MercoPress. South Atlantic News Agency

Argentina’s main business organizations react to profit-sharing with unions

Probably the strongest power-broker in the country: the teamsters boss Hugo Moyano

Argentina's top business groups on Monday openly reacted against legislation backed by the country's largest trade union group that would require companies to share 10% of their annual net profits with employees.

In a joint press release, the business groups said they didn't agree with the bill and had several objections, including provisions that would give unions influence over management of the nation's businesses in violation of “private property rights.”

“At the same time, it is worrisome the [negative] effect the [profit-sharing] regime would have on investment and the inevitable consequences of higher exclusion and unemployment,” according to the release.

“The different groups manifested their concerns over the bill being analyzed and all showed their disagreement with it,” said the document. It also added that it goes against “the agreements previously established between different sectors by the International Labour Organization and signed by Argentina” as a member country of that organization.

The statement was issued following a meeting of representatives of the Association of Argentine Banks, the Buenos Aires Stock Exchange, the Argentina Chamber of Commerce, the Argentina Construction Chamber, manufacturing trade group Union Industrial Argentina, and the powerful agriculture lobby Sociedad Rural Argentina.

The profit sharing bill submitted to the lower house of Congress last month was sponsored by legislator Hector Recalde, a close ally of the Confederacion General de Trabajo, CGT, a union umbrella organization and a close ally of the ruling Frente Para La Victoria coalition.

If passed into law, profit sharing would initially be mandatory for companies with more than 300 workers, and later be extended to firms with as few as 100 workers, according to the original version of the bill.

It would also create a 12-member council comprised in equal parts by representatives of government, labour and employers that would be responsible for implementing profit sharing regulations. Supporters say that Argentina's constitution already has provisions for profit sharing.

The CGT, led by Hugo Moyano, has been flexing its muscles in recent months with a view to influence congressional and presidential elections in October 2011.

Last week, Moyano spoke out in favor of either President Cristina Fernandez or her husband, former President Nestor Kirchner, running on the Frente Para la Victoria ticket.

“The presidential candidate is either Nestor or Cristina,” he was quoted as saying on La Red radio. He also warned that if Vice-president Julio Cobos attempts to run for the presidency, “we will stop him”.