29 marzo 2022

The labor and social security reform required by the IMF. Published on Cronista.com

Another new deal has been made with the IMF only to be breached in the future, a legacy that will be received by those who take office after 2023. The labor and social security reform will be part of the changes that will be inevitably introduced, because without them it will not be possible to overcome the fiscal deficit or lost work ethic that Argentina has been experiencing, and that got worse in the last ten years.

Article by Julián A. de Diego published on Cronista.com on March 29, 2022

According to the official announcement, there will not be any social security or labor reform within the actions required by the IMF; however, some changes may be introduced through addenda that will be agreed in due course.

The IMF is asking the Argentine authorities to listen to the demands of the business sector to improve their competitiveness, particularly with regard to exports. The actual scenario conspires against any plan that has the slogan of dealing with inflation effectively.

The truth is that the social security system accounts for more than 60 per cent of the national budget, including pension privileges, pensions and retirement benefits granted without having made contributions, fringe benefits and welfare programs. As a matter of fact, the 2022 Budget that the National Government submitted to Congress (which has not been approved) anticipated Public Social Spending to reach ARS 8,875,473 in the next year, accounting for 66.6% of total expenditure, a percentage similar to that forecast for the end of 2021, which is around 65.6%. A total of 12 million people receive benefits funded by Public Social Spending, 4 million of whom are retired and the rest participate in welfare programs. Considering the entire social security system for an estimated population of 47 million people, some 28 million citizens have been receiving direct monetary income from the National Government in the form of contributory and non-contributory social security benefits. Some 9 million benefits are paid by ANSES (National Social Security Administration), including the universal child allowance for around 4.5 million beneficiaries; pension benefits granted without having paid contributions for 3.5 million people; and non-contributory pensions for 1 million beneficiaries.

Unfortunately, distortions have been created as a result of unlawful, arbitrary, or unfair situations. During certain periods of our recent history, there have been some regrettable examples: a Minister who got his pension privilege after only one day in office; lawmakers who got their pension privileges after taking office and resigning 24 hours later. Strictly speaking, it is imperative to have a plan to correct the general system and subsystems. Increasing the retirement age or deadlines, disappointing pensioners with unconstitutional pension increase systems or paying awards with bonuses or by any other illegal means are actions contrary to the most fundamental ethical principles.

The most appropriate solution would be to get more than 50% of the informal economy into the system and revise all pension privileges so that they can be eliminated in the future. Welfare programs should not be free, but rather include the obligation to complete training courses with job opportunities.

The same applies to the adaptation of the industrial relations model to the new world of exponential technologies, where past legislation must be observed, reshaping the future. This has been partly achieved with the Telework Act No 27555, which for the first time in fifty years has set standards for the technological future.

Serious research conducted confidentially by some areas of the Government and by some of the ten opposition blocs shows that they have 12 fundamental items in common, similar in terms of content and questioning. These items include:

  1. Revising fixed-term contracts;
  2. Including job promotion contracts for SMEs (companies with fewer than 100 workers);
  3. Revising working hours and reducing the 48-hour workweek to 44 or 40 hours per week;
  4. Flexible workday and options for remote work arrangements or hybrid work models;
  5. Specific differentiation of non-salary benefits questioned by case law;
  6. Adapting rest periods to the new forms of work organization;
  7. Greater legal certainty for calculating severance pay in case of termination without fair cause (Section 245 LCT);
  8. Revising penalties for unregistered employment or inadequate registration under Acts No. 24013 and 25323;
  9. Fund for Employment Termination or similar systems for a large part of the private sector;
  10. Reformulating legal status for unions and equalization for merely registered unions;
  11. Revising social health care insurance handled by unions towards a more efficient national health care system with the systematic allocation of resources according to needs, taking into account the pandemic’s demands and the emergence of new viruses and plagues;
  12. Redefining collective disputes and formal regulation of the exercise of the right to strike.

The industrial relations model changes extremely rapidly due to the cross-sectional effect of exponential technologies and artificial intelligence, global accelerators, such as the Covid-19 pandemic, the Russian War against Ukraine or the threat of other plagues, and legislation cannot remain stuck in an old scenario fifty years into the past, like in the case of our legal system, which consolidated in the 1970’s. Those who do not introduce the above-mentioned reforms and changes will lose the global race among countries and corporations to lead the new world economic order.