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ARGENTINA | 01-09-2023 15:43

Provincial pushback: City Hall and 13 provinces refuse to pay bonus

Economy Minister Sergio Massa faces strong pushback to new measures; As many as 14 regions, including Peronist-governed provinces, vow not to adhere to one-off payments to public-sector workers; Businesses also express unease.

Economy Minister Sergio Massa is facing a provincial rebellion over his plans to issue workers a one-off bonus to counter the effects of the devaluation and runaway inflation.

At press time, the provinces of Córdoba, Catamarca, Misiones, Jujuy, Entre Ríos, Neuquén, Salta, Santa Cruz, La Pampa, Tucumán, Santa Fe, San Juan and Chaco had confirmed they were joining the Buenos Aires City government in announcing that they will not be complying with the 60,000-peso payment for both private-sector workers and public employees announced by Massa.

San Juan y Chaco, both under Peronist rule,were the latest to join 12 other districts which had already advanced their refusal to pay out the 60,000 pesos over two months as ordered by the presidential candidate to offset the post-PASO primary devaluation.

At press time only the four provinces of Mendoza, La Rioja, Santiago del Estero and Chubut had confirmed payment  with six provinces yet to define their stance.

Last Sunday, Massa announced a series of measures to improve government workers’ salaries and funnel money toward retirees and poorer families. The move defies an International Monetary Fund appeal earlier this month for the country to spend less.

Included in the package were tax breaks, higher pension payments, additional money for food programmes for families with kids, and low-interest credit lines. It also includes financing for export products.

“The main objective is that every sector of the economy has help, in some way, from the state,” said Massa in a video, citing the devaluation of the currency and the unprecedented drought crisis as reasons to offer financial support to Argentine families. 

The first to break ranks was Santa Fe Governor Omar Perotti, who detailed that he would not be making the two payments of 30,000 pesos to his provincial employees, as ordered by the national government, because the province had agreed to review salaries to adjust to inflation and preserve purchasing-power only 10 days previously.

Perotti justified the decision on the bonus established by the national government "having plenty to do with what is being negotiated in each jurisdiction."

"They are resorting to this because in some places the wage lags being triggered by inflación and devaluation are not being contemplated. Our province is covering that," assured Perotti.

Regarding that mechanism, he explained that "it’s about establishing monthly percentages and if overtaken by the price index, the difference is automatically matched, whether two or three points, to maintain purchasing-power."

Misiones, whose governor Oscar Herrera Aguad backs Massa’s presidential candidacy, also distanced itself from the bonus for public employees with arguments similar to Santa Fe, also immersed in its own collective bargaining.

City Hall here also claimed to have given its municipal employees increases approximating this year’s inflation "in monthly and sometimes fortnightly collective bargaining."

Córdoba also disclosed last Tuesday via local media that it considers the bonus to public employees to be already contained in its own collective bargaining, explaining that there was an increase of at least 33,000 pesos last month incorporated into the basic salary. What was announced by Massa had thus been paid in Córdoba to all public employees except teachers. 

 

Business concerns

Private-sector firms have also expressed concerns about the bonus payment. Earlier this week, the Confederación Argentina de la Mediana Empresa (Argentine Confederation of Medium-Sized Enterprises, CAME) rejected the move, arguing that wage adjustment mechanisms were “part of the [collective-]bargaining process” and should not be conducted as “an imposition from the state on labour relations.”

Similar views were expressed by the Cámara Argentina de Comercio y Servicios (Argentine Chamber of Commerce and Services, CAC), which issued a statement expressing its “deep concern” at the government decree.

Speaking on Thursday in a radio interview, Labour Minister Raquel ‘Kelly’ Olmos said that businesses would have to cough up – or else.

Companies that “do not pay up will be fined. They will have to pay it, and on top of that, pay a fine too,” declared the official.

"It seems to me that criticism is legitimate. Unfortunately, many of them criticise before analysing the measures. It's like an established prejudice. And that attitude is perceived", she said.

Wading into the row, President Alberto Fernández called on governors and business owners to pay the 60,000-peso bonus.

“So that nobody is confused, it is not a ‘plan platita’ programme,” said the president, referring to the name by which a similar scheme in the lead-up to the 2021 midterms was christened by opponents. 

Fernández, speaking at an event in Catamarca, preferred to call Massa’s scheme a “justice plan,” in that “those who have the most should distribute the most.”

Taking aim at the opposition-controlled Buenos Aires City government, the Peronist leader said he was “surprised that Catamarca and La Rioja are able to do this and that the most opulent city in Argentina has difficulties in doing so.”

Business leaders also received the president’s ire.

"They made a lot of money in the last two years when Argentina grew 16 percent, they made a lot of money in the years of the pandemic. The time has come to distribute,” declared Fernández.

Casting an eye outside the country, Massa’s measures could put the government in conflict with the IMF, which approved a cash transfer to the government last week following extensive negotiations over its multi-billion dollar loans, after Argentina failed to meet programme targets amid a drought.

A condition of the IMF’s aid to Fernández’s government was that Argentina step up expenditure controls by limiting public wages and pensions. The lender said in a statement last week that the government would implement a temporary increase in taxes on select goods and services to offset losses from drought-related exports.

 

– TIMES/NA/BLOOMBERG

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