Kelly 'Raquel' Olmos: ‘Argentina has an exemplary labour movement’

Raquel ‘Kelly’ Olmos, Argentina’s brand-new Labour minister and a fundamental Peronist cadre, trusts in being able to build bridges between all the branches of the movement.

Olmos, 69, is laying her bets on dialogue and clear ground rules “to favour a process permitting us to grow in unity.”

Minister, thank you very much for granting us your first long interview, exposing yourself at a time when the Labour Ministry is in the centre of discussion. I’ll start with a cyclical question about the tension surrounding the wage bargaining with the teamsters, which finally ended up with a 107 percent hike, above your own government’s inflation forecast of 95 percent for this year.

What happens is that the 107 percent covers a period of 16 months. If taken since it was last updated from May to May, the wage bargaining agreement is for an 85 percent annual increase plus a one-off bonus of 100,000 pesos, which will be paid in four instalments.

So finally similar to inflation ...

Exactly.

Your predecessor had a singular record for Argentina of almost three years in the Ministry without major labour conflicts. How do you imagine the just over a year remaining in the Alberto Fernández Presidency working out?

I imagine collective wage bargaining with strong and important dynamics, obviously due to the high inflation. But these dynamics are truly producing very positive results since the sectors of both workers and businessmen are reaching agreement. There might be some more or less tense situations and even conflict during the negotiations. That’s OK but the most important thing is how they are finally resolved. I believe in effect that the mechanism of resolution strengthens the democratic process because things are properly resolved.

We are undergoing a more complex situation than during the three previous Peronist governments under Néstor Kirchner and Cristina Fernández de Kirchner, yet there was more conflict beforehand than now. To what do you attribute that?

On the one hand, conflicts in general have to do with the possibility of improving wages because when jobs are lacking, there tends to be less conflict. In that event there is some kind of social explosion afterwards, but the struggle for wages is much more active when closer to full employment, which is a general characteristic of all societies.

Here we have a particular situation – firstly, we received an inheritance of a whole bunch of restrictions from the Mauricio Macri presidency, which had no pandemic nor war to worry about but nevertheless handed over to us a government conditioned by a severe crisis on its external front, somewhat camouflaged by the agreement with the International Monetary Fund, but wages lost over 20 percent of their purchasing-power on average. On coming to office Alberto Fernández immediately tried to tone up demand via a generalised wage increase, the Tarjeta Alimentar food stamps and a pension increase, but just when we were entering into a process of recovery, the pandemic came along. During the pandemic, when job protection was the most important thing, the state even financed wages with a moratorium, the IFE emergency family assistance and transfer mechanisms for informal sectors. All the work went on trying to reduce the damage from the need for isolation ahead of the existence of vaccines.

Afterwards we pushed a very vigorous process of economic recovery. We might recall that many economists said that we were going to take four or five years to recover the losses from the pandemic, and we managed to recover in only one year. The reality is that we burned up a very high level of reserves, gambling on the success of demonstrating the vigour of the Argentine productive system in being able to recover so quickly. [This year] 2022 was thus always going to be the year for accumulating reserves, also according to our pact with the IMF, because we all know that the crises on the external front are what destabilise Argentina so it became very important to strengthen our foreign currency reserves. Neither had we foreseen war with the Russian invasion of Ukrainian territory, which had an enormous impact on food and, above all, fuel prices, which signified an imbalance in our foreign trade with over US$5 billion which had been earmarked for boosting our reserves going on the purchase of energy. But we succeeded in avoiding any shortages in the access to energy, either from the viewpoint of the citizenry or the productive system. Now we are making an effort. All this creates tensions and imbalances which express themselves in an inflationary process which the world has not known for four decades. In Argentina, with an impact of those characteristics, amplified by our structural inflation, we now have to work hard on stabilisation, and that is the effort of our entire government with restrictions which do not affect growth nor our capacity for job creation.

In that context, I repeat the question: how did [former Labour minister Claudio] Moroni manage to avoid major conflicts, apart from the tyre workers, making that all the more striking?

By working hard to maintain and open up collective wage bargaining, the negotiations between workers and management, which are truly exemplary. You have to be present to see how they have reached a culture of dialogue and agreement, projecting a very virtuous model. When we are so used to ferocious criticisms of Argentina every day, I realise that we have very important democratic reserves.

Does the capacity to resolve, for example, a conflict like the teamsters – originally asking for an annual increase of 137 percent yet settling for 107 percent but over 16 months but 85 percent annually plus a bonus of 100,000 pesos placing them around four percent ahead for the year, along with the approval of a budget exempting the travel expenses of truck-drivers from income tax – does all this mean that you have finally found the way around inflation?

Yes, with rational and objective work and above all with our leaders practised in dialogue, both businessmen and workers. The truth is that Argentina has an exemplary labour movement. The countries with weakened labour movements have deteriorated as democracies. We have many deficits and pending issues but we can display a vigorous labour movement, which also corresponds to a business world often not given the visibility it deserves. Because in the construction of public opinion there often appear some big businessmen who hardly represent businessmen as a whole who work daily side by side with workers to reach agreements.

Consulting you as an economist, help me to understand the job problems in Argentina in recent years. We come from the same generation, so we can both remember 1974 as the last year when Argentina had four percent poverty, a per capita income comparable to Australia or Canada and seven million in private-sector registered employment. Nearly 50 years later today they are still seven million with double the 1974 population. What is your macro-economic analysis of this situation?

The international context has changed fundamentally. You are quite right to highlight the year 1974. It should be remembered that this was the period of the oil crisis, rupturing the dynamics of the International Labour Organisation when we were developing an import substitution which dynamised the Argentine productive system, as you have very well described. The 1974 oil crisis fundamentally impoverished Europe, which was the most affected. At that time Europe was our leading importer with our main export beef. Our annual exports were then, if I remember correctly, around US$500 million. As from that winter beef became a luxury in Europe and Argentine exports plunged while a high level of imports was required because, thanks to the programme of stabilisation of (then-economy minister José Ber) Gelbard, Argentina had an extremely high level of economic activity and, in consequence, needed to import many inputs and capital goods. That triggered an external crisis which ended up in the Rodrigazo price instability, which served as the excuse for a coup d’état, which also wanted to make Peronism and the entire popular and national movement disappear in a holocaust of over 30,000 comrades. They established or installed Argentina within a system of speculative flight capital, a process of clearly speculative indebtedness which the Peronist government had not wanted to adopt.

You will recall that it was the tablita exchange rate sliding scale of [junta Economy Minister José] Martínez de Hoz, where the differential between an exchange rate known in advance and very high interest rates favoured a tremendous process of going into debt very similar to what happened recently with the Mauricio Macri administration. Thereafter, the debt is nationalised while the hard currency thus acquired is transformed into the creation of external assets or capital flight, as it is more vulgarly known. That knocked the structure out of the Argentine productive system, deepening what Marcelo Diamand has called the imbalanced economic structure. Today we must revert that situation by strongly modifying the inheritance of the productive matrix remaining from that period and incorporating dynamic new sectors for the international market in order for the access to hard currency not to be concentrated in the farm export sector, as it is now. In that sense we must again boost the competitive capacity of our industrial sector, promoting and adding value to the mining and lithium sectors and the knowledge economy, which is the focus of our government.

Minister, the military dictatorship lasted seven years and we have had 50 years of neo-decadence. Isn’t there something more to it?

Yes, the strong imbalance between how quickly things can be destroyed and how long it takes to rebuild them. It also has to do with the institutional system. For example, in the first government of [Juan Domingo] Perón, the electoral system was governed by the Sáenz Peña law whereby the winner took two-thirds of the seats even if ahead by only vote – in consequence, a system slanted towards governability. We have currently evolved towards a much more representative system, which has its virtues but has weakened the system’s ability to respond to governance issues. This is not just limited to Argentina, it’s pretty general, expressed today in the discontent of majorities with ineffective systems...

The limited capacity the governments have to transform?

Exactly. A system more geared to representation than governance reproduces the status quo or at least that’s what we see to be happening.

I obviously share the idea that things are destroyed much faster than they are constructed but aren’t there other more structural motives to explain the number of people without access to a registered job in the private sector, as well as the number in the underground or “popular” economy or the self-employed? For example, the structure of globalisation, in which it is impossible for developing countries to compete with the likes of China?

Yes, I think that the development of China had characteristics which affected us because their competition was initially far more based on cheap labour than technological development – that has gone varying since.

Are we entering a positive cycle because its level of development no longer hinges on cheap labour while food and other inputs begin to be bought?

Thanks to their having generated a positive social mobility, they need food of better quality like what we could supply. That’s why the challenge is not to sell animal feed but those proteins which can go directly to supermarket shelves in the form of food with added value. The pandemic has also had a huge impact in modifying the chain …

Via globalisation.

Within the global system of production, and I believe there’s going to be a...

A return to a closer supply chain.

More regional and continental, which should be observed very closely.

In an interview within this same series the current PRO chair Patricia Bullrich said that at the IDEA business symposium she heard several trade unionists say that labour reform was necessary. Obviously what kind of labour reform would then need to be discussed but what is your view as to the need for labour reform and if so, what kind?

Any system for organising labour can always be perfected and should adapt itself to the dynamics of the context. In my view the system should be updated via collective bargaining agreements. We have seen, for example, a virtuous circle at Toyota, which has permitted not only Toyota but also the entire sector to become an important exporter with a far more national composition in car manufacture. But I don’t agree with the proposals expressed by Macri in his latest book, which is heading towards a society without rights. I don’t believe that is good.

When you speak with leaders of the “popular economy” who propose the idea of permanent self-employment, they tell you that it is necessary to register the enormous number of people who cannot be employed via the traditional system of companies as formally self-employed. What is your opinion regarding self-employment as a cycle, a crutch within a process of development or something which should be permanent?

I hope it’s a process of transition because self-employment confers fewer rights than formal employment. It seems to me an effort which must be made. In fact, in Argentina today formal employment is growing at an annual rate of six percent, which is very vigorous and very good and we have to make an enormous effort to make informal employment and self-employment a transit route towards formal employment, with rights.

Let me take advantage of all your experience as a Peronist cadre beyond the Labour Ministry. How do you see Peronism today and the internal differences within what we might call pan-Peronism?

Constructing institutional leadership has always been a very big challenge for Peronism and we’re seeing how we can face up to that difficulty today.

To what do you attribute that customary difficulty of Peronism?

That’s because we have a culture which has always been very associated with personal leadership and we need to make the transition towards a more institutional construction but it’s proving difficult for us.

You were named as a minister along with two other women and the whole press commented that it was the sole decision of the president without consulting the other two important Frente de Todos leaders, namely Cristina Fernández de Kirchner and Sergio Massa. When the president named you, did you at any point ask yourself whether it was important to have the approval of the vice-president and the economy minister?

Sincerely, no. The president proposed me for a Cabinet post and I accepted. I’ve been trained over 50 years to take on challenges committed to the doctrine in which I believe and with the political vision in which I participate – I wasn’t going to abandon the battlefield in the moment in which they summoned me to take on that responsibility.

The biggest responsibility of all those you’ve had.

Sincerely. Now, of course, I want my running of the Ministry to be approved as much by the president, who is undoubtedly the one primarily responsible for government policies, as by the remaining members of Frente de Todos. On both sides I feel myself to be very committed, both in emotional and political terms.

Do you think Alberto Fernández will be among those running in the PASO primaries?

Yes, beyond doubt he could be an option for next year. We need to boost his administration and empower the presidential figure politically while favouring and permitting comrades with legitimate interests to express them and participate. It seems to me that is what is called for.

And so how would you imagine that amalgam then?

By agreeing on the ground rules. That is what you see in collective bargaining – when there is clarity as to the ground rules and a methodology accepted by all sides, you get results.

So would collective bargaining be the ground rules in that sense?

In collective bargaining there are ground rules which have been incorporated, accepted and matured by both sides. In the case of politics we also have to agree on ground rules to favour a process which permits us to grow in unity.

Production: Melody Acosta Rizza and Sol Bacigalupo.