio Basavilbaso, Treasury Minister Nicolás Dujovne, Labour Minister Jorge Triaca and other government officials and legislators were repeatedly interrupted by shouting and shoving as tensions ran high and pensioner and union representatives attempted to enter the room to protest.

In one of the most heated interventions during the hearing, Lower House Cambiemos block leader and lawmaker Nicolás Massot denounced that Fernández de Kirchner had dilapidated pension funds during her presidency and allowed “300,000 pensioners to die without receiving the (pension hikes from the) lawsuits that were ruled by the (Supreme) Court.”

Also during the hearing, the general secretary of the SUTEBA teachers’ union, Roberto Baradel, said: “We are demanding that this looting not be carried out at the expense of pensioners. We believe it is fundamental to defend the system for current and future retirees.” On Wednesday, social and labour organizations including CTEP, Barrios de Pie, Corriente Clasista y Combativa, as well as both CTA umbrella unions, ATE state workers’ union and the Movimiento Evita party had marched down 9 de Julio Avenue in protest of all of the government’s proposed reforms. They then relocated outside Congress, where they camped out and awaited the debate on the floor.

The next day, as protesters began to gather and security forces lined up, the tension soared both inside and outside Congress.

For its part, the CGT umbrella union grouping had threatened a national strike for Friday if the Lower House were to pass the reform as law. Union members also joined in with Thursday’s demonstration outside Congress, but the industrial action was eventually called off as the bill stalled. Last night, at press time, the CGT’s representatives again reiterated their opposition of the bill, declaring that “wisdom” must triump over “economic calculation” and condemning the “violence” against protesters. 

Tensions are running high.


FRANCISCO ALDAYA. ON TWITTER: @FRANALDAYA

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