Monday, October 14, 2019
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ECONOMY | 28-05-2019 15:28

Dante Sica: 'Business leaders are reporting higher sales than expected'

Production and Labour Minister Dante Sica insists government is focused on reform package as economic indicators show few signs of any major pre-election upturn.

Dante Sica swapped offices for two days last week, opting for the Buenos Aires City Expo Centre, where the Argentina Exporta (“Argentina Exports”) forum brought together over 2,500 people. In a busy few days, the Production and Labour minister met with business leaders and journalists, before holding a crucial meeting with Transport Secretary Guillermo Dietrich and transport sector union leaders, who later abandoned their planned strike action scheduled for May 25.

During the opening of the forum you said we were seeing changes in economic indicators. However, the latest economic data were negative. Is a rebound possible?
Late last year, we began to see it [a rebound]. The crisis is very heterogenous in its impact on economic activity. There was 30 percent of activities with no decline: fishing, mining, energy, tourism, red and white meat. But they represent a small percentage of the job market. Business people say that they're selling a little more than expected. They are not recovering what they lost but they are better off. January was better than December and February better than January. In March, with the volatility and inflation, those gains were lost and in April and May we're seeing it [a rebound] again. There are sectors which are seeing improvements.

Can industry find a floor?
It [industry] has experienced a significant negative lag but it is very heterogenous. Metallurgists production for internal consumption dropped but providers to Vaca Muerta [shale oil and gas reserve in Neuquen province] grew. This first semester we will see sectors whose recession will decelerate, especially food production, among others that are starting to recover.

How much do collective wage bargaining deals impact?
In May, we saw double incomes because of the increase in the AUH welfare plans, ANSES social security loans and the recomposition of collective wage bargaining. Today, there are six million people formally receiving welfare and three million whose salaries have regained against inflation. They must now feel the impact. If this were not an election year, we would have a lower country risk and a lower interest rate. The uncertainty over the elections makes the recovery slower. We are recovering our fiscal policy and contractionary monetary policy, and rates that do not expand credit.

If this were not an election year, would less money be flowing into social security?
The money would be there but we would have other consumption rates. With lower volatility, with a higher interest rate, today real wages and credit would be acting above consumption.

Has it been the case that in collective wage bargaining talks, broadly there has been a 28-percent increase in wages?
Bargaining ended in January, February and the middle of March with increases of between 23 and 25 percent. The ones we have closed now [May] were of 28 percent annually with a revision [clause]. We will look at expectations for inflation further down the line.

The last Survey of Market Expectations suggested annual inflation of 40 percent, not counting the deceleration of last month. How do they reach that conclusion?
Expectations for inflation in May are dropping. We also look at the Survey but we do not have inflationary targets. We all look at future expectations.

The Interior Ministry has told economists that a recovery in consumption will occur in the 100 days prior to the elections...
There is a wage bargaining period from March to June. From the point of view of all formal workers, these will be completely finalised by the end of July. But in the next 15 days, we will have three million workers seeing an impact in their wages, stemming for instance from the ones agreed to with the UOM [Metallurgical Workers Union], which comes into effect next month.

Can next week's strike action be resolved beforehand?
We are not seeing high degrees of labour tension. Unions know that if they pressure us too hard then they prolong the resolution of bargaining and it is not in the private sector's interest to engage in conflict when they are trying to recover activity. The strike is another issue. We saw labour activity and a protest 15 days ago. The decision-making process [in the labour movement] is a different issue.

Is the strike politically motivated?
It's inopportune because many workers have the will to go to work and avoid absenteeism or impacts on small- and medium-size businesses, which are affected when there is no transport. If there is no transport, it's almost a forced strike. The channels of dialogue are open. We may have deep differences about politics but we are not going to continue debating wage bargaining and collective deals the day after next. We have to have tri-party committee talks. The strike will most impact workers and small businesses, not the government.

Is the opposition's definition of candidacies having an impact on the government's electoral strategy?
We are clear about our candidate, our policy programme, and the reforms we want for a more competitive Argentina. The definition of candidates does not change what we're doing.

Does the Fernández-Fernández ticket favour the government?
The opposition has to resolve the issue of its candidates. We have until June 22 to see which coalitions will run and how many candidates there will be. We [the government] are focused on our campaign and our reforms.

Are you reassessing the issue of export dollars and Brazil?
We are not correcting this yet. We are seeing an over-harvest in comparison to last year. What falls because of price may see compensation in volume. And while it's true that expectations with Brazil has been lowered, we will still see growth compared to last year. There are terminals that are reviewing upwards their forecasts for the second part of the year. That could be beneficial.

How does the trade war between the US and China impact Argentina?
It may have an impact on prices but it is also an opportunity and a challenge, not only in the area of tariff policy. It is a challenger for the Asian market and we have make investment to make the most of this.

Interview originally published in Spanish on Perfil.com.

Patricia Valli

Patricia Valli

Subeditora de Economía y 50y50 de Diario Perfil.

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