Friday, July 19, 2024

ECONOMY | 08-04-2020 11:20

‘Segmented’ reopening of shops, factories on cards to avoid bankruptcies

Business leaders and trade unionists witnessing a government shift from isolation to “social distancing,” in order to allow for a resumption of activities amid fears of bankruptcy.

After almost two hours of meetings at the Olivos presidential residence on Tuesday, and in response to Chamber of Commerce (CAC) pressures for a more flexible quarantine, President Alberto Fernández is budging. The Peronist leader has moved closer to the position held by some business leaders and trade unionists, who are now witnessing a government shift from isolation to “social distancing,” in order to allow for a resumption of activities while avoiding crowds as a safeguard against Covid-19.

“Some public works will return and also the manufacture of agricultural machinery. Shops will start opening as from next Monday in a gradual and segmented pattern,” explained CAC secretary Natalio Grinman told Perfil on Tuesday night.

In the course of the rest of the week, what commercial activities are coming back and under what conditions will be finally defined.

Bankruptcy threat

The Argentine Industrial Union (UIA) and the CGT labour umbrella union grouping also joined the CAC in the meeting with the president Tuesday. In recent weeks all sides have shared a request to relax the quarantine with many firms risking bankruptcy if the economic paralysis is prolonged. The reopening of shops would be within a reduced timetable and with rotating staff with a controlled inflow of customers respecting spaces.

“The idea includes all the sanitary precautions: face-masks, alcohol-based hand gel sanitiser while avoiding people aged over 65”, added the CAC representative.

The halt in construction jeopardises 100,000 jobs while in tourism a further 200,000 employees and self-employed are at risk. In recent years industrial and commercial activities have lost over 200,000 jobs and even if dismissals are banned for the next 60 days, the agreement between Techint and UOCRA building workers union confirming the layoffs of 1,450 workers shows that if both sides are agreed, the government cannot restrain them.

But the loss of earnings with the chain of payments cut also translates into wages being reduced and paid piecemeal. Various companies like Neverland, Garbarino and Musimundo announced last week that they would only be paying staff 30 percent of their salaries, later joined by McDonalds paying 50 percent, while others opted for quotas. That loss of income carries the impact of a further fall in consumption.

This year economists are forecasting a 4.3 percent drop of GDP on average according to the Central Bank’s latest REM (Relevamiento de Expectativas de Mercado) survey although the figure depends on the duration of the pandemic.

Less activity also lowers the revenues of a state facing higher spending. 

“The deeper recession from the quarantine will reduce even more state revenues, which will also suffer from tax exemptions. As a result, the fiscal red ink will grow from greater spending and less revenue,” concludes the Ecolatina consultancy firm.

Phased withdrawal

The government has confirmed that it is planning a gradual and phased withdrawal from lockdown.

“The kids won’t be going back to class. Working sectors will have to go back in a gradual and organised manner,” Buenos Aires Province Lieutenant-Governor Verónica Magario told the C5N news channel.

“We made our request on behalf of all sectors. I reckon something will have to give because otherwise the sector is going to suffer and many companies go broke,” remarked Grisman.

One proposal made by his Chamber was to combine e-commerce with delivery as being done by the retailers themselves, independently of the logistics companies and whether the outlets are open. Segmentation is also proposed in territorial form according to the level of risk and urban density, criteria also given by UOCRA and the Chamber of Construction to revive public works.

For shops in general, the idea is to open with 50 percent of their staff, allowing the gradual entry of customers, something also promoted for shopping centres. The proposals given to the government to analyse this week also included restaurants, also working up to half their capacity and staff. Catering outlets have opted for delivery until now and some appeal to the solidarity of their clients, asking them to buy “future” meals to sustain cash flow.


Meanwhile, over the weekend, the Central Bank defined that banks would be opening next week with appointments made in advance and for general business, according to the last number of DNI identity cards, so that companies can resolve the lack of access to the soft credits fixed by the Central Bank – one of the demands made by business chambers and many PYMES (small and medium-sized firms).

Nevertheless, the La Bancaria trade union has presented a note to Labour Minister Claudio Moroni requesting strict compliance with sanitary safety measures. In the request, addressed to Central Bank Governor Miguel Pesce and ANSES social security administration chief Alejandro Vanoli, La Bancaria secretary-general Sergio Palazzo calls for a ‘Covid-19 Protocol’, including temperature detectors, restricted public entry, an hourly clean-up and disinfection, the provision of alcohol-based hand gel, face-masks, gloves and anti-bacterial soap among other points. 

Patricia Valli

Patricia Valli

Editora de Economía y 50y50 de Diario Perfil.


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