In many eyes, the appointment of Daniel Funes de Rioja as leader of the Unión Industrial Argentina implied a shift in the business organisation’s approach, away from government policies.
Nevertheless, the veteran labour lawyer maintains that for him, the key is consensus – it’s all about proposing rather than protesting.
Even so, he points out that inflation, the lack of a clear economic course and labour disputes are problems needing urgent solutions.
What was with [ex-lawmaker and businessman] José Ignacio de Mendiguren, the day you took over as the president of the UIA?
The general council elects the UIA’s authorities. It met up according to the guidelines. A month beforehand the board of directors had recommended [businessman] Miguel Ángel Rodríguez and myself as the candidates to be secretary and president respectively, also drawing up the list of the members of the executive committee, the board of directors, the steering committee and the audit committee – i.e. the UIA authorities.
It’s not a simple process because you have to amalgamate different situations and wishes, even new realities. [Predecessor] Miguel Acevedo had already incorporated a female member into the executive committee, Carolina Castro. She had worked with me as one of my two sherpas in the B20 Argentina, because my track record also includes having headed the global business meeting within the G20 Argentina [in 2018]. Since 2010 I have been working with the B20 internationally, occupying important posts within its committees and now with the upcoming G20 in Italy, I’m on the International Advisory Caucus of G20 Italia. I believe in multilateralism and that the G20 is necessary, above all for intermediate countries like ours.
Within that process you make up different lists for unanimous approval. That does not mean that everybody is happy with those decisions. In this case [De Mendiguren], he expressed a wish to be on the executive committee and not on the board of directors, where he has been for the last six years. He has occupied very important posts within the institution and continues to be among those directing it.
The Kirchnerite press affirms that opting for you had to do with greater confrontation with the government. Did that play a role in the election?
My model is one of relationships with the government and the political parties with parliamentary representation. It means interacting with everybody, trying to convince them, not confront them. We are not a political power. We claim to be a productive force which can emphatically trace the broad lines of a horizon, something missing in Argentina: long-term state policies. The aim is to work towards those state policies. When you have a medium and long term, the political cycle is less pendular, you know where you’re heading. Then come the adjustments.
Nobody was expecting this Covid-19 cycle, it flooded out everything, altering plans. On the other hand, frictions are more probable within a cyclical agenda. When there is a long-term vision, the frictions appear less. When you don’t know where you’re heading but only what will happen today, more tensions may arise, which applies both to the government and the opposition.
You said: “We businessmen are not the cause of inflation, we’re the consequence.” Economists like Roberto Lavagna and Emmanuel Álvarez Agis point out that several years will surely pass before Argentina can have single-digit inflation. Would a shock anti-inflation plan as in the 1980s and 1990s in Argentina and Brazil be preferable, even with its short-term costs?
The key lies in its sustainability.
So shock plans are not sustainable?
It remains to be seen. Some countries have put through sustainable shock reforms. Society said: “Enough.” When we came out of hyperinflation, the convertibility plan was not rejected by society. You have to see the reality from which it arises. You cannot fix the economy other than inclusively. That’s why we’re talking about an industrialist, federal, integrated and inclusive project. And it must be inclusive socially.
Whose economic inheritance was worse, Mauricio Macri or Alberto Fernández?
Argentina’s complexities repeat themselves. There are fleeting moments which smile on us with favourable circumstances and then other complexities return. There is always an inheritance to revert. The degree of complication can differ according to viewpoint. Nobody comes out of it alone here. It’s not that one half of the country escapes and the other does not.
When they elected you president, you spoke of a ‘Triple C’ strategy: credibility, confidence and concertation – is that feasible in the context of a government which does not speak with one voice?
We’re obliged to find those three Cs and we have to seek the path to get there. Creating jobs, resolving the problem of inflation and ensuring the basics for a sector of the population might be sufficient for us but not the long-term investors. Without them we cannot satisfy those other demands either. We need to weave a fabric to make it viable.
How do you get on with Alberto Fernández?
I’ve known him for many years. In the 1990s he was the superintendent in charge of national insurance. I then had to tackle issues of on-the-job risks to produce a law on the European model.
Was that Alberto Fernández essentially the same as today?
I see him as open to dialogue, at least in my particular case. We’ve had our differences, I’ve spoken to him about what I call the ‘triple labour clamp.’ But that doesn’t mean I don’t have a permanent and excellent dialogue with [Labour] Minister Claudio Moroni.
During the worst part of last year’s Covid-19 crisis, we had daily exchanges via WhatsApp to resolve minor problems. That does not mean we agree about everything. Ditto with [Productive Development Minister] Matías Kulfas – we disagree over price ceilings but we seek dialogue and get together.
I have a history at both national and international level of discussing these things. The aim was always to have the factories working and people employed from the labour standpoint. There are broader objectives from the political standpoint, which does not mean that there is no friction but not confrontation.
Will there be an agreement with the International Monetary Fund before the elections?
I’m aspiring to a reasonable and sustainable agreement. It’s not a question of signing a paper with nothing happening the next day.
Will it be before the elections?
Possibly. The international organisations see the impact of the crisis in middle-income countries like Argentina. The G20 was very useful, allowing them to take note of the problems we have. It’s probably easier to get to know the situation of very poor countries than those in the middle, neither so rich nor so poor.
Who was the best Economy minister since the return of democracy?
Those who stabilised the economy: Domingo Cavallo and Roberto Lavagna. You will tell me that they are different but that’s not the point. Both achieved their aims including my ‘Triple C’ – credibility, confidence and some concertation, more Lavagna than Cavallo. I respect Menem’s minister for his intelligence but it was difficult to find agreement with him.
Whom did you vote for in 2015 and 2019?
I don’t answer those questions. You’re not speaking to me as a citizen but as a leader.
The World Economic Forum ranks Argentina in 136th place out of 141 when it comes to the flexibility of its labour market. Are you in favour of Roberto Lavagna’s proposals to create a mechanism for new jobs without the difficulties of the ‘triple clamp’?
Absolutely and I’ll tell you why. Overtime has increased over 30 percent in Argentina in order to compensate for the lack of manpower because companies don’t dare hire. There is an infinity of cases in the world for comparative experience. The Nordic countries resolved this a long time ago using a combo which they call “flexi-security.” I cannot protect jobs in a company but I have to protect the workers and their family when jobless so that they can regain another job, retraining them to be employable. The question is to link training, employment and the protection of workers and their families. There are various proposals: Lavagna’s and that of [textile manufacturer] Teddy Karagozian known as the ‘Austrian package.’
Karagozian concretely proposed an unemployment fund.
Yes but there are mitigating factors. Argentine labour legislation dates back to 1974, drafted between the second and third industrial revolutions when we are moving past the fourth. We cannot have such a disconnect. Some activities have problems holding people because they leave.
In those countries which resolved this problem when in crisis, real wages dipped a little and unemployment rose a lot with dole. In Argentina real wages fall heavily because of inflation, unemployment hardly moves and there is no dole. Inflation would also appear to be a basic question for changing the system.
Argentina must face up to inflation in sustainable fashion with a vision of the future and at the pace recommended by the economists. My generation lived practically all their lives with an unpredictable and uncontrollable inflation from the financial viewpoint of any person of any class, except the upper. We need to look at labour issues with far more dynamic and realistic concepts. Half the workforce is informal. Why isn’t unemployment higher? Because many people have stopped looking for work. And that’s very bad for society.
Is there a trial industry in Argentina or is that a myth?
There is a crazy tendency to dictate any number of norms. One example is the telecommuting law. The home office experience was being worked out via collective bargaining, which is the true basis of regulation, especially with trade unions like the Argentine. I’ve spoken at world trade union congresses and there is nothing like the Argentine by a long way. When you have trade unions which are that strong, it marks a reality for wage bargaining and the regulation of industrial relations alike. What’s needed is framework legislation without entering into details which trigger litigation.
What do you say to those businessmen who say that in reality a company’s labour lawyers do not desire less labour conflicts because that would reduce their work and their clients?
Those who have lawyers like that should change them. It’s like thinking that disease suits doctors.
Perhaps they should be better paid.
There are ethical limitations. Is there a trial industry in Argentina when it comes to labour legislation? Yes. Are there some truly weird judicial rulings from a legal viewpoint? Yes. Can this be corrected? The Supreme Court itself acts as a sort of Cassation Court to put some things right.
A maestro of labour law, [Rodolfo] Carcavallo, said that labour legislation and collective bargaining agreements are applied every day and generate friction if not well written. Often enough these agreements are not well written because they emerge in the small hours after lots of bickering. You have to be precise to be clear with everybody knowing what’s theirs without going beyond.
Some judges are truly surprising. I’ve written about this over the years and have even been denounced before bar associations for speaking of a trial industry. They did not sanction me because they couldn’t. There is an ethical question, the same as in medicine. Anybody who does not trust their labour lawyers should change them. As in any profession, it is a question of confidence and ethics. But the state should be very careful when naming judges. I’ve seen many rulings which, unable to invoke a norm, spoke of the Pact of San José of Costa Rica. We leap into the stratosphere to play Robin Hood judicially with redistribution.
Are there two ideological schools in the UIA, one more industrialist and the other more orthodox?
There is something I learned at the international level. In the midst of the 2008-2009 global crisis, heading the businessmen before the International Labour Organisation (ILO), I said “We must change the agenda.” They stared at me because the agenda is decided years ahead. But in the face of such a crisis we changed the agenda and discussed what is called the “global employment pact,” a policy toolbox for use when a financial crisis impacts the real economy, in turn hitting jobs inexorably. That agenda has no political colour although it might have tones one way or the other.
My vision is a federal perspective of production, which is what should guide us. Beyond that there should be shades of emphasis as in any organisation. Those are the kind I’ve headed until now, I’ve never permitted opinion polls as to whom people were going to vote for politically. That is not an issue for a business umbrella grouping – it should be discussing an agenda. Which does not alter the fact that we are citizens but we must express that in the corresponding spheres.
Your predecessor Miguel Acevedo was very hard on Mauricio Macri. In this series of interviews he said that he considered himself pro-Kirchnerite although he wasn’t. What is your evaluation of the previous presidency? Does the UIA have an ideology?
I don’t know if we have ideological differences – what matters to me is that our projects agree. I’m heterodox and pragmatic when it comes to political hassles, which doesn’t mean that I don’t have my own ideas but they are mine. I want ideas, not an ideology.
When I took over, I referred to three historic milestones. I spoke of Juan Bautista Alberdi, who did what he did in denial of the ongoing domestic tensions. That generation of 1837 not only suffered those tensions but had the intelligence to envisage a united Argentina via a basic instrument, the Constitution, of which Alberdi was a precursor. The second milestone I mentioned was Carlos Pellegrini. He not only had the capacity to resolve the economic-financial crisis of 1890 but to look ahead. Our ancestor the Industrial Club was born then under the motto “Without industry there is no nation.” Pellegrini spoke of adding value to primary products and creating jobs – the essence of Argentine business thinking. And the third milestone was Arturo Frondizi [who happened to be secretary of the commission to pay tribute to Pellegrini on the centenary of his death]. As president, Frondizi pronounced a very important speech in 1959 regarding national unity and development. It is a masterpiece of a strategic vision of a country with development and inclusion, which could not be fulfilled. I believe in those ideas, which should be projected.
We are in a very harsh crisis different from the previous. It has left the world perplexed and incapable of reaction until it finds the way. The worst crises create points of inflection and opportunities, bringing people the most together. I’ve studied this with Europe’s integration, which was born out of world war with countries destroyed, not only physically but in terms of families and even social ethics. The reconstruction proceeded from pacts where everybody committed themselves to reconstructing the country – not some people but everybody. When I speak of this, I’m talking about government, labour and business – all united behind growing again, committed to having a single model and national perspective – a development model with our characteristics but with an aim in mind. That’s what industrialised many countries. Ideology does not have to separate us. Those are the points in common to bring us closer.