The Taboo of the Labor Reform in Pre-election Times

The Labor Reform gets a really bad press in electoral campaigns even though it is one of the pillars of the future of Argentina. Both candidates and leading figures are participating with a statement that contains a fallacy. It is really exotic how they use their ability to shirk their responsibility to deal with the necessary proposals under today’s circumstances, and draw on multiple resources to hide or simulate reality.

Published in El Cronista on October 15, 2019
In the vicissitudes of the supposed social pact, it is said that companies and unions agree on basic terms. However, their statements show traps, contradiction and especially, lack of conviction.

Curiously enough, the industry takes on commitments that have nothing to do with its grievances, such as respect for freedom of association, a tripartite view of labor law (State, Unions and Companies), and the need to revise special rules and regulations. Now with CTA [Argentine Workers’ Central Union] as a part of CGT [Workers’ General Confederation], social movements and left-wing groups aspiring to hold specific powerful positions, there is little chance that what they say may come true.

They say that the priority is a general inclination towards new technologies that provoke serious disputes inside unions in their attempt to gain representation. Unión Informática [IT Union] and other merely registered unions clash with the unions at specific sectors, such as banking, commerce and software development, which has become a usual source of conflict. Not a word is said about the new ways in which work is done through sharing economies, such as Uber, Cabify, PedidosYa, Glovo, and so forth.

It is said that the big unions are willing to modernize the old collective bargaining agreements; however, most of these rules imply waiving rights that have been long gained, and workers and their leaders are not willing to relinquish them. In practice, they seem inclined to reformulate some guidelines under collective bargaining agreements in exchange for the business sector’s commitment not to introduce any changes in the Employment Contract Act [Ley de Contrato de Trabajo] and substantive law.

The need to open negotiation in rough times creates expectations that big changes will come; however, most leaders cling to industry-wide collective bargaining agreements and talk about articulated subordination to company-wide collective agreements that can meet the needs of each branch or company.

There is a trap in this alternative, such as wage protection under substantive law.

Companies must observe three principles, namely: 1. The principle of non-waivable rights according to which any agreement between the parties that reduces or somehow compromises workers’ rights as provided by law, collective bargaining agreement and individual employment contract shall be null and void; 2. The principle of progressive realization whereby any worker has the right to improve the enjoyment of rights progressively and not to lose or suffer any reduction in those rights already gained.; and 3. The principle in dubio pro operari –when in doubt, rule in favor of workers; decide based on the most favorable law where there is a conflict of law; and opt for the most favorable condition whenever there are two or more interpretations.

In any case, Courts should rule in favor of workers, leaving aside any interpretation or construction to their detriment.

As to wages, it is said that in times of recession like today’s where there is stagflation, income should be increased gradually and moderately, hoping for a process of growth that may raise income little by little. Nobody dares to talk about wage freeze or growth by area or sector. This stance has been challenged by the most combatant unions, which are tough supporters of Cristina Kirchner and willing to run in August 2020 to fight against CGT current and traditional leadership, which is mainly managed by majority and more moderate unions.

The models of the US, South Korea and China that were taken as an example by Argentine industry are not compatible with the local model. In Argentina the target is a reduction in working hours. In China the workweek ranges from 60 to 80 hours. In these three countries there is no statutory protection against employment termination.

The main issues have not been discussed, such as labor courts and the destructive effect of court rulings that threaten the survival of SMEs, which make up over 80% of employment in Argentina. No word has been said about social security taxes, work off the books and an eventual regularization plan. No reference has been expressly made about legislative amendments to the Act on unions, collective bargaining and social health care.

Even though nobody knows for sure who will win the presidential elections, the two frontrunners have promised what they did not achieve in their respective terms of office: they promise to lower payroll taxes, promote growth, foster employability, incentive the hiring of new employees. Now they promise growth without any supporting fact or viability, and as far as we know the critical conditions of our economy have not changed yet; therefore once and again they resort to magic thinking and supporters’ fantasy.

By Julian A. de Diego
Director of the postgraduate course on Human Resources at the School of Business at UCA.