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6 enero 2021

2021 should put an end to the ban on layoffs,published in El Cronista

The Covid-19 catastrophe was, and still is, similar to a war, with an invisible enemy and an army of health professionals who have very few tools to deal with and try to beat the pandemic. Irreparable harm has been inflicted on human lives; public health in general has suffered with social, political and economic effects that have wreaked havoc and brought about uncertainty for what may come.  

Article by Julián A. de Diego published in El Cronista on January 4, 2021

In this scenario events that were exceptional in the past, like the mandatory social quarantine, the ban on layoffs, the double severance pay, the separation of powers with Emergency Executive Orders and the Judiciary in recess, the prohibition to work, non-salary subsidies and wages paid to employees who did not work, have become fairly standard and led to destructive and sometimes antidemocratic conducts.

The indifference of some sectors, the risk, anguish and danger caused by the Pandemic jeopardize people’s health and survival, and damages the economy both at the individual and collective level. The illusion of an exclusive quick fix is magic thinking that society experiences with utter frustration, and translates into demands, complaints, wishes and needs.

All sectors are demanding changes, and not promises, specific actions to combat the palpable poverty and indigence in which Argentina has fallen, and the State is not able to cover needs unless it creates value and boosts real growth in private sector activities.

Different countries, including Argentina, have implemented policies that failed to meet their primary goals, and used the Pandemic as a scapegoat, which on the one hand clearly uncovered reality and showed all human misery at its worst.

This virus spared no race, culture or religion, and curiously enough, largely affected the most developed and well-equipped countries on earth. Around one thousand five hundred million job positions have been lost, and the unemployment rate tripled worldwide. Faced with the failure of preventative actions, core countries and the WHO are confident that they will be able to reverse the advance of the Pandemic in its second and third surge, with strains modified through mass vaccination already in full swing.

Now we have to examine the present and the future. It is clear that it is indispensable to promote growth and development at the private sector, which is the only one that can create added value, capitalization, and specially genuine and sustainable employment.

There are three priority matters, namely: the reactivation of the domestic market, exports focused on new markets, and the reformulation of the internal scenario restructuring the regulatory framework of taxes, interest rates, social security and payroll taxes.

As to employment, it is worth mentioning that there will not be a favorable, genuine and long-lasting reaction if the economic activity does not return to normal, which is still affected by many restrictions at the local, provincial and national levels. Tourism with the labor intensive advantage is strictly monitored by the authorities, who examine the spread of the virus vis-à-vis the preventative actions taken in each area of the country.

The truth is that the Pandemic still has an impact on every aspect, taking into account the new surges in particular; mass vaccination in Argentina will be gradual with enough doses that will come in March or April; reactivation may occur in the second half of the year.

Consequently, welfare programs, the Emergency Aid Program for Employment and Production (ATP), Productive Recovery Program II (REPRO II), loans with zero or preferential interest rates, paid suspensions under Section 223 bis (Employment Contract Act) will still be necessary in a gradual process towards normality.

Essential structural reforms will be a must to boost competitiveness, considering that the Argentine labor cost is really high because of payroll taxes, the impact of the ban on suspension and layoffs, double severance pay and the unpredictability that causes disproportionate and unexpected decisions when labor claims are taken to Court.

The Executive will have to pass rules to put an end to the ban on layoffs and re-examine payroll taxes, which if not reduced, may be restructured to create an unemployment and severance pay fund to cover statutory severance pay for all workers in case of employment termination.  

Job promotion will surely require tax and social security incentives that may be provided by Emergency Executive Orders, rewarding companies who hire employees in excess of their regular and usual standards to help create new job positions. In the last twelve years no government could add more jobs to the six million two hundred thousand positions in the private sector, which proves that even at times of growth, Argentina did not offer adequate conditions for genuine employment.

Finally, it is essential to have a substantive reform of the educational system, so badly hit by the Pandemic crisis, as a great chance to teach new technologies and provide job opportunities from the first years of study, in addition to computers and telematics devices, and a second language.

The future is today, as long as we know how to take advantage of it. It is not enough to give pretty speeches, the narrative is no longer reliable, what matters are facts, specific actions and reforms for the common good and general welfare to ensure the benefits of freedom, as stated in the preamble of the National Constitution.

Por Julián A. de Diego
Por Julián A. de Diego

Fundador y Titular del estudio “de Diego & Asociados”.  Abogado, Doctor en Ciencias Jurídicas.

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