Wage negotiations in Argentina
Teachers'unions go out on strike
“IT CAN'T be that every annual salary negotiation makes it a strain just to begin the school year,”
said President Cristina Fernández de Kirchner during a speech to Congress on March 1st. Yes it can.
Strikes this week delayed the start of classes in 19 of Argentina's 24 districts,
after provincial unions and governments failed to reach agreements about wage rises.
Negotiations between the national government and federal unions,
which are meant to set a minimum benchmark for the provinces, also foundered.
With some unions demanding more than 40% hikes, the national government and Buenos Aires's provincial government,
the most influential negotiators, offered increases of just 22% and 25.5% this year respectively. The unions called the proposals “a provocation”.
Tension had been expected.The teachers'unions want salary rises above Argentina's galloping inflation rate.
Since the start of the year the government has devalued the Argentine peso by over 20%, causing inflation expectations to spike.
According to Eduardo Levy Yeyati of Elypsis, a consultancy, prices are expected to jump by 32% this year.
And now that the government has started publishing more realistic data, it cannot simply pretend the problem of rising prices does not exist.
The teachers'unions have a strong hand. In December provincial police squeezed 35-100% pay increases out of their employers.
Public-sector employees are not fearful of losing their jobs. Strikes give unions the power to cause widespread chaos.
But the government cannot afford to concede too much ground.
The negotiations with the teachers will set a precedent for salary talks with other unions scheduled for later this month and April.
To ensure that inflation does not continue to accelerate, the authorities need to curb real wages.
Budgetary considerations also play their part. According to Economía & Regiones, a research group,
if the provinces were to grant 30% raises to their 2m employees, that would double their collective fiscal deficit.
That may nonetheless be what happens. In the five jurisdictions that were able to reach accords,
the teachers and the provinces agreed to increases of around 30%.
That wouldn't do much to bring down inflation, but it would at least help keep it from skyrocketing. And it would mean the school year can begin.