Wednesday, January 30th 2013 - 06:41 UTC

Argentine organized labour anticipates fierce wage talks despite controversial tax relief

Argentina’s organized labour CGT confederation led by Hugo Moyano came on stage on Tuesday to make clear that Monday’s income tax floor 20% rise announced by President Cristina Fernández “is not enough” and anticipated fierier wage talks with a clear 25% raise demand.

Union leader Venegas: “the President believes she lives in Wonder Land”

Omar Plaini: workers will demand a starting rise of 25% and not a 20% cap as proposed by government

During a speech on national television from Government House Cristina Fernandez said that the rise in the income tax floor means a revenue sacrifice for the Treasury of 8 billion Pesos and that 82.5% of dependent employees “will now cease to pay income tax”.

The rise of the income tax floor has been for a long time one of the main demands from organized labour, even from those groups that still support the government of President Cristina Fernandez.

Lawmaker and Newspaper Salesmen union boss Omar Plaini warned during a radio interview that the income tax floor “was not increased last year”, hence indicating that workers are still trailing inflation in what seems to be an endless race.

Likewise, Plaini stressed that once collective bargaining talks finish, “there will be much more workers reached by the income tax”.

“Yesterday’s (Monday) announcement leads us to fierier wage talks as the income-tax floor is something based on inflation. All unions are starting talks with a clear demand: a 25% raise”, thus going above the 20% maximum raise that several officials from President Cristina Fernandez have been lobbying for.

Furthermore, UATRE farm hands union leader Gerónimo Venegas, considered that President Fernández “came totally short”, and added “the increase has nothing to do with the country’s reality; the President believes she lives in Wonder Land.”

“How come President Fernández wants a maximum wage increase of 20% when last year’s inflation rate was around 28%?” Venegas insisted during a meeting with radio reporters.

Vanegas also explained that “after two years without touching the income tax floor, the announcement comes short, it’s not enough. But the President wants to keep collecting money on the workers expenses”.

The unionist also responded to the President’s attack after the Head of State indicated during Monday’s speech that even though the farming sector has the highest profitability rates the farm hands have some of the lowest salaries in the nation.

“It gives one the chills plus anger to see the President lying just like that”, Venegas counterattacked and remembered that last year “it was her government that took us away a 10.7 percentage points increase after we had discussed and reached a 35.7% increase during wage talks since the national government only authorized a 25% rise.”

“Today’s minimum wage for a farm hand worker is 3,580 Pesos (approx 500 dollars) plus home and food” he added.

Cristina Fernandez also argued that with the new scale and higher tax floor, Argentina will be collecting from workers 5% of tax revenue, compared to 7% in Brazil and 8% in Chile and Uruguay.

The Argentine president turned up at the meeting in Casa Rosada with Guy Ryder ILO Director General who is on a work visit to Argentina. On Wednesday he is scheduled to meet with the main leaders of organized labour which have ceased to support government and have become strong critics of President Cristina Fernandez.

11 comments Feed

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1 Ayayay (#) Jan 30th, 2013 - 07:08 am Report abuse
20% is a HUGE raise if Christina is being honest that inflation is only 9%.
So, is she being honest?
2 Orbit (#) Jan 30th, 2013 - 08:32 am Report abuse
The good news is that the money printers will be earning lots of overtime to make up the drop in revenue.
3 yankeeboy (#) Jan 30th, 2013 - 11:25 am Report abuse
The business leaders are saying they want no increase since the economy is in recession and exports are already uncompetitive. For gosh sakes even fruits and vegy exports are too expensive and are dropping like a rock.

Looks to me like everyone is pressuring for a HUGE DEVALUATION

And with Argentina's heterodoxy economy they can devalue their way to riches.
4 Welsh Wizard (#) Jan 30th, 2013 - 11:45 am Report abuse
This is the trouble with inflation/stagflation. Ultimately, any wage hikes which match the level of inflation are retrospective/historical and are immediately of out date within a month. However, you can't give wage rises which take into account the next 12 months of inflation as this will stoke inflation even more. As a result, the whole thing ends up resembling a poo sandwich without the bread.
5 yankeeboy (#) Jan 30th, 2013 - 11:56 am Report abuse
Yep, wage spiral. I had this chat with many an Rg on this board. They called me every name they could think of and said I was spreading lies because wages will always go up more than inflation.

Yes until the $ runs out, which it did last year

Anses is Bankrupt Poof all the $ is gone
BCRA reserves are depleted and finally the financial world is worried
U$ are still leaving the banking system...what little is left

Everyone is waiting on the Devaluation as the economy grinds to a halt

It is all hanging on the SOY usual...which is withering in the fields with no rain and 90f+ week in and week out.

If I was trapped there I would be buying sugar, laundry detergent and toilet paper to trade. This is what happens when you follow Chavez's playbook but don't have oil.
6 Welsh Wizard (#) Jan 30th, 2013 - 12:13 pm Report abuse
True, unless you have a ready supply a black gold you're going to find it difficult to survive with these economic policies. I have to say that I'm a big fan of Chavez, he's cunning chap. Best friends with Argentina but when they ask him for a loan he duly obliges but punishes then with interest rates way above the market standard (even for Argentina). Venezuela will probably end up owning Argentina and it would surprise me if the next lot of loans from Venezuela come with security over Argentina's shale deposits or at least security over the shares of YPF to be realised on an Defalut/MAC event
7 yankeeboy (#) Jan 30th, 2013 - 12:22 pm Report abuse
6. Without Chavez I doubt any new loans will be forthcoming. Venezuela is in pretty bad shape itself and if Chavez doesn't show up alive soon there will be a change in Gov't.
When Chavez dies this cobbled together alliance with the Bolivarian Socialist countries will die with him and probably UNASUR too.

In the end Brazil will have to step up and lead South America but we'll see if they can do it. They have their own problems to deal with and I don't think they are “grown up” enough to take on the responsibility.

I think the USA is going to push the RG collapse on Brazil. I think they'll make sure all Int'l $ is inaccessible and make Brazil fund them . It should be fun to watch if you don't live there.
8 ChrisR (#) Jan 30th, 2013 - 12:38 pm Report abuse
@7 yankeeboy

But Brazil are in the mire themselves and, it seems to me, do not know how to tackle the problems.

It seems incomprehensible that Dilma will bankroll the biggest crooks on the continent, but there again; she has kept Mantega as finance minister!

The next 12 months is going to be just as interesting with Brazil as it will be with AR.
9 yankeeboy (#) Jan 30th, 2013 - 12:53 pm Report abuse
Chris, That is my point. I think it is a deliberate plan of the USA to saddle Brazil with Argentina's debt and problems. In will thwart their efforts to become a major player in world politics.
Brazil isn't ready anyway. They may never be ready. There are too many poor and uneducated people there to play with the big boys.

Dilma looks completely out of her depth and I think is making some grave economic errors that is going to really hurt them in the end.

I think the saying is still apt, Brazil the country of the future (that will never come)
10 ChrisR (#) Jan 30th, 2013 - 04:00 pm Report abuse
@9 yankeeboy

Good points well made.
11 LEPRecon (#) Jan 31st, 2013 - 09:38 am Report abuse
Yankeeboy and ChrisR

Good points.

Basically if Brazil wants to be a world leader, it needs to start at home. They need to become the main player in South America, and show leadership to the other countries there, regarding trade, politics, economy, etc.

However, when you have basketcase countries like Argentina and Venezula in your backyard, it makes it difficult.

Brazil needs to step up and take control (metaphorically speaking) of institutions such as Mercosur. Ensure that everyone plays by the rules, and enforce their rules. They have been lacking in that, with the illegal suspension of Paraguay, and the illegal inclusion of Venezula.

Oh well, all the sh!t is in their own backyard, and if they're not willing to clean it up, why should anyone else.

When Argentina goes tits up, the rest of the world is going to shrug and walk away. I mean why should the world help when Argentina refuses to honour its debts? Why should the world throw good money after bad?

Nope you're right. Argentina's continuing failures should be left up to the other countries of South America to sort out. It's their problem now.

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