MercoPress. South Atlantic News Agency

Argentina's unions challenge wage policy in election year

Argentina's powerful trade unions are stepping up calls for salary increases despite an economic slowdown and since it is election year they could win double-digit hikes to offset inflation.

The global economic downturn is drying up new jobs in Argentina but the government is seeking to avoid layoffs and has intervened to halt planned job cuts at several corporations. Wages have become a particularly controversial issue in Argentina where the administration of the Kirchner couple, Cristina and Nestor, has been accused of under-reporting inflation, which did not cause much ripples when the economy expanded sustainedly for several years. But jobs and pay-checks have become a top concern for President Cristina Fernandez de Kirchner as she faces legislative elections in October even as business leaders warn of a drop-off in economic activity stemming from the global crisis. Former president Nestor Kirchner, (Cristina's husband) warned industry executives on Wednesday during a public rally "not to touch a single job during these moments of crisis." Some analysts say the average pay raise is likely to hover around 15%, similar to economists' forecasts for inflation in 2009. But Hugo Moyano, the leader of the powerful General Labour Confederation, or CGT, has called for each sector to negotiate its own pay increase. The CGT wage hikes have generally set the benchmark for other sectors' demands. The problem is union officials have said the floor for salary talks should be set at 18 percent, the "non official" housewives inflation estimate of 2008. The government reported 7.2% consumer inflation last year, but private analysts put the figure closer to 20%. Economists, consumer groups and some state statisticians accuse the government of under-reporting inflation for political gain and to save money on inflation-indexed debt. This week Interior Minister Florencio Randazzo appealed to both unions and business owners to be mindful of the global economic context. "We are calling for rationality, responsibility and understanding that the world is going through a very important crisis that Argentina isn't removed from" he said. "Maintaining economic activity and preserving jobs will be our biggest challenge," Randazzo said. Mrs. Kirchner who is expected to visit Spain in the coming weeks has invited union leader Hugo Moyano to join the official delegation. Next October Argentina will be holding mid term congressional elections and the undisputed leadership of the Kirchners (since 2003) has begun to be strongly challenged from inside the ruling movement, Justicialista party that has dominated local politics for the last six decades.