6 junio 2019

The Need for a Labor Reform, and the Crisis and Decadence of the Current Model of Industrial Relations

Argentine legislation is archaic, and its origins can be traced back to the period immediately following the Second World War, built upon some loosely scattered previous laws from the first half of the 20th century. In other words, our regulatory framework is nothing else but the product of social, political and economic struggles from the first half of the last century.

Published in the magazine Consejo Digital on June 4, 2019
Most of our collective bargaining agreements were made in 1973/1975, and only exceptionally updated in 1992/1993, and sporadically amended from time to time.

None of our labor reforms has ever included any reference to new technologies; what’s more they just refer to what existed at the time of their passage. Please note that at the time of their passage there were no computers, PCs, Internet, social media, cell phones, notebooks, or even faxes.

More than 50% of employees under employment relationship earn net income below the value of the market basket.

Internet erupted twenty years after the passage of the Employment Contract Act [Ley de Contrato de Trabajo], and up to date there is no reference to email, which is one of the unquestionably common tools for communication used by all employees.

The number of registered employees under employment relationship at the National Administration of Social Security [Administración Nacional de la Seguridad Social] has remained unchanged in the last seven years.

The model that is still in force today with a high gross cost, extremely high payroll taxes and a complete lack of flexibility is forcing workers to find other alternatives, such as non-registered employment, freelance work or self-employment, considering options in the sharing economy, the civil service or different anomalous hiring methods at the State at the national, provincial or municipal levels, and underemployment and unemployment.

It is unbelievable that today more than 50% of employees under employment relationship earn net income below the value of the market basket, i.e. below the poverty line. In other words, nowadays having a duly registered job does not ensure decent compensation.

Reform should be structural and institutional

The so-called labor reform is of paramount relevance affecting the three branches of Government, i.e. the Executive with its bills and any initiatives by the Department of Labor or similar, the Judiciary through its processes and case law, and Parliament through reforms for substantive law in addition to new institutions and rules imposed by apps and new technologies.

The labor crisis is so serious that it is undergoing a process of systemic decadence.

In order to face such a challenge it is essential for unions and the business sector to assume the respective responsibilities, accepting a change in mindset where new tools are crucial to promote employment, attract investment and improve competitiveness in the local, regional and global scenario.

As to the structural bases of our current model of industrial relations, the crisis is so serious that it is undergoing a process of systemic decadence. That is why a reform should be made with a wide array of innovative operating actions to be immediately put into practice.

In my opinion, this task does not imply sacrificing any fundamental rights of workers. In fact, it is vital to build upon what has already been built. Argentina has anachronistic laws that require substantive changes to include all the new elements that make up the labor law of the future.

There are issues that call for innovation. For instance, cross-functionality instead of a rigid functional category; flexible schedules instead of a fixed workday; variable compensation according to results instead of minimum wage under collective bargaining agreements or fixed additional payments; and variable rest periods instead of rigid break schedules, among others.

In addition, other issues that do not have a reasonable regulatory framework include teleworking, telecommuting, the use of computer tools (software and hardware), robotics, AI and the automation of processes, logistic resources and the just-in-time inventory system, new hiring methods in the sharing economy, the economically dependent self-employed worker, the alternative entrepreneur, and others.

To sum up, exponential technologies and the new models for HR and industrial relations are not a fiction of the future but a reality today, and so it is imperative that social stakeholders and all those who belong to the working community stop and think about the changes and innovations that should be implemented. Then, the necessary actions should be taken to make those changes, and finally the resulting model should be adjusted until the new design can promote employment in a scenario of modernity and prosperity.