Austerity projected to raise Argentine unemployment from current 5.9% to 10% by year's end.
According to private estimates published Friday, unemployment in Argentina could reach double digits before the end of 2016. The projected increase would be as a result of the recession in Brazil, the slowdown in China, a fall in consumption as a result of devaluation-driven inflation, lower export commodity prices, and the current wave of layoffs in both the state and the private sector.
"The floor for unemployment this year is 10%," estimated the chief economist at the Institute of Thought and Policy (Ipypp) Claudio Lozano. Speaking to local news daily Perfil, Lozano warned that the figure could be as high as 12%. Argentina has not seen double-digit unemployment since 2006.
Public sector layoffs since the right-wing administration of President Mauricio Macri took office a month ago have thus far been the main contributors to the sudden spike in unemployment. The National Union of Civil Servants (UPCN) estimates that between the national government, provinces, and municipalities, layoffs have already affected around 18,000 workers and that the number could climb to 65,000.
Layoffs are likewise impacting the private sector. The consulting firm Economic Trends counted 5,439 corporate layoffs in December, five times more than a year ago. The Social Law Monitor for the CTA, the nation's second largest labor federation, estimates that, including the first half of January, layoffs have reached 10,000. These include poultry processor Red Crest (5,000), Austral Construction (1,800), numerous smaller builders (2,000), Tecpetrol (500), Paraná Metal (180), San Lorenzo Ceramics (100), Expofrut (109), and subway operator Metrovías (26), among others. A further 2,700 employees have been placed on rolling furloughs at Techint, the nation's largest steel maker.
In this context, the report of the CTA explains that "the success of the ongoing austerity program requires as a prerequisite a substantial drop in workers' wages. Indeed, the brutal transfer of resources that have been implemented by the Macri government (currency devaluation, removal of export taxes) together with sharp fiscal austerity measures such as the elimination of public services subsidies, inevitably lead to a cut in the share of national income received by workers."
According to the report, President Mauricio Macri's policies aimed to "scare public sector workers, while sending a signal to employers and workers in the private sector not only through high impact measures such as state sector layoffs; but also through rhetoric."
"Employers," the report concluded, "have begun this year's round of collective bargaining negotiations with increased layoffs as a terror tool, and thus meant to weaken the bargaining position of workers."
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Little wonder then that even Bloomberg News - no friend of the labor movement - projects that Argentine GDP will decline by 3% this year and a further 3% in 2017. It had doubled between 2002 and 2015, and was still growing by 2.8% when Macri took office.
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While giving big landowners a $10 billion tax cut - equivalent to a $300 billion-a-year tax cut in the U.S.
George W. Macri. 