25 enero 2023

Wages: the race against inflation begins. Published on Cronista.com

The monthly inflation rate of 5.1% last December and the annual 94.8% rate according to INDEC CPI have promted year-end raises under collective bargaining agreements as inflation has beaten wages overall.

Article by Julián A. de Diego published on Cronista.com on January 17, 2023

Unions are now on high alert, not only because of past discrepancies but also because of the way in which wage negotiations will be conducted during 2023, and how often, as inflation is expected to be similar to that of 2022. For instance, FATSA (Healthcare Workers) and SMATA (Car Workers) are inevitably asking for quarterly raises, once the inflation rate is disclosed based on INDEC’s monthly CPI measurements.

It is clear that attempts to grant pay increases based on inflation forecasts have failed not only because they were speculations about an uncertain future, but also because they created a mechanism that largely triggered inflation itself.

The phantom of indexation during hyperinflationary periods of the past has been haunting us since democracy was restored in Argentina in 1983. At the same time income in Argentine pesos has plummeted due to the currency devaluation against the US dollar. As a matter of fact, when Macri took office the monthly average wage was around USD 1450, as reported by the IMF. However, today it is around half that amount, USD 810, and still crashing. In contrast, during the same period (2005-2012) wages in the rest of Latin American countries remained stable: in Brazil USD 750, in Chile USD 650, in Colombia USD 580, in Ecuador USD 480, in Mexico USD 420, and in Uruguay USD 630.

There is a great divide in unions once again. Hector Daer and the most representative unions from the CGT favor wage negotiation under collective bargaining and claim anti-inflationary measures. They do not trust the intervention of the National Government, as happened with the failed attempt to grant a year-end bonus to all employees in the private sector, which ended up benefiting just a few, and in many key industries it was not paid at all.

Hugo Moyano in the CGT, with discrepancies though, and Pablo Moyano with the support of Máximo and Cristina Kirchner are leading the dissident Unions.

The CTA questioned everything but with a confusing and even contradictory strategy. It has participated as dissidents in the Council of Minimum Living Wage, whose amount is less than 50% of the market basket measured by INDEC.

In addition, social groups and their representatives, in a clearly defiant attitude towards the Executive, are demanding collective bargaining as if they were unions. But they are actually groups comprised of the unemployed, the excluded, and those with insufficient and irregular incomes. To achieve this goal, they organize extorsive demonstrations, block roads, and camp on the streets in a clear move to affect the National Government.

The most radicalized unions are preparing themselves because they expect this to be a year of conflict, claiming selective measures according to sector as part of an election year when decisions are likely to be driven by demagogy. Union members know that they do not have a leader who can run for the presidency. Strictly speaking, they know there is no Lula in Argentina.

Collective bargaining will get complicated with other equally important claims that affect labor costs. In fact, March 23 is the deadline set under EO No. 144/2022, which has established a one-year term for companies to set up on-site day care facilities if they have more than 100 employees per shift (no matter their hiring method, and including third parties), or alternatively, pay a stipend as provided by Section 103 bis subsection f of the Employment Contract Act, which needs to be determined under Collective Bargaining.

In fact, this stipend is already established in many collective bargaining agreements, but it should be adapted to the above-mentioned rule. It is worth mentioning that this rule was issued by Labor Minister Moroni in compliance with a Supreme Court decision mandating the regulation of the provisions of the Employment Contract Act (Section 179) about child care facilities.

The Telework Act No. 25777, in almost all its provisions, refers the parties to collective bargaining to establish rules, principles, complementary rules, guidelines, and other standards, which are now necessary for the negotiation process, which so far has not been successful.

To make matters worse, the Public Health Emergency has been extended to 2023. So the debate continues: are those who work remotely (teleworkers) or from home (home office) governed by these new regulations, considering that they stem from an inevitable force majeure event?

Finally, the negotiations also address a variety of recurring issues, such as rules on gender equality, protection against violence against workers in all its forms, inclusion and nondiscrimination, and to top it all, environmental and ecological protection.

As is often the case, every year a handful of collective bargaining agreements set the tone for further negotiations. The Executive has not announced any guidelines yet. On the contrary, the year-end bonus was a failed attempt that changed the rules of the game and hurt companies’ competitiveness and the freedom to negotiate base wages under collective bargaining agreements.

The delicate balance of a market marked by high inflation and different exchange rates requires businesses and unions, as well as the Department of Labor, to reach consensus about competitiveness without resorting to electoral maneuvers of government intervention.

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